• The dollar reversed most of its overnight gains as risk appetite rose. Eurozone economic sentiment climbed for a third straight month in June. US stocks advanced. The S&P 500 rose 8.33 points to 927.23, extending its best quarterly gain since 1998. The euro gained on the improving eurozone economic sentiment. Sterling rose modestly as UK house prices showed signs of stabilization while net lending increased less than expected. The Australian dollar appreciated while the Canadian dollar declined despite higher energy prices. Trading was relatively thin at the start of a holiday-shortened week in the US.
  • The USD/JPY advanced as risk sentiment improved. Japanese industrial production rose less than expected and retail sales were flat. The pair has been trading sideways for most of 2009. A break of either support or resistance will give us some clue on the future USD/JPY direction. There are support in the 94 area and resistance in the 99.


Financial and Economic News and Comments

US & Canada

  • The Chicago Fed national activity index stood at -2.30 in May, little changed from -2.27 in April, indicating economic activity remained weak, the Federal Reserve Bank of Chicago said.
  • Declines in Texas manufacturing activity eased further in June, with the Dallas Fed general business activity index increasing to -20.4 from May's -21.5, the Federal Reserve Bank of Dallas said.


  • Eurozone economic confidence rose for a third consecutive month in June, with the eurozone economic sentiment indicator rising more than anticipated to 73.3, the highest since November, from May's upwardly revised 70.2, data from the European Commission showed. Consumer sentiment improved in June with the consumer confidence indicator increasing to -25 from May's upwardly revised -28. The manufacturing confidence indicator was up to -32 from May's upwardly revised -33, while retailer confidence fell.

Eurozone Economic Sentiment
  • The UK average house price held at £155,600 ($257,000) for a second month in June, stopping its month-onmonth decline for the first time in 20 months, Hometrack Ltd. reported. June house prices declined 8.7% y/y, following May's 9.6% y/y drop.
  • The May £0.6 billion increase in total net lending to individuals was lower than the April £1.1 billion increase; the £0.3 billion increase in net lending secured on dwellings was lower than the April £0.9 billion increase; and consumer credit rose by a net £0.3 billion, the Bank of England reported.
  • UK mortgage approvals increased less than expected to 43,400 in May from 43,200 in April, data from the BOE showed.


  • Japan's industrial production rose 5.9% m/m in May, a third month-on-month gain and the fastest rate since 1953, according preliminary May IP data from the Ministry of Economy, Trade and Industry, matching April's month-on-month rise. May IP fell 29.5 y/y, following April's 30.7% y/y drop.

Japan, Total Industrial Production

Japanese retail sales were unchanged m/m in May after a 0.7% m/m increase in April, the METI said. May retail sales were down 2.8% y/y, a ninth year-on-year decline, the same pace as in April. Large retailers' sales fell 6.5% y/y, following April's 6.7% y/y decrease.


Japan, Retail Sales

FX Strategy Update

Primary TrendNeutralNeutralNegativeNeutralNeutralNeutralNeutral
Secondary TrendPositiveNeutralPositiveNegativeNegativePositivePositive
Start Position1.390495.691.4845N/AN/A0.6601N/A