Euro Falls on European Bank Worries

* The dollar traded mixed on Monday on speculation the Federal Reserve will have to raise interest rates as the US economic outlook improves. US stocks ended mostly lower as a late surge for large financials stocks partly offset declines in commodity stocks. The S&P 500 fell 0.95 points to 939.14. The yen rose modestly as Japan’s merchant confidence climbed to a 14-month high in May. Sterling advanced despite UK Prime Minister Gordon Brown’s political problems and the worst election results for the ruling Labour Party. The Canadian dollar was supported by optimism on Canada’s housing sector. The Australian dollar fell for a second day, pressured by lower commodity prices, but remained above the 0.78-handle support.

* The EUR/USD fell on increased risk aversion. Ireland’s sovereign credit ratings were cut for the second time on heightened concerns about the country’s ailing banking sector. More bad news from the European Baltic States also weighted on the pair. The losses were limited as eurozone investor sentiment rose to the highest level since September 2008 and German factory orders showed signs of stabilizing. The EUR/USD broke support from its upward sloping trading channel. There are support in the 1.37 area and resistance in the 1.40.

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Financial and Economic News and Comments

US & Canada

* Canada’s housing starts increased to 128,400 units on an annualized basis in May from 117,600 units in April, the Canada Mortgage and Housing Corp. reported. “Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year,” the CMHC said.

* The US Supreme Court agreed to delay the sale of most Chrysler assets to Fiat, pending a hearing of an appeal by three Indiana state funds. Supreme Court Justice Ruth Bader Ginsburg, in a one-sentence order, said the bankruptcy court orders allowing the sale "are stayed pending further order of the undersigned or of the court."

Europe

* Eurozone investor confidence improved for a third consecutive month in June, with the eurozone Sentix investor sentiment index increasing to -27.0, the highest level since September, from May’s -34.3, Sentix reported.

* Germany’s seasonally adjusted factory orders were unchanged m/m in April, as forecast, after an upwardly revised 3.7% m/m gain in March, signaling the German recession is abating, according to figures from the Federal Ministry of Economics and Technology. April factory orders plunged a more-than-expected 37.1% y/y.

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* Switzerland’s non-seasonally adjusted unemployment rate declined to 3.4% in May from 3.5% in April, while the seasonally adjusted unemployment rate increased less than expected to 3.5% from April’s 3.4%, according to data from the Swiss Federal Statistical Office.

Asia-Pacific

* Japan’s current-account surplus shrank for a third month in April, narrowing 54.5% y/y to ¥630.5 billion ($6.4 billion), the Ministry of Finance said. Exports slumped 40.6% y/y in April after a 46.5% y/y drop in March and a record 50.4% y/y plunge in February. Imports fell 37.8% y/y, the same rate as March. On a seasonally adjusted basis, the current-account surplus widened 7.1% m/m in April to ¥966.3 billion. Exports rose 7.2% m/m and imports gained 1.0% m/m.

* Japanese merchant confidence climbed in May to the highest level since March 2008, with the Japanese current conditions index increasing to 36.7 from April’s 34.2, according to the Cabinet Office’s economy watchers survey. The future conditions index rose to 43.3 in May, a fifth consecutive increase and the highest since September 2007, from 39.7 in April.

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* Japan’s corporate bankruptcies fell for the first time in 12 months, falling 6.7% y/y in May to 1,203 cases, Tokyo Shoko Research Ltd. reported.

FX Strategy Update

EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD AUD/USD EUR/JPY
Primary Trend Neutral Neutral Negative Neutral Neutral Neutral Neutral
Secondary Trend Positive Positive Positive Negative Negative Positive Positive
Outlook Neutral Neutral Neutral Neutral Neutral Neutral Positive
Action Buy Buy Buy None None Buy None
Current 1.3896 98.49 1.6051 1.0916 1.1164 0.7889 136.83
Start Position 1.3149 95.69 1.4845 N/A N/A 0.6601 N/A
Objective N/A N/A N/A N/A N/A N/A N/A
Stop 1.3770 N/A 1.5390 N/A N/A 0.7670 N/A
Support 1.3700 94.00 1.5900 1.0600 1.0800 0.7800 128.00
1.3500 91.50 1.5500 1.0400 1.0500 0.7500 125.00
Resistance 1.4000 99.50 1.6500 1.1000 1.1300 0.8200 139.00
1.4300 101.00 1.7000 1.1300 1.1500 0.8500 142.00

Источник: Hans Nilsson

08.06.2009