Forex

China announced another 50bp hike in its reserve ratio requirement, this is third time in 2010, in response to consistently strong economic data. The European Union and IMF allowed Greece €110 billion of aid over the next 3 years with the first payment before Greece’s next bond auction on May 19 2010.

Major Economy and Forex Market Headlines - Previous Session

• Australia April 2010 Performance of Manufacturing Index out at 59.8 vs. revised 50.5 prior
• Australia April 2010 TD Securities Inflation out at 0.4% m/m, 2.9% y/y vs. 0.5%/2.5% prior resp.
• Australia 2010 Q1 House Price Index out at +4.8% q/q, +20.0% y/y vs. 3.0%/18.0% expected and revised 5.1%/13.5% prior resp.
• USA 2010 Q1 GDP out at +3.2% q/q vs. 3.3% expected and 5.6% prior
• USA 2010 Q1 Personal Consumption out at 3.6% vs. 3.3% expected and 1.6% prior
• USA 2010 April Chicago PMI out at 63.8 vs. 60.0 expected and 58.8 prior
• USA April Final Michigan Confidence out at 72.2 vs. 71.0% expected and 69.5% prior
• China April PMI Manufacturing out at 55.7 vs. 55.9 expected and 55.1 prior
• NZ Apr Commodity Price Index out at +4.9% m/m vs. 1.8% prior

Forex

The initial reaction to the EUR was a positive, but forex markets are mostly in risk-off mode today. The Euro declined against 13 of its 16 most-traded counterparts. The Euro fell 0.5 percent versus the US Dollar, erasing a similar gain on April 30 and bringing its decline this year to 7.6 percent.

The initial reaction to the EUR was a positive, but  markets are mostly in risk-off mode today and we are neutral on the EUR.

Greece’s ASE Index declined 1.3 percent. National Bank of Greece SA, the Greece’s biggest lender, gained 0.4 percent.  National Bank said country will not default. Market Investors are concerned the US$146 billion Greek bailout package by the European Union and International Monetary Fund (IMF) will fail to stem market contagion in Portugal and Spain.

Forex

In his testimony before the Joint Economic Committee, Fed chief Ben Bernanke reiterated that he anticipates keeping US rates low “for an extended period”  even though he commented that the risk of a recessionary dip is currently lower than a couple of months ago.

Major Economic and Forex Market Headlines – Previous Session

• US Mar. CPI out at +0.1% m/m, +2.3% y/y vs. 0.1%/2.4% expected and flat/2.1% prior resp.
• US Mar. CPI ex-Food/Energy out at flat m/m, +1.1% y/y vs. 0.1%/1.2% expected and 0.1%/1.3% prior resp.
• US Mar. Advance Retail Sales out at +1.6% vs. +1.2% expected and revised 0.5% prior
• US Mar. Advance Retail Sales ex-Autos/Gas out at +0.7% vs. 0.6% expected and revised 1.1% prior
• US Feb. Business Inventories out at 0.5% vs. 0.4% expected and revised 0.2% prior
• NZ Mar. Business PMI out at 56.3 vs. revised 53.6 prior
• UK Mar. Nationwide Consumer Confidence out at 72 vs. 81 expected and revised 81 prior
• AU Apr. Consumer Inflation Expectation out at 4.1% vs. 3.2% prior
• China Q1 Real GDP out at 11.9% y/y vs. 11.7% expected and 10.7% prior
• China Mar. PPI out at +5.9% y/y vs. 6.4% expected and 5.4% prior
• China Mar. CPI out at +2.4% y/y vs. +2.6% expected and 2.7% prior
• China Mar. Retail Sales out at 18.0% y/y, as expected vs. 22.1% prior
• China Mar. Industrial Production out at 18.1% y/y vs. 18.2% expected and 12.8% prior
• JP Feb. Industrial Production out at -0.6% m/m, 31.3% y/y vs. -0.9%/18.9% prior
•  JP Feb. Capacity Utilization out at flat vs. +3.9% prior
• SI Feb. Retail Sales out at -5.5% m/m, +4.8% y/y vs. -2.3%/+2.0% expected vs. revised 5.5%/2.1% prior resp.