The dollar reached a two-week high against the yen as a measure of U.S.
durable goods orders unexpectedly increased, signaling the outlook for
the world's biggest economy may improve.
Durable goods orders fell 0.5% during April, which is a less severe
downturn than expected. Excluding transportation, durable goods orders
increased 2.5%. Economists forecast a 0.5% downturn following 1.7%
increase registered in the previous month.
Japan's currency touched a one-month low against the euro and the
weakest since November versus the Australian dollar, dropping to the
day's lowest levels as an earlier decline in crude oil spurred
investors to buy higher-yielding assets funded in Japan's currency, a
strategy known as the carry trade. The yen pared its drop as oil
reversed its decline.
The euro pared its drop after a report showed inflation in Germany,
Europe's largest economy, accelerated more than forecast in May. German
consumer prices rose 3 percent this month from a year ago after
rising 2.6 percent last month, when measured using a harmonized
European Union method, the Federal Statistics Office said. The median
forecast was for inflation to quicken to 2.9 percent. A separate report
showed French consumer confidence dropped to a record low in May.
The euro will trade at $1.56 at the end of next month, and fall to
$1.49 at year-end, according to the median forecast in a Bloomberg
survey of 44 analysts.
EUR/USD
printed high near $1.5758, before retreating to $1.5607.
GBP/USD
firmed initialy to $1.9825, where supply brought the rate down to $1.9700 with further return to $1.9825.
USD/JPY gained from Y103.87 to a high on Y105.30, closing later near Y104.65.
European data starts at 0600GMT with the German April ILO employment
change and May wholesale sales data. At 0700GMT, Spain April retail
sales and May preliminary HICP data are due. The main German March
employment data is due at 0755GMT and is expected to see a jobless
change of -27.5k, taking the unemployment rate down to 7.8%.Eurozone
April M3 is due at 0800GMT and expected to come in at 10.3% y/y with
the three-month moving average at 10.6% y/y.At 0900GMT, the Eurozone
May economic sentiment index is seen edging down to 96.5. UK data sees
the 1000GMT release of the May and Q2 CBI distributive trades
survey/report.
US data starts at 1230GMT with preliminary first-quarter GDP and the
weekly jobless claims. The first quarter GDP is expected to be revised
up to a 1.0% gain on smaller net exports gap and modestly stronger
construction spending. PCE appears to be virtually unrevised. The chain
price index is expected to be unrevised at 2.6%. Initial claims are
expected to rise 5,000 to 370,000 in the May 24 week. US data continues
at 1400GMT with the help-wanted index for April and at 1430GMT with the
weekly crude oil and natural gas stocks data. 1500GMT sees Kansas City
Fed Production for May. At 1830GMT, Fed Chairman Ben Bernanke is due to
speak about liquidity provisions at a risk transfer mechanism
conference, in Basel, Switzerland.