Week ending 19 June 2009: Further consolidation within the forex trading market in a light data week as economic bears and bulls await direction.

Australia’s April Westpac leading index rose 0.7% m/m but is down −3.5% annualised, while the 2Q2009 Westpac-ACCI survey of industrial trends (PMI) improved to 47.6 from 35.3; however, 1Q2009 dwelling starts fell −4.0% q/q. AUD/USD remained rangebound between 0.7880 and 0.8125 and closed at 0.8055, unable to sustain short-term gains above long-term resistance at 0.8160.

The FOMC meets Wednesday, 24 June, and markets await clarification on future Federal Reserve monetary policy. May CPI printed 0.1% m/m, −1.3% y/y, and 1.8% y/y core, while PPI registered 0.2% m/m, −5.0% y/y, and 3.0% y/y core. April long-term TIC flows printed US$11.2Bn although total net TIC flows showed a deficit of US$53.2Bn as China, Japan, Brazil, and Russia all reduced their U.S. Treasury bond holdings. May housing starts eased higher to 532K units while industrial production fell −1.1% m/m. Meanwhile, continuing claims for unemployment fell on a w/w basis for the first time since January, although that may be due to long-term claimants exhausting their benefits rather than any uptick in hiring.

The Eurozone’s May CPI rose 0.1% m/m, 0.0% y/y, and 1.5% core. The June ZEW sentiment survey in Germany improved to 44.8 from 31.1, while that within the overall Eurozone, to 42.7 from 28.5. The April trade balance printed a surplus of €2.7Bn, but a deficit of €0.3Bn s.a. EUR/USD saw bears selling at 1.4000, bulls buying around 1.3800, trading flat for the week with a close at 1.3946.

May CPI in the U.K. rose 0.6% m/m, 2.2% y/y, and 1.6% y/y core. May unemployment rose 39.3K, less than expected, the claimant count rose to 4.8%, and the ILO rate to 7.2%, while May retail sales fell −0.6% m/m, −1.6% y/y. GBP/USD remained rangebound between 1.6230 and 1.6530, closing at 1.6498, while EUR/GBP could not penetrate long-term resistance at 0.8600 on a rebound, falling 0.7% in the week to close at 0.8450.

Canada’s May CPI printed 0.7% m/m, 0.1% y/y, and 2.0% y/y core. April retail sales fell −0.8% m/m, −0.5% ex-autos, and May leading indicators dropped −0.1% m/m, beating market expectation of a −0.6% fall. USD/CAD rose early in the week but could not hold gains through 1.1375 as commodities fizzled, and closed at 1.1349. AUD/CAD remains within a bullish regression channel, entered 2 February 2009, closing at 0.9142 in the upper half of the range.

New Zealand’s 1Q2009 real manufacturing sales rose 0.2% m/m, mainly on a 23% rise in dairy sales offsetting losses in other industries, while April PMI services improved to 46.2. NZD/USD respected the uptrend line initiated 10 March 2009 but could not sustain a break of 0.6460, closing at 0.6438, while AUD/NZD trended down to close at 1.2503.

The BoJ left its interest rate at 0.10% and QE programme steady while upgrading the Japanese economic forecast for the second consecutive month. May machine tool orders are down −79.2% y/y, Tokyo condominium sales −19.4%. USD/JPY fell in the week but respected its range, closing at 96.18 in a 2.4% gain. EUR/JPY lost 2.8%, closing at 134.13, while AUD/JPY lost 3.0%, closing at 77.47.