Risk Appetite Improved on EZ PMIs, Equities Greened, RBA Holds Key Rate at 2.75% | IFCM India
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Risk Appetite Improved on EZ PMIs, Equities Greened, RBA Holds Key Rate at 2.75% - 4.6.2013

Risk appetite returned to FX markets on Monday evening session underpinned by stronger PMI reports for Euro zone members, US equities inched higher on yesterday session and Asia stock indices followed respectively with NIKKEI paring some recent losses. However US ISM Manufacturing PMI was weaker than expected, it was expected to be above 50 mark in May but was reported at 49.0 indicating contraction. The Euro against the greenback jumped to cap at 1.3105 on EZ PMIs, breaching previous resistance at 1.3060 but then retraced back around that level. In addition the USDCAD dropped to support at 1.0261 amid disappointing ISM PMI weakening the greenback.


US equities followed a rising path even though ISM PMI suggested contraction of the manufacturing sector in May, the Dow Jones Industrial Average Index advanced by 0.92%, S&P 500 rose by 0.59% and NASDAQ gained 0.27%. Nonetheless the US dollar lost against its major counterparties with the USD Index making a new monthly low at 82.39, consistent with its new general downtrend but then pulled back to 82.87.


Risk Appetite Improved on EZ PMIs, Equities Greened, RBA Holds Key Rate at 2.75%


The Reserve Bank of Australia maintained its cash rate at 2.75% as it was expected. The RBA Governor Glenn Stevens stated that the monetary policy is appropriate for the time being and that the easing of monetary policy the last 18 months is still contributing to growth with inflation subdued. The Aussie gained against weakening greenback yesterday, climbing up to 0.9793 but then corrected to 0.9693. Lastly, the USDJPY breached psycho barrier at 100 and dropped to support at 98.8. However, greenback counter attacked lifting USDJPY back above 100 coupled by annualized Japan’s Monetary Base in May increasing by 31.6% more than anticipated at 24.3%, raising selling pressure on the Yen.
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