Forex Magnum

The euro (EUR) dropped to 1.2567 from 1.2667 yesterday against the US dollar following poor economic data from the eurozone. The unemployment rate in the eurozone jumped to a record high in May while manufacturing remained at its lowest level in three years. The grim data raised expectations that the European Central Bank may need to act by cutting interest rates at its policy meeting on Thursday. The euro was further under pressure after the Finnish government’s announcement that Finland and the Netherlands opposed the plan of ESM bond buying in the secondary markets. This caused disappointment in the markets while euphoria over the EU deal fades as the plan cannot proceed if members do not agree. Attention shifts to the eurozone Producer Price Index figures due later today.

The US dollar (USD) strengthened today against a basket of currencies as heightened risk aversion spurred a higher demand for the safe haven currency. Versus the safe haven Japanese yen (JPY), the greenback rose to 79.85 from 79.30. Economic figures showed that US Manufacturing contracted for the first time in nearly three years raising speculation that the Federal Reserve may decide on a third round of quantitative easing. Eyes turn to the US Factory Orders due today.

The Australian dollar (AUD) rose against the greenback to 1.0283 from 1.0212 following the Reserve Bank of Australia monetary policy meeting. RBA kept rates unchanged at 3.5% and gave no sign whether they will ease further supporting the Aussie. Focus is now on inflation for the second quarter due later in June where it will provide a better picture about the need to ease again.

Oil edged lower to 82.09 dollars a barrel from 84.36. Gold (XAU) rose to 1606.03 dollars an ounce from 1587.16 and against the euro it rose to 1270.04 from 1263.89. Silver (XAG) jumped to 27.90 dollars an ounce from 27.19. Stay in tune throughout the day with foreign exchange bullets!

Equities	EUROPE				US				ASIA3
	FTSE 100	1.25%			S&P 500	0.25%			NIKKEI	0.61%
	DAX	1.24%			DJIA	-0.07%	▼		HIS	1.49%
	CAC	1.36%			NASDAQ	0.55%			CSI 300	0.84%

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