MORNING BRIEFING: Australian Jobs data and China fund remarks lift Euro

[RTFX-Trading]

MORNING BRIEFING:  Australian Jobs data and China fund remarks lift Euro

What’s new:
Australia: Jobs data beat forecasts.
New Zealand: RBNZ lifts rates from record low.
China: ICBC head warns recovery is not solid.
China: China fund remarks lift Euro.
China: Exports leap put Yuan back under focus.
Fed’s Beige Book: Economy improving modestly.
United States: Bernanke says recovery on track but jobs lag.
Central Banks: ECB & BoE Interest rate decisions today.

Today:


Rates in Asia and Indices:
EURUSD: 1.2063 - 1.1957.
USDCHF: 1.1505 - 1.1424.
GBPUSD: 1.4620 - 1.4510.
EURJPY: 110.04 – 108.98.
USDJPY: 91.39 – 90.94.
DowJones: 9’899.25 -0.41%
NASDAQ: 2'158.85 -0.54%
S & P 500: 1'055.69 -0.59%
Nikkei: 9’542.65 +1.10%
Shanghai: 2’566.29 -0.68%
Gold: $ 1,230.90
Crude Oil: $ 74.34
 
Comments:

China's exports and its trade surplus jumped in May, adding new pressure on US Treasury Secretary Timothy Geithner to calm congressional critics who say Beijing is keeping the Yuan unfairly undervalued. Meanwhile the chairman of Industrial and Commercial Bank of China warned that the global economic recovery is not built on solid foundations and Europe’s government debt crisis is the biggest near-term risk.

The Australian Dollar increased early Thursday morning on better than expected jobs data and strong Chinese exports. Also improving risk appetite was the increase in rates by the RBNZ by 25 basis points from record lows. The Euro also found support on short-covering following remarks from the head of China’s national pension fund saying the Euro would weather the European debt crisis.

The Euro is up by 0.49% to 1.2038 against the US Dollar early in European Trading, after reaching as high as 1.2063 earlier. However we expect the Euro will meet solid resistance in the 1.22 region, especially after this short-covering runs its course. The Australian Dollar is up to 0.8390 versus the USD, while the Kiwi is up to 0.6790 against the greenback. The Euro is currently up to 109.80 against the Yen, an increase of 0.40% on the day.

Yesterday, FED chairman Bernanke said the recovery is on track but cautioned it could be years before the jobs lost during the recession are restored. He also remarked how the economy has made an ‘important transition’ to relying less on government support but emphasized how the struggles of the US job market suggested the central bank is in no rush to raise interest rates. US stocks rose for most of the US trading session, partly on Bernanke's optimism, but gains eroded late in the session and stocks closed lower.

The FED Beige Book released yesterday showed how the economic activity continues to improve since the last report across all 12 Federal Reserve districts, although many districts described the pace of growth as 'modest’. The FED also noted some contacts cited concerns over how Europe's fiscal troubles might affect financial and business conditions, and said uncertainty increased.

Today many market players will be looking to see if the European Central Bank, which meets later in the day, plans new efforts to help troubled Euro Zone countries.

The ECB is expected to keep interest rates at a record low when it meets today at 14:30 CET.

Good day,

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer