Week ending 15 May 2009, Consolidation continued amongst many currency pairs as U.S. retail sales forced economic reality into financial markets, although US TIC flows and Japanese government figures confirm international funds moving from flight-to-quality bonds into equities.

Australia’s April NAB business confidence fell to −14 while current business conditions improved to −10. March home loans rose 4.9% m/m, investment borrowing 4.7%, and value of loans 7.3%. The Commonwealth budget cuts employment and growth expectations for 2009 but forecasts possible recovery in 2010 as well as record deficits until 2016. AUD/USD executed a textbook double top at the 0.7700 resistance level on four-hour charts, then fell 2.1% in the week, closing at 0.7495.

U.S. April advance retail sales fell −0.4% m/m and real estate foreclosures rose 32% y/y. April PPI printed 0.3% m/m, −3.7% y/y, and CPI printed flat m/m, −0.7% y/y, and 1.9% y/y core. April industrial production dropped −0.5% m/m and the March trade deficit widened to US$27.6Bn.

Eurozone 1Q2009 GDP readings surprised to the downside, printing −2.5% q/q, −4.6% y/y, with most national-level readings including Germany’s contracting at shocking rates. April CPI held steady at 0.4% m/m, 0.6% y/y, and 1.8% y/y core. March industrial production fell −2.0% m/m, −20.2% y/y, and new car registrations dropped −11.9%. EUR/USD consolidated within a narrow range until Friday, when it broke beneath support at 1.3535 and dropped to close at 1.3489. EUR/CHF fell beneath the SNB’s “line in the sand” at 1.5000 then rocketed within hours to 1.5135 in another possible Swiss forex intervention.

The BoE Quarterly Inflation Report downgraded growth and lengthened the recessionary recovery time, hinting at possible future quantitative easing intensification. The March visible trade deficit narrowed to £6589, while 57.1K jobs were lost in April and the unemployment rate rose to 4.7%, 7.1% for the ILO. March industrial production fell −0.6% m/m, −12.4% y/y, and manufacturing production −0.1%, −12.9%. GBP/USD consolidated in the week, closing at 1.5165, while EUR/GBP briefly poked through 0.9000 before falling on Friday to close at 0.8892.

In March, Canada’s housing prices fell −0.5% m/m, manufacturing shipments dropped −2.7%, vehicle sales rose 6.3%, and international merchandise trade printed a surplus of CA$1.1Bn. USD/CAD bounced from support at 1.1490, returning to last week’s levels and closing at 1.1791. AUD/CAD opened at 0.8841, consolidated between 0.8783 and 0.8920, and closed at 0.8838, right back where it started.

New Zealand’s March retail sales fell −0.4% m/m but rose 0.5% ex autos, printing 1Q2009 as −2.9% q/q ex inflation. April manufacturing PMI printed 43.7, and while housing prices are down −9.2% y/y, sales rose 39.6%. NZD/USD also formed a double top at 0.6100 before falling 2.9%, closing at 0.5860, while AUD/NZD rose to 1.2781.

Japan’s March leading index printed 76.6 and the coincident index 84.9, while the current account surplus widened to ¥1485.6Bn and balance of payments to ¥132.9Bn. March machine orders improved to −22.2% y/y and April machine tool orders to −80.4%. The April EcoWatchers survey rose to 39.7 outlook and 34.2 current. USD/JPY completed its head and shoulders formation by breaking beneath the neckline, but closed at 95.11 at strong support rather than pushing lower. EUR/JPY fell 4.5% in the week, closing beneath the pivotal 130.60 level at 128.30, and AUD/JPY fell 5.6% to 71.30.