Equities	EUROPE				US				ASIA3
	FTSE 100	-2.53%	▼		S&P 500	0.17%			NIKKEI	0.08%
	DAX	-2.33%	▼		DJIA	-0.05%	▼		HIS	-0.34%	▼
	CAC	-2.62%	▼		NASDAQ	0.39%			CSI 300	-0.28%	▼

Written by Easy-Forex

EU Morning Report- Greek exit fears weigh, gold bounces epically is an article from:

The Euro again stalled in the 1.28 region against the dollar in European trading on Tuesday and initially dipped to lows in the 1.2730 area during the US session. In the latest Spanish Treasury Bill auction, there was a rise in yields and lower bid/cover ratios compared with the previous sale. Although a relatively small auction, the outcome increased unease surrounding the Spanish economy and potential loss of investor confidence.

Greek political party Syriza stated that it would be able to combine continued Euro membership with abandonment of the austerity programme, but this will be seen as posturing and markets have very little confidence in this outcome.

French officials continued to promote the introduction of Eurobonds ahead of Wednesday’s informal EU Summit in Brussels while Germany continued to insist their opposition to joint bonds. Both France and Germany looked to play down the importance of the Summit insisting that it was only a staging post towards the June meeting, but tensions will still be high.

The US existing home sales data was in line with market expectations at 4.62mn for May which was the highest since the third quarter of 2010. In contrast, the Richmond Fed index dipped to 4 from 14. Although there are persistent doubts surrounding the US outlook, there is still confidence that it will out-perform the Euro-zone which helped underpin the dollar.

Emerging-market currencies also remained generally vulnerable as the Indian Rupee dipped to fresh record lows and this also provided important net US currency support on capital flows and defensive demands. The Euro was subjected to renewed pressure after former Greek Prime Minister Papademos warned that a Greek Euro exit was a real risk. The Euro dipped to lows just below 1.2650 as the key 1.2625 support area came into focus again.

Source: VantagePoint Intermarket Analysis Software

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Yen

The dollar was able to push above the 79.50 area against the yen on Tuesday which helped boost underlying sentiment and the US currency gained additional momentum during the European session.

Ratings Agency Fitch downgraded Japan’s sovereign rating by two notches to A+ from AA which undermined the yen, especially with the agency highlighting a lack of economic reform.

The Bank of Japan held monetary policy unchanged at the latest policy meeting. This was the expected outcome, although there was some speculation that there could have been further action. There was further political pressure for action and the decision not to expand policy curbed yen selling. Although the trade account remained in deficit for April, there was a 7.9% annual increase in exports which provided some relief and the yen strengthened back towards 79.50 as risk appetite remained very fragile.

Sterling

The headline UK inflation rate fell to 3.0% for April from 3.5% previously which was the lowest reading for three years. Significantly, with a figure of 3.0%, the Bank of England did not have to write an explanatory letter to the Chancellor which will have come as some relief to Bank of England Governor King.

The latest government borrowing data recorded a sharp improvement for April with a net repayment of GBP18.8bn. The outcome was distorted y a one-time receipt in relation to the Royal Mail pension fund and there was a net underlying deterioration.

The IMF called for a further relaxation of monetary policy and also stated that a scaling back of fiscal tightening would be required if the economy deteriorated further.

Given the IMF warnings and the inflation decline, there was increased speculation that the Bank of England would introduce fresh quantitative easing. Wednesday’s Bank of England minutes will be watched closely on for further evidence on likely near-term policy.

Sterling retreated to lows around 1.5740 against the dollar while making some headway against the Euro with a move back to below 0.8050.

Swiss franc

The dollar found support below 0.94 against the franc on Tuesday and moved back towards the 0.9490 area later in the US session as the Euro remained virtually paralysed against the Swiss currency.

There will be major doubts whether Euro-zone leaders can stem the contagion effect and curb capital outflows from the Euro-zone which will maintain the risk of upward pressure on the franc. With Fitch downgrading Japan’s credit rating, there will also be speculation of increased defensive demand for the Swiss franc which would increase pressure on the National Bank.

Source: VantagePoint Intermarket Analysis Software

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Australian dollar

The Australian dollar continued to take advantage of improved risk appetite and pushed to highs around the 0.9930 area against the US dollar in Europe on Tuesday.

The currency was unable to sustain the advance and retreated back towards the 0.9850 area in New York. There were further concerns surrounding the outlook for commodity prices and doubts over the global growth profile which had a significant impact in curbing Australian dollar demand.

Selling pressure intensified late in New York as risk appetite deteriorated again and the currency retreated to a fresh six-month low just below the 0.9750 area as Asian fears increased further.

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Emerging-Market Currencies Remained Generally Vulnerable is an article from:

Equities	EUROPE				US				ASIA3
	FTSE 100	1.86%			S&P 500	0.05%			NIKKEI	-1.81%	▼
	DAX	1.65%			DJIA	-0.01%	▼		HIS	-1.68%	▼
	CAC	1.88%			NASDAQ	-0.29%	▼		CSI 300	-0.59%	▼

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EU Morning Report- Japan policy on hold, eyes on BoE minutes is an article from:

The Euro was unable to make any fresh attack on the 1.28 region against the dollar on Monday and drifted weaker to test support below 1.2740 before rallying again during the US session. There was further evidence of caution over aggressive Euro selling, especially with speculative short positions at a record high which maintained fears over a positioning rally.

The French government continued to promote Eurobonds as the solution to the Euro-zone debt crisis while the plans continued to meet tough resistance from the German Chancellor Merkel. Tensions continued to increase ahead of an informal EU Summit due to be held on Wednesday as pressure for German concessions continued to increase.

Geek political parties continued to campaign ahead of the June 17th general election with New Democracy leader Samaras stating that he would lead a pro-European front while Syriza continued to campaign against the austerity programme. There was a small increase in optimism that a pro-austerity government could be formed which curbed Euro selling.

There were further fears surrounding the Spanish economy, especially after another upward revision to 2011′s budget deficit while sentiment surrounding the banking sector remained extremely fragile amid fears that a further bailout would be required.

Regional Fed President Lockhart stated that there was no need for further quantitative easing at this stage, but that it could not be excluded if there was a sharp deterioration in the economy. Emerging-market currencies generally remained under pressure during the day with the Indian rupee at a record low and an underlying flow of funds into the US currency will also help protect it against major currencies such as the Euro. The Euro consolidated just below 1.28 on Tuesday as market caution persisted with further resistance above 1.2810.

Source: VantagePoint Intermarket Analysis Software

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Yen

The dollar resisted a further test of support in the 79 region against the yen on Tuesday and nudged higher towards the 79.50 area, but there was no major test of resistance. There was further speculation over a further monetary-policy easing the Chinese central bank which had some positive impact on risk conditions and curbed defensive yen demand.

The impact was offset by persistent fears over a sharper than expected downturn in the Chinese economy. There was also speculation that regional competitiveness issues would maintain pressure for yen gains to be resisted. In this context, there was also pressure for the Bank of Japan to relax monetary policy further at the Wednesday policy meeting. Risk appetite was slightly firmer in Asia on Tuesday which curbed immediate yen demand as the Euro continued a technical recovery.

Sterling

Sterling hit resistance close to 1.5830 against the dollar on Monday and drifted weaker, but ranges were extremely narrow. Sterling moved slightly weaker against the Euro as it tested important support in the 0.8090/0.8100 region.

There were very little domestic incentives with markets very cautious ahead key events on Tuesday and Wednesday. A lower than expected inflation reading on Tuesday would give the Bank of England greater scope to introduce further quantitative easing. If demand conditions are sufficiently weak there is little doubt that the central bank will act to boost bond purchases anyway, but lower inflation would give the move greater credibility.

The latest government borrowing data will also be watched closely with markets looking to assess whether revenue held up at the start of the fiscal year. Sterling consolidated just above the 1.58 area against the dollar in Asia on Tuesday in subdued conditions.

Swiss franc

The dollar found some support below 0.94 against the franc on Monday, but was unable to make significant headway with gains capped below the 0.9450 area. There was no relief for the Euro as it remained trapped close to 1.2010 and a key feature has again been that any wider recovery in the Euro is not being translated into an advance against the Swiss currency.

Any comments from National Bank officials will remain under very close scrutiny in the short term. There will be the potential for additional defensive demand for the Swiss currency if there is resistance to dollar and yen gains.

Source: VantagePoint Intermarket Analysis Software

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Australian dollar

The Australian dollar was able to resist a further test of support in the 0.98 region against the US currency on Monday and moved significantly higher later in the New York session as risk appetite attempted to improve as equity markets moved higher.

There was still a mood of unease surrounding regional growth prospects which had an important impact in dampening underlying demand for the currency, especially with fears that Chinese demand is continuing to decelerate. In this context, the Chinese HSBC manufacturing data due on Thursday will be important for both Chinese sentiment and the Australian currency.

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Further Evidence of Caution Over Aggressive Euro Selling is an article from:

Equities	EUROPE				US				ASIA3
	FTSE 100	0.70%			S&P 500	1.60%			NIKKEI	1.04%
	DAX	0.95%			DJIA	1.09%			HIS	1.05%
	CAC	0.64%			NASDAQ	2.46%			CSI 300	0.78%

Written by Easy-Forex

EU Morning Report- Euro rebounds, focus on the UK inflation is an article from: