After a fresh yearly low near 1.2788 in the EUR/USD to begin the session, the European currency gained an unsteady foothold to pull itself higher in Asia, weakening the dollar and yen for now. With videos of the streets of Athens in complete chaos flooding the airwaves in New York all day, the Euro didn't seem to have a chance as the ominous threats of contagion polluted the markets. The single European currency began its drop from 1.2990 about 24 hours ago, and continued to its 1.2788 lows against the dollar as the Asian session commenced. The pair looked to get a bounce due to a solid wave of short covering which saw earlier gains in the dollar and the yen pared. Many traders were looking ahead to the ECB rate decision later in the day, not for a rate change, but for the possibility that with its back to the wall the central bank may unleash some monetary tools to help battle the current crisis.

Against the yen the Euro was able to move from 119.95 to 120.70, despite a sharp 3.5% decline in Japan's Nikkei 225 as that market played catch up after a five day holiday. GBP/JPY made a push to 142.30 after earlier lows near 141.20. Despite poor Retail Sales, (0.3% vs. 0.8% expected) in Australia, AUD/JPY was just shy of an 85.30 high, a 70 pip hike from late NY lows. AUD/USD collapsed from 0.9090 highs on the poor data, and was close to 0.9040 lows late in the trade day. While Australia endured a poor day of data, New Zealand enjoyed a one-two punch of hawkish commentary out of the RBNZ and strong employment data that boosted its currency. New Zealand's Unemployment rate came in at 6.0%, better than the forecast of 7.3% and last month's 7.1%, posting the biggest drop since 1986. As well, employment change came in at a solid +1.0% as opposed to the projected +0.3%. The Kiwi dollar reacted swiftly, driving from 0.7180 to over 0.7270 against the greenback. AUD/NZD hit a low not seen since February as it crumpled from 1.2610 to lows just under 1.2450.

Ahead we have some key events to watch for, the ECB rate decision at 11:45GMT, and the conclusion of the UK Parliamentary election much later in the day. The British Pound would surely favor a win by the Conservative party but currently polls seem to be suggesting a hung parliament. Stay tuned for what should be a very active trade day.

Data Releases (London Session) prior expected

5/6/2010

7:15

SZ

CPI (MoM)

APR

0.10%

0.80%

5/6/2010

7:15

SZ

CPI (YoY)

APR

1.40%

1.30%

5/6/2010

7:30

GE

Schaeuble Gives Speech in Stuttgart

6-May

 
 

5/6/2010

8:30

UK

PMI Services

APR

56.5

57

5/6/2010

8:30

UK

Official Reserves (Changes)

APR

$80M

- -

5/6/2010

10:00

GE

Factory Orders MoM (sa)

MAR

0.00%

1.40%

5/6/2010

10:00

GE

Factory Orders YoY (nsa)

MAR

24.50%

21.00%

5/6/2010

11:45

EC

ECB Announces Interest Rates

6-May

1.00%

1.00%

5/6/2010

12:30

CA

Building Permits MoM

MAR

-0.50%

- -