- Heavy turnover in the Tokyo market as asset managers shift funds pre month-end
- Significant corporate flows were also apparent
- Margin calls in AUD/JPY in retail market sent pair tumbling on Tokyo open
- Regional stockmarkets fall by 1.5% on the open and consolidate those losses through the session
- Gold rallied hard and fast in late NY, jumping $30 from $1535 to $1565. Asia consolidated above $1560.
- Australian building approvals disappointed at -8.7% MoM, but Capex and Private credit data was encouraging
- Brazilian central bank cut rates by 50bps to 8.50%
- Japan’s industrial output +0.2% MoM
- FinMin Azumi: Yen rise and stockmarket falls do not reflect economic fundamentals
- South Korean April industrial output +0.9% MoM
- UK consumer confidence rises in May
We had a fairly quiet start to the session, with the main talking point being the sharp rally in Gold in late NY trade. The FX market had been anticipating some significant end-of-month flows, and they did in fact materialise.
The first sharp move of the day was in AUD/JPY, after margin calls in the retail market set off some heavy selling. It fell sharply from 76.70 to 76.30 and dragged AUD/USD back below 97.00. With equity markets opening almost 2% lower, risk sentiment was at its worst and the Aussie bore the main brunt of this. Nevertheless, very solid bids around .9675, from Sovereigns and corporates, put a base in place. AUD/USD dipped again briefly on the poor building approvals headline, but rallied immediately when short-covering kicked in. Ranges: .9668/.9718
EUR/USD got its heavy tone from the AUD/USD as well as corporate selling of EUR/JPY. But with more barriers being protected at 1.2350, the bears didn’t have the momentum to really test the level. The Irish treaty-ratification referendum is the next risk event for the single currency. Ranges: 1.2356/78
USD/JPY has been weighed on by heavy end-of-month Yen buying by Japanese corporates and gradually drifted lower through the session. Large barriers are reported at 78.50 which will be protected. Ranges: 78.75/79.13; EUR/JPY 97.37/90
Cable 1.5459/84; EUR/CHF 1.2010 again; EUR/GBP .7985/95
