FOREX IN REVIEW

Eurozone PMI data was a mixed bag as manufacturing PMIs contracted at a slower pace while the services PMIs of France, Germany and the Eurozone saw a sharper contraction. Longer-term 10-year Spanish debt saw yields jump by over 2% as credit weakness extended to the equity markets. The Italian MIB was hit the hardest, diving -1.37% as the German DAX and EuroStoxx 50 fell by -0.97% and 0.96% a piece. The UK FTSE 100 outperformed peers, rising 0.04%. There is still no news about a formal bailout request from either Spain or Italy, which is keeping EURUSD buoyed at 1.2560. However, Angela Merkel and Francois Hollande will be looking to highlight their commonalties in the fight to end the crisis ahead of today's meeting with Greek Prime Minister Samaras.

After reaching multi-month highs, Asian equity indices are pulling back as slower growth in China and the U.S. warrant a second look at the value of stocks, especially exporters. Weaker U.S. jobs data and lackluster new home sales figures failed to offset St. Louis Fed President Bullard's hawkish comments towards further quantitative easing. Equity indices are led lower by the -1.11% slide in the Hong Kong Hang Seng Index followed by a -1.10% drop in the Nikkei. The Australian ASX is notably lower, falling -0.82%. Even in Nikkei weakness, the Yen, which typically has shown inverse correlation in recent months, is weakening with USDJPY rising 0.17% to 78.620. BoJ Governor Shirakawa is slated to speak early in the European session. The energy complex meanwhile dove lower with crude recording losses of -0.51%, trading at $95.78 per barrel.

Contradictory statements from Fed Presidents muddled market sentiment as the energy complex fell while precious metals rose yesterday, extending gains. Equities remained weak, as although beating expectations on paper, the headline new home sales figures showed greater weakness than expected. Initial jobless claims data also sat at month highs of over 372,000. Equity weakness from Europe continued in the American session with the Dow Jones declining -0.88% and the S&P 500 decreasing -0.81%. The Nasdaq dropped a more moderated -0.66%. Gold specifically jumped to multi-month highs, briefly closing above the $1670 handle before retracing to $1669.40. Today will see durable goods orders data, serving as a strong indication of business investment and purchases of longer duration assets.


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