: Risk rallies following China data, US retail sales

The rally in risk sentiment which was seen following positive China data overnight was extended during the NY session as U.S. retail sales came in better than expected. The Aussie, a high beta currency, was the strongest performer against the greenback as AUD/USD rose above 1.0700 and currently trade at around 1.0690. Safe havens such as the Japanese yen and the Swiss franc were sold with USD/JPY rising to current levels of around 80.50 and USD/CHF currently around 0.8450.

U.S. headline PPI figures were slightly higher than forecast while the core readings were in line with expectations. Headline PPI was +0.2% m/m (cons. +0.1 prior +0.8) and +7.3% y/y (cons. +6.8 prior +6.8). Core PPI came in as expected at +0.2% m/m ( prior +0.3%) and +2.1% y/y (prior +2.1).May retail sales were better than anticipated with the headline declining by only -0.2% from the prior +0.3% (exp -0.5) while retail sales less autos rose by more than the forecast of +0.2% with a print of +0.3% (prior +0.5). Business inventories for April were also released today and were slightly lower than expected at +0.8% (cons. +0.9 prior +1.3%). The market focused on the better than expected retail sales which added to increased risk appetite.

U.S. equities opened sharply higher and continued to trade in positive territory throughout the session. The Dow Jones Industrial Average rallied by about +1.04% and the S&P 500 rose around +1.27% as risk appetite increased. Commodities were firmer with gold, silver, and oil up by roughly +0.65%, +2.00% and +1.96% respectively. U.S. 10-yr Treasury yields advanced nearly 10 basis points to about 3.08% amid reduced demand for safe havens.

On the data front for the upcoming Asia/Pacific session is New Zealand’s 1Q retail sales and May Nationwide consumer confidence. Australia sees the release of the April Westpac leading index, June Westpac consumer confidence, and 1Q dwelling starts. RBA Governor Stevens is also scheduled to speak.

Source: Forex.com

14.06.2011