Article by Ron Daulton

A backdrop of market concern regarding the US economy’s soft patch as well as Greece’s ability to execute promised austerity measures suppressed risk appetite last night. The S&P500 is currently down 0.9%. the financial sector faring worst (-2.3%) after an influential analyst recommended selling Wells Fargo – the largest USA home lender – due to the weak economy and regulatory proposals for banks. The CRB commodities index is down 0.9%, oil -1.3% but copper 0.2%. US 10yr treasury yields are 2bp lower at 3.00%, earlier (midday London) bouncing from 2.98 to 3.04. Fed hawk Plosser favoured inflation targeting and a defined exit strategy, but the markets were looking ahead to tonight’s Bernanke speech (Atlanta), anticipating content on the soft patch in the US economy and possibly policy implications.

The US dollar index found a base, drifting modestly higher during the London and NY sessions. EUR fell from 1.4658 to 1.4562, amid concern peripheral Europe may falter in executing austerity plans. Protesters in Athens demanded a debt default and a return to the Drachma, while the Portuguese Government changed hands in a snap election. USD/JPY consolidated above 80.00. AUD fell from 1.0768 to 1.0692, largely following the EUR. NZD fell from 0.8183 to 0.8120. AUD/NZD consolidated between 1.3130 and 1.3180.

Economic wrapNo US data to report.

Canadian Ivey PMI jumps from 57.8 to 65.5 in May. Completely unexpected strength in this index of business sentiment (before seasonal adjustment the rise was even steeper), contrasting with the sharply weaker business survey trends apparent in the US economy. The Ivey detail showed purchases and jobs stronger last month, but deliveries softer. The building approvals story in April was much weaker, down 21.1%, due to a 13% fall in residential permits and a 32% slump in non-residential.

Euroland Sentix investor confidence down from to 10.9 to 3.5 in June, with the current index down 5 and expectations down 9 pts. Concerns about the growth outlook after a decent enough set of Q1 GDP growth figures in some parts of Europe, and the seemingly intractable sovereign debt issue, are likely the key factors at play. In other news, Euroland PPI edged lower from 6.8% yr to 6.7% yr in Apr.http://straddletraderpro.info/

Market outlookAUD/USD and NZD/USD outlook next 24 hours: AUD’s trend resistance is now at 1.0800. There is major event risk from today’s RBA meeting, the consensus forecast being an unchanged cash rate. NZD major support is in the 0.8070-0.8120 area, and this must hold for the positive outlook to remain intact. http://theforexincomeengine3.info/