Week ending 5 June 2009 continued poor and marginal economic data were shrugged off by markets optimistically pushing the recovery angle in a forex trading week bracketed by the GM bankruptcy and major hedge funds unwinding currency positions entered in anticipation of a Rio Tinto-Chinalco deal;

The RBA left rates steady at 3.0% but indicated further potential for easing, a correct decision, as it proved, as 1Q2009 GDP defied gravity and rose 0.4% y/y. April trade balance printed a deficit of AU$91Mn and 1Q2009 current account another of AU$4614Mn. May PMI indices printed 37.5 manufacturing, 39.9 services, and 46.9 construction, while April new home sales rose 0.5% m/m, retail sales 0.3%, and May inflation expectations 1.5% y/y, the lowest since August 2003. AUD/USD rose to resistance at 0.8160 then pushed through to a high of 0.8262 before turning and falling to close at 0.7931, unable to sustain the rally even on the positive GDP reading.

In May the U.S. lost “only” 345K jobs and past data was revised upwards, however unemployment surged to 9.4%. April personal income rose 0.5% m/m but personal consumption fell −0.1% and consumer credit contracted US$15.7Bn, more than double estimates. May PMIs printed 42.8 manufacturing, 44.0 services, while April factory orders rose 0.7% m/m, construction spending 0.8%, and pending home sales 6.7%.

The ECB held rates steady at 1.0% as 1Q2009 GDP contracted −4.8% y/y and unemployment rose to 9.2%. May PMIs printed 40.7 manufacturing, 44.8 services, and 44.0 composite. April retail sales rose 0.2% but are down −2.3% y/y, and PPI fell −4.6% y/y. EUR/USD rose to a midweek high of 1.4338, however at that level reports that the BIS were selling Euros broke the rally. It fell further on the better-than-expected U.S. employment data, closing at 1.3963.

The BoE held rates steady at 0.5%. May PPI printed −9.4% y/y input, −0.3% output, and 1.2% output core. May Halifax house prices rose 2.6% m/m and April mortgage approvals rose to 43K, while May PMIs printed 45.4 manufacturing, 45.9 construction, and 51.7 services. GBP/USD was shoved about by the U.K. expenses scandal, rising to 1.6661 before falling to close at 1.5974. EUR/GBP was more volatile, bouncing beneath support at 0.8600 to bounce again from resistance at the 200-MA near 0.8850, closing at 0.8738.

The BoC held rates steady at 0.25% and 1Q2009 GDP contracted −5.4% annualised. May unemployment rose to 8.4% as the economy lost 41.8K jobs and the Ivey PMI fell again to 48.4 from 53.7. USD/CAD formed a textbook double-bottom on support at 1.0800, rising to close at 1.1188 on the employment reports. AUD/CAD remains rangebound between 0.8725 and 0.8925, closing at 0.8874.

The RBNZ meets Thursday, 11 June, and markets expect rates to remain steady at 2.5%. May ANZ commodity prices rose 2.7% m/m. NZD/USD tracked AUD/USD, rising then falling to close at 0.6262, while AUD/NZD continues bouncing beneath resistance on the 200-MA on four-hour charts, repeatedly respected since Wednesday, closing at 1.2663.

Japan’s 1Q2009 capital spending contracted −25.3% y/y, 25.4% ex software. USD/JPY surged through resistance at 97.00, closing at 98.84, while both EUR/JPY and AUD/JPY trended up for much of the week, closing at 138.01 and 78.40, respectively.