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At 6:00:00 AM E-12 April Eurozone PPI Y/Y (exp -0.9%, prev -0.8%) E-12 April Eurozone PPI M/M (exp 0.2%, prev 0.4%) At 4:00:00 AM E-12 Eurozone May PMI (exp 51.4, prev 50.7) At 3:55:00 AM E-12 French May PMI (exp 52.6, prev 51.7) Germany May PMI (exp 49.9, prev 49.1) E-12 May Italian PMI (exp 52.4, prev 51.5) UK Market and Public Holiday
The euro eased vs. the dollar trading around 93.10 and off from its 15-month high of 94.16 cents after a Fridays' surprise surge in the Chicago PMI to 60.8 in May that overshot a forecasted reading of 54.9. The UK market is closed for the holiday and European trading is expected to be lighter. Markets await Thursday's ECB meeting where no rate cut is expected. The euro could gain further vs. the dollar as a result of US current account deficit which came at a record $417.4 bln in 2001, taking away more than $1 bln a day flows from the US. The latest forecast predict that the U.S. economy will expand at an annualized 3.1% this quarter, while the EU cut its growth estimates to 0.2% from 0.3% for the first quarter. EUR/USD support at the 93-cent figure, backed by 92.80 and 92.50. Resistance is seen at 93.25, 93.70 and 94.0.
USD/JPY seems supported around 124.20 as fear of Japanese govt. intervention continue to weigh on the market. MoF's Kuroda said that although there is no change in Japan's forex policy, he was carefully watching currency markets. He added that he heard no change in US forex policy. Japanese government announced that overtime pay declined for the 14th consecutive month down 3.4% y/y in April. Moreover, Japan total cash earnings posted its 12th straight month of fall in April down 1.6% y/y. The yen is likely to be underpinned by this week's release of Q1 GDP, which is forecasted to be upbeat by confirming the Japanese economy had bottomed. Japan May registered new vehicle sales fell 1.4% y/y at 284,826. It marked the 9th consecutive month of year on year declines. On Friday, Moody's cut by two-notch Japanese debt to Aa3 but the move was already priced in USD/JPY Support at 124 and 123.50. Resistance at 124. 50 and 125.20.
This week's US economic highlights include the ISM Manufacturing index, ISM Non-Manufacturing index, jobless claims and the labor market report. Key Eurozone indicators consist of Manufacturing PMI, German PMI, French PMI, Italian PMI, Euroarea business and consumer sentiment survey, Euroarea unemployment, French INSEE household survey, Euroarea Services PMI, German Services PMI, French Services PMI, Italian Services PMI, Spanish industrial production, ECB rate announcement, German manufacturing orders, German employment, and Dutch CPI.