Mid-Day Report: Dollar Broadly Lower on Risk Appetite, Greece Still Awaited

Dollar is broadly lower today as risk appetites are lifted by German bill auction and bank stocks. Germany sold EUR 2.54b of 12-mont h bills today at average yield of 0.07%. That yield was much lower than October’s 0.346%. The auction attracted solid demand of EUR 5.53b of bids. Meanwhile, banking stocks in UK saw impressive strength with strong advance in RBS, Lloyds and HSBC leading FTSE and other major European indices higher. Dollar index is back below 80 psychological level and is set to take on 79.51 support.

Main focus remain on Greece and the EcoFin meeting in Eurozone. There is no details announced on Greece’s debt swap deal with private sector yet. But it’s believed that private bond holders are willing to take a loss of around 65 to 70% off their Greek debts. However, it’s still uncertain however the over deal could help Greece lower debt to 120% of GDP in 2020.

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Daily Report: Risk Appetite Recedes Mildly after China Data, Euro Firm

Risk appetites cool a bit today after disappointing China PMI data. Both the official manufacturing PMI and the one complied by HSBC indicated the country’s manufacturing sector has slowed down in June. The China Federation of Logistics and Purchasing reported the index fell to 50.9, the lowest level since February 2009, in June from 52 in May. Meanwhile, the HSBC PMI data dropped to a 11-month low of 50.1 in June. Aussie pared some of recent gains against the greenback after the data on the country’s strong tie to China. But loss is so far limited as dollar remains broadly weak.

Economic data from Japan saw unemployment rate unexpectedly dropped to 4.5% in May, household spending dropped more than expected by -1.9% yoy in May. Regarding inflation, National core CPI was unchanged at 0.6% yoy in May while Tokyo core CPI rose 0.1% yoy in June.

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Daily Report: Risk Appetite Lifted Mildly by China Data

Dollar and yen are both mildly lower against other major currencies today as risk appetite is given a mild lift by positive China data. CPI rose to 5.5% yoy in May, inline with expectation. While further tightening is still widely expected, today’s data wasn’t anything drastic that would trigger even more aggressive measures from China. There were whispers in the markets that the number could be as bad as 6% yoy. PPI was unchanged at 6.8% yoy in May. Growth data were solid with retail sales up 16.9% yoy in May while industrial production slowed slightly to 13.3% yoy.

BoJ left rates unchanged at 0-0.1% as widely expected today. The JPY 30T lending program and JPY 10T asset purchase program were also left unchanged. Also, the bank unveiled a new lending program to aid companies. JPY 500b in loans would be available to companies that don’t have ordinary collateral, including real estates.

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U.S. Dollar Gains as Risk Appetite Dissipates

The U.S. dollar is gaining in forex trading on the currency market today as risk appetite dissipates. One would expect that fairly positive economic data would help risk appetite, but that has not been the case. Disappointment over company earnings has the U.S. stock market heading lower — and risk aversion setting in.

Other issues are also causing concern. According to Action Forex, China appears to be trading in its own world — something it may not be able to keep up with if the rest of the global economy can’t keep up.

For now, though, the greenback is higher in currency trading against all the major currencies. Weaknesses in other countries may be contributing to dollar gains, such as continued concern over sovereign debt in the euro zone and growing unemployment in Australia.

Daily Report: Dollar Pressured as Asian Data Boosts Risk Appetite

Dollar remains under much pressured today as risk appetite is lifted by solid data from Asia. HSBC China manufacturing PMI rose for the second month to 52.9, the highest reading in five months, suggesting the economy is gaining momentum again. The data is also seen as a signal that another multi-month upswing has started in China as officials strengthened its commitment on completing the stimulus projects. From Japan, the quarterly Tankan large manufacturing index rose sharply from 1 to 8 in Q3 versus expectation of 7. Non-manufacturing index rose from -5 to 2 versus expectation of -2. Dollar index broke 79 level overnight after poor consumer confidence reading and continues to trade below 79 so far today. EUR/USD stays firmly above 1.35 level while old stays above 1311 level, reflecting market’s expectation on more quantitative easing from Fed going forward.

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