fallenDC

NFP comes worse than expected

The market's risk sentiment has taken another blow.

According to US Non-Farm Payrolls data released today, US economy added only 69K in May vs. 151K expected. April figures were revised down from 115K to 77K. Moreover, the unemployment rate unexpectedly rose from 8.1% to 8.2%.

USD/CAD jumped sharply on the news. USD/JPY’s daily candle is a doji-like formation.

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Pound plunged on negative data

Sterling slumped this week versus the greenback losing 400 pips in a decline from $1.5700 to $1.5300. Only a month ago GBP/USD set high at $1.6300. The pair breached $1.3555 (support line connecting 2008 and 2010 minimums).

Today pound was hit by disappointing UK PMI data of 45.9, the lowest level since the depths of the financial crisis in 2009 (vs. 49.8 expected and previous 50.2).

Support lies at $1.5268 (today’s minimum, October 2011 minimum) and $1.5233 (January minimum). 14-day RSI slid to 15 showing that the pair’s decline may have been too rapid and some consolidation may take place. At the same time, downtrend may be expected to continue while pair is trading below resistance at $1.5355.

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Chart. Daily GBP/USD

USD/JPY slides lower, interventions fears loom

The greenback began today’s trading by rising versus Japanese yen as traders went long in order to get ready to potential intervention of Japanese monetary authorities, but got only the usual verbal commitments from the Japanese Ministry of Finance. As a result, the USD/JPY erased ts advance sliding to 78.10, the minimal level since the middle of February.

On the fundamental part, risk aversion strengthened due to disappointing UK PMI data of 45.9 (vs. 49.8 expected and previous 50.2). US 10-year Treasury yield fell from 1.5713% to 1.5374% – negative factor for USD.

The talk about potential intervention intensifies as US dollar slid yesterday below the 200-day MA. Analysts at Societe Generale think that Japan may act if USD/JPY goes under the 78 yen mark. Experts say there’s an option barrier and buy orders there.

Analysts at Standard Chartered closed USD/JPY longs citing several reasons: the ability of the BOJ to provide support for the pair’s recovery seems less and less feasible, while the markets will stay risk-off amid euro zone’s problems. “The Japanese authorities may well seek to offset this renewed JPY strength through aggressive FX intervention. However, with the BOJ demonstrating continued reluctance to act, it is challenging to suggest when this might occur”.

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Chart. Daily USD/JPY

Analysts set targets for EUR decline

The single currency has been trading within downtrend versus its US currency since the beginning of May. The markets are bearish, analysts are bearish… What interests everybody is how deep EUR/USD may fall?

SocGen: sell EUR/USD at $1.2350, stopping at $1.2550 and targeting $1.1800. There’s a risk of short-covering rally, but the risk aversion is so high that euro seems to be the best way to play the short European trade.

ANZ: any acceleration of the decline may bring the pair to $1.1875 (2010 minimum) and even to $1.1760 (2004 spike minimum), $1.1640 (2005 spike minimum) and $1.1215 (61.8% Fibonacci retracement). Euro has to rise above $1.2640 to ensure that a decent consolidation period.

Commerzbank: EUR/USD will find support today in the $1.2336/06 (2008 minimum, 2001-12 uptrend line). If this area is breached, the pair will head down towards $1.2058 (200-month MA) and $1.2000 (psychological level). Resistance for euro lies at $1.2457 (March 2009 minimum), $1.2495, $1.2500 and $1.2625 (January minimum and weekly maximum).

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Chart. Monthly EUR/USD

Standard Chartered: NFP won’t bring joy

Today is one of the most exiting regular releases of the month – US Non-farm payrolls.

Previous (April): +115K.

Forecast (May): +151K.

Analysts at Standard Chartered think that the actual reading will come between previous and forecast level, at 130K. In their view, the lack of progress at US labor market reflects more the cautious attitude of business to future than indicates fears about a return to recession.

Initial jobless claims have recovered after their seasonally adjusted spike higher in April, but they have failed to move below the levels seen in February-March. In addition, ADP employment report released yesterday was lower than expected showing that the number of employed people excluding the farming industry and government rose by 133K in May after increasing by 113K in April (below the forecast of +145K).

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Key options expiring today

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2350, $1.2450, $1.2480, $1.2485, $1.2500;

USD/JPY: 78.50 and 79.00;

GBP/USD: $1.5525;

EUR/GBP: 0.8000, 0.8050, 0.8100;

USD/CHF: 0.9725;

EUR/CHF: 1.2050;

AUD/USD: $0.9700, $0.9800.

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June 1: currencies & economic background

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The summer has begun in the risk-off mode. Chinese manufacturing PMI disappointed: official figures were down from 53.3 in April to 50.4 in May (that still means expansion, but the critical 50 level is getting closer), while HSBC index dipped from 49.3 to 48.4 vs. 48.7 expected.

US dollar gained versus the majority of its peers as a safe haven with the Dollar Index (DXY) reaching 21-month maximum. Even USD/JPY is trading on the upside as investors went long due to potential intervention, but got only the usual verbal commitments from the Japanese Ministry of Finance, so the pair has already erased some of its advance.

Euro’s attempt to interrupt the long decline against the greenback ended in red yesterday. EUR/USD has been steadily renewing 2-year minimum this week: today is set at $1.2323. Australian and New Zealand currencies are set to complete 5-week declines against the dollar as Asian stocks fell. The MSCI Asia Pacific Index of shares lost 0.9%.

In Europe it’s all about politics. The markets are waiting for the results of Irish referendum on the fiscal pact – Ireland is the only country to put the EU plan to a public vote. Although the polls indicate that the legislation will be ratified, one can’t eliminate the possibility of unpleasant surprises taking into account the fact that Irish voters rejected 2 previous referendums. The results will be announced tonight. In addition, the ECB is pushing Germany to give up its opposition to direct euro-area aid for struggling banks.

Important data to watch today:

Great Britain: According to forecasts, manufacturing PMI will decrease to 49.7 in May from 50.5 in April, indicating industry contraction and augmenting concerns on the UK economic conditions. Great Britain holds a 10-year bond auction.

Canada: GDP in March may have added 0.3% in March after an unexpected contraction by 0.2% in February.

US: Analysts expect the US non-farm payrolls to increase by 150K. In April the labor market didn’t fulfill expectations rising only by 115K, far below the 172K consensus forecast. The March unemployment rate is predicted to remain unchanged at 8.1%. The ISM manufacturing PMI in May is expected to drop slightly to 54.1 compared with 54.8 in April.

Spain’s in danger, markets are worrying

While there are slight signals of optimism in Greece (according to new surveys, Greek parties are likely to form a pro-bailout coalition in June), market attention has switched to Spain and its troublesome banking sector.

On Wednesday Span’s 10-year bond yields reached 6.7% approaching the critical 7% mark at which Greece and Ireland were forced to ask for financial help. Main Spanish stock index IBEX lost 28%, while the nation’s unemployment is almost at 25%,

Spanish authorities confirm that the situation is critical. According to them, financial needs for the next few weeks are satisfied after the nation’s government has issued more than half bonds planned for 2012. The comment doesn’t sound inspiring at all.

The European Commission offered direct aid from a euro-zone rescue fund to recapitalize distressed banks and proposed giving Spain additional time to meet a 3% budget deficit target.

The EC officials also underlined that they would like to know Spain’s restructuring plans for recently nationalized Bankia as soon as possible: beyond all question, the domestic solution of the country’s bank crisis without a bailout is preferable. Spanish government promised to provide Bankia with 23.5 billion euro, but still hasn’t provided any information on where the funds will come from.

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Image from dom-spain.com

Bearish outlook for EUR/CAD

The single currency hit yesterday 2-year minimum versus Canadian dollar in the 1.2730 area. Today the pair USD/CAD has managed to recover a bit, though it got constrained by the resistance of this week’s downtrend.

According to analysts at Rabobank, the loonie will suffer from euro zone’s debt turmoil and slow rebound of the US economy. Strategists are bearish on the cross in the long term. If the pair makes a sustainable break below the 1.2761 (2011 minimum), it will get vulnerable for a decline to 1.2500.

Specialists at Danske Bank also remain bearish on EUR/CAD, but forecast a short-term correction. They recommend selling the pair at 1.2850, targeting at 1.2640 and stopping at 1.2940.

According to analysts at TD Securities, there is no strong support for the cross until 1.2455 (2010 minimum).

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Chart. Daily EUR/CAD

Danske Bank: trading GBP/USD

Analysts at Danske Bank recommend going short on GBP/USD, entering the trade at $1.5540, targeting at $1.5410 and with a stop at $1.5615.

On Thursday British pound strengthens against the greenback after yesterday’s sharp fall. The sterling is supported by M&A talks (Britain’s Logica could be bought for 1.7 billion pounds by Canada’s CGI) and by positive UK economic data (GfK consumer confidence index and housing prices went up).

However, the cross still trades in a downward channel and is close to a 4-month minimum at $1.5233. According to specialists, the sterling will continue a downward movement after a short-term correction. The bank points out that British economy is affected by the euro zone’s debt crisis. Moreover, the pair’s looking oversold with RSI index below 30.

Support for the pair lies at $1.5440, $1.5400 and $1.5365, while resistance – at $1.5510, $1.5550 and $1.5600.

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Chart. H4 GBP/USD

USD/CAD: a pause in advance

Yesterday the greenback added almost 100 pips trading versus its Canadian counterpart. However, the bulls didn’t manage to push USD/CAD above resistance in the 1.0300 zone and the pair posted the day’s minimum at 1.0261.

Note that both technical and fundamental picture for the pair still looks positive, so US dollar may resume its advance after some consolidation.

The pair has gained 4.2% this month. Canada’s 10-year bond yield dropped to the lowest level since at least 1989 at 1.770%.

US currency strengthened due to several factors: global risk aversion, declining commodity prices and the speculation that the odds of the Bank of Canada interest-rate increase decreased.

Analysts at TD Securities think that USD/CAD may strengthen to 1.04/06 before USD-bears finally reemerge. Strategists at National Bank of Canada recommend buying the pair above 1.0320.

As always with the pair USD/CAS, much depends on US and Canada’s data. Watch US unemployment claims and US GDP data today and Canada’s GBP and US NFP release tomorrow.

Analysts expect the U.S. non-farm payrolls to increase by 152K. However, in April the labor market didn’t fulfill expectations rising only by 115K, far below the 172K consensus forecast. The March unemployment rate is predicted to remain unchanged at 8.1%. The unemployment declined to 8.1% in April from 8.2% in March, despite lower NFP job gains.

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Chart. Daily USD/CAD

EUR as usual looks vulnerable

The single currency rose today versus the greenback after 7 consecutive days of losses.

The market’s confidence in euro improved a bit as polls showed Ireland will vote for European Fiscal Pact at today’s referendum. In addition, German retail sales increased for the second month, while Spanish 10-year bond yields subsided from 6-month maximum and the ECB President Mario Draghi underlined that the central bank cannot resolve the problems caused by the lack of fiscal prudence and governance in the euro area.

Although the markets took some breath, euro still looks extremely vulnerable. Morgan Stanley thinks that there may be “a very brief pause in the downtrend in the euro because of the Irish referendum, but beyond that the news is fairly negative”. “Things are starting to look ugly. It seems like the market is making Spain its next target after Greece,” said analysts at Bank of Tokyo-Mitsubishi UFJ.

Analysts at BMO Financial Group recommend selling euro on potential rallies. The specialists advise to go short in the $1.2625 area (January minimum) stopping at $1.2725 and targeting $1.2325. In their view, “this is momentum and strong trend trading”.

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Chart. Daily EUR/USD

SocGen: you should be short on EUR/JPY

Analysts at Societe Generale are bearish on the single currency versus Japanese yen. In their view, EUR/JPY will surely hit at least 97.03 (January 2012 minimum). So, the specialists recommend either maintaining shorts if you are already selling euro or open new ones with stops around 101.00. According to SocGen, EUR/JPY is a good trading choice as euro’s weak due to the region’s problems, while yen is demanded as a safe haven.

The bank underlines that EUR/JPY could reverse upwards only in case of some major development in the current euro zone’s state, which seems unlikely for now. Societe Generale points out that the next important dates are 17 June (Greek elections) and 28-29 June (European summit). In addition, all news from Spain will be of great importance as well.

Moreover, SocGen remind of EUR/JPY’s correlation with core euro zone bond yields and the dynamics of EUR/USD. From this view, the pair’s prospects are negative: as 10-year German bund yield is at a historical low under 1.35%, while EUR/USD remains close to 2-year minimum and is expected to go even lower.

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Chart. Daily EUR/JPY

AUD is weighted by weak equities

According to Bloomberg Correlation-Weighted Indexes, Australia’s dollar has lost 2.6% this year being the worst performer among 10 main developed-nation currencies after Sweden’s krona. Today AUD/USD once again tested the levels below $0.9700, but then managed to recover a bit, to $0.9730.

Building approvals gave a negative surprise coming at -8.7% (m/m) in April vs. 0.3% expected gain boosting the speculation the Reserve Bank of Australia will cut its benchmark rate on June 5. The readings of private capital expenditure and private sector credit, however, were good enough.

Analysts at Westpac claim that AUD/USD has potential for rebound in the near term: 14-day RSI was at 28.9, below 30 – the decline off Australian currency may have been too rapid and it has a chance for retracement. However, the specialists underline that Aussie’s prospects will be seriously affected by the declines in regional equities: Australian shares pared early losses but the main indexes post losses of more than 7% – one of the worst months since the global financial crisis erupted.

Strategists at Rochford Capital worry about Spanish problems and their negative impact on the market’s risk sentiment. In their view, AUD/USD will inevitably slide to a very important support area in the $0.9500/9450 area.

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Chart. Daily AUD/USD

Key options expiring today

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2500, $1.2560, $1.2570, $1.2625 and $1.2650 (large);

USD/JPY: 79.00, 79.80 and 80.00;

AUD/USD: $0.9820, $0.9850, and $0.9900;

NZD/USD: $0.7600;

USD/CHF: 0.9600;

EUR/GBP: 0.8100 and 0.8125.

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May 31: economic background

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Trading volumes and monetary flows are high as asset managers and corporations adjust their positions in the last trading day of the month.

In Australia building approvals gave a negative surprise coming at -8.7% (m/m) in April vs. 0.3% expected gain. The readings of private capital expenditure and private sector credit, however, were good enough.

Elsewhere the data was generally quite positive: Swiss economy added 0.7% in Q1 (q/q), while economists saw it unchanged, German retail sales were above the forecast last month (+0.6% vs. +0.1%), though the index gained less than in March (+1.6%).

Spain and its banking sector remain the main source of the market’s pain. The nation’s 10-year bond yield rose reached 6.70% yesterday.

EUR/USD edged slightly higher, but remains close to the 2-year minimum at $1.2358. AUD/USD once again tested the levels below 0.9700, but then managed to recover a bit. JPY strengthened versus all of its major peers as investors want it as a safe haven. EUR/JPY is falling for the eighth day in a row showing the longest decline in almost 2 years. USD/JPY slid to more than 3-month minimum at 78.70.

Data to watch today:

Euro zone: euro area flash annual inflation is expected to decline slightly from 2.6% in April to 2.5% in May. If inflation changes direction and increase, it may lower the chances of the ECB interest rate to remain low. Ireland holds a referendum on EU fiscal compact. The vote is crucial as it determines a crossroad for Ireland: the ‘Yes’ vote to the treaty (the baseline scenario) could bring economic progress and financial stability together with unavoidable austerity measures. The ‘No’ vote will enhance downward pressure on the common currency.

US: A bunch of important US data will be released. ADP estimate of US non-farm payrolls in May is expected to reach 139K after 119K in April. Preliminary GDP release is expected to show a 1.9% growth in Q1 compared with a 2.2% growth in Q4, indicating that the US economy is not strong enough to drive global growth on its own. Chicago PMI in May is forecasted to increase to 56.8 vs. 56.2 in April. A small decline in unemployment claims during the last week is expected (369K vs. 370K).

AUD/USD falls on debt woes

On Wednesday the Australian dollar declined 2.2% against the greenback as risk aversion is becoming stronger on Spain’s concerns. The Aussie strengthened last week after trading in a narrow downward channel until May 24.

AUD/USD plummeted after the data showed Australia’s retail sales contracted by 0.2% in April compared with 1.1% growth in March and a 0.2% growth forecast. The next RBA policy meeting is scheduled on June 5: some economists expect another 25 b.p. rate cut. However, analysts at HSBC think local conditions are not enough to motivate the RBA to cut next week.

Strategists at Danske Bank recommend selling AUD/USD at current levels, targeting at 0.9663 and with a stop at 0.9940.

Support:

0.9690 (May 23 minimum)

0.9664 (Nov.23 minimum)

0.9640 (Lower Bollinger)

Resistance:

0.9770 (May 28 minimum)

0.9800 (May minimum)

0.9935 (May 22 maximum)

0.9963 (21-day MA)

0.9990 (38.2% retracement of May decline)

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Chart. Daily AUD/USD

Italian auction results disappoint

Italy’s 10-year bond yields overcame the critical 6% level for the first time since January, confirming that the euro zone’s crisis is gathering pace.

The country managed to sell 5.73 billion euros of 5- and 10-year bonds out of its maximum 6.25 billion euros target. As a result, the yield spread between Italy and Germany’s 10-year bonds increased to 465 basis points.

According to most analysts, Italian perceived creditworthiness is impaired mostly by external factors.

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Photo: Independent Report

Why is a Greek exit so dangerous?

A Greek exit from the single currency bloc is a burning question: words “increased uncertainty” have become a fixed collocation in recent months. Market participants massively abandon the common currency: EUR/USD has fallen 6% in May. Why does a tiny Greek economy strike terror into the hearts of investors?

According to analysts at Bank of America and JPMorgan, a so called “Grexit” would create a domino effect to other European countries: sovereign defaults, bank runs, credit crunches, recessions and, finally, new exits.

Economists at JPMorgan estimate that 1% economic slump in the euro zone economy will trigger 0.7% decline in the other countries. All the exporting countries are extremely vulnerable to Europe’s crisis, no matter if it is Great Britain, Russia or China. U.S., however, is forecasted to cope with upcoming problems with a smaller damage for the economy.

In case of exit analysts at Bank of America forecast the euro zone’s GDP to contract by at least 4% during the recession, what is close to the decline after Lehman Brothers collapse in 2008. The common currency is expected to fall to $1.20 levels. Other euro zone’s countries except Germany would suffer from increased borrowing costs (Spain’s bond yields have already reached critical 7%). However, strategists expect Greece to remain in the euro zone because of the high cost of the alternative.

According to economists at University of California, the influence of the Grexit on the global economy will depend on the preventive measures, taken to limit the contagion. If the efforts prove to be insufficient, the economic system will get beyond the control. Citigroup analysts are convinced that Greece will leave the euro zone on January 1, 2013.

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Cartoon: Tom Janssen

Bank of America: comments on USD/CAD

Analysts of Bank of America expect the Canadian dollar to fall to its lowest level since October as commodity prices keep declining. Strategists recommend going long on USD/CAD at current levels, targeting at C$1.0528 and with a stop at C$0. 9950.

Specialists note that raw materials account for half of Canada’s export revenue. The CRY (CRB) commodity index fell below 281 (the lowest level since September 2010). Moreover, specialists at Bank of America forecast a further decline to 257 in a near-term.

Net long positions on the Canadian dollar declined twofold (70K on May 4 vs. 38K on May 22). According to analysts, net longs were opened in February - March when the pair was trading at C$1.0053-0.9700. As a result, a further downward movement of the cross is expected.

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Chart. Daily USD/CAD

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Chart. The Thomson Reuters/Jefferies CRB Index

Commerzbank: USD/CHF broke above resistance

Technical analysts at Commerzbank note that the greenback has at last managed to overcome resistance in the 0.9572/95 area (January maximums) trading versus Swiss franc, so the pair USD/CHF reached new 2012 highs and March 2008 minimum at 0.9636.

The specialists think that US currency may climb to 0.9950. In their view, support for the pair will be found at 0.9529/00 (May 28 minimum, May 18 maximum), 0.9368/35 (May 22 minimum, March maximums) and 0.9478 (Ichimoku Cloud support at H4 chart).

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Chart. Daily USD/CHF

Gloomy days for the euro area

The fundamentals for the single currency remain bad and the majority of experts see EUR/USD declining to $1.20 or even to the parity level. For example, Commerzbank targets 55-month MA at $1.2067.

Euro tries to edge up this week as the Greece's pro-bailout parties regained an opinion poll lead ahead of the elections on June 17, but failed to overcome resistance at $1.2625 (January minimums) showing that the bulls are extremely weak. More negative news added to the poor sentiment such as the problems with Spanish banks recapitalization and the nation’s downgrade by Egan-Jones Ratings.

Some specialists say that there may be some positive developments at EU summit on June 13, just a few days ahead of the Greek elections, as the European authorities will feel the need to something to persuade Greeks say ‘yes’. Most Greeks want to see the terms of an international financial rescue revised even as they acknowledge that not abiding by austerity measures required for the funds may lead to the country leaving the euro area.

Societe Generale notes that the situation in Greece is already terrible: unemployment reached 21.7%, while GDP is contracting by 7.7%. The biggest Greek lender NBG claims that is the nation leaves the currency union, its GDP will contract by at least 22%, jobless rate – rise to 34%, inflation – climb to 32% and lending rates – surge to 37% with new drachma devalued by around 65%.

In the nearer term the markets will be looking at ECB’s meeting next week. Analysts at Standard Chartered claim that the central bank to cut its benchmark rate one more time by 25 bps to 0.75% in Q3 before going on hold.

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Chart. Weekly EUR/USD

Key options expiring today

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2450, $1.2475, $1.2600, $1.2675 and $1.2700;

USD/JPY: 79.50 and 80.00;

EUR/JPY: 100.00;

AUD/USD: $0.9705 and $0.9800;

GBP/USD: $1.5650, $1.5735 and $1.5800;

EUR/GBP: 0.8000;

USD/CAD: 1.0200.

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Photo by Reuters

May 30: economic background

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The pair EUR/USD has once again renewed 2-year minimum versus the greenback and tested today the levels below $1.2500. The market’s focus has slightly shifted from Greece to Spain.

The Financial Times reported citing unidentified officials that the ECB rejected the plan of Spanish government to recapitalize BFA-Bankia, the nation’s third- biggest lender, which has been nationalized earlier this month through an injection of treasury debt instead of cash. Spanish 10-year bond yields rose yesterday to the maximal level since November getting close to the critical level of 7%.

Risk sentiment was also affected by the fact that Chinese authorities have no plan to introduce large-scale stimulus measures to support growth. AUD/USD dipped below $0.9800. Aussie was also hurt by discouraging retail sales data (-0.2% m/m in April). USD/JPY is little changed for the second day trading just under downtrend resistance line.

Events to watch today:

Switzerland: KOF Economic Barometer index is forecasted to increase to 0.44 in May, indicating that the Swiss Economy is headed towards an expansion in 2012.

Euro zone: Italy holds a 10-year bond auction. The previous one, which took place a couple of weeks ago, went well, but the interest rate reached 5.66%. Later in the day ECB President Mario Draghi will be speaking in Brussels and may unveil the central bank's position ahead of the rate decision next week.

US: Pending home sales in April are expected to remain unchanged after a 4.1% surge in March.

USD/JPY: technical comments

The USD/JPY cross keeps trading on a downside despite the fact that today it edged a bit higher once again. Analysts at Standard Chartered expect USD/JPY to stay between 79.00 and 81.00 yen until the risk sentiment improves. In their view, the pair may rise to 83.00 yen on positive Greek vote results, improved U.S. economic data and a monetary policy easing from Bank of Japan. Strategists at UBS opine the Bank may intervene if USD/JPY falls below 78.00.

Support:

79.35 (May 24 minimum);

79.21 (May 23 minimum);

79.16 (61.8% Fibonacci retracement from Jan. – Feb. rally);

79.06 (May 21 minimum).

Resistance:

79.83 (May 25 maximum);

80.08 (May 23 maximum);

80.15 (May 22 maximum).

Early Tuesday a bunch of important data was released in Japan. Unemployment rate slightly increased in April to 4.6%. Japan’s retail sales keep rising for 5th consecutive month (a 5.8% growth), while household spending – for 3rd consecutive month (a 2.6% growth).

Later this week watch for Japan’s data releases:

• Wednesday: manufacturing PMI; BoJ Governor M.Shirakawa speaks

• Thursday: preliminary industrial production; housing starts

• Friday: capital spending

http://static1.fbs.com/sites/default/files/image/analysis/May2012/29_05_12/daily_usdjpy_29.05_17.21.gif

Chart. Daily USD/JPY