National numbers not with standing, the 12 Nation single currency in the end was shadowed by changes elsewhere with markets in particular having a field day with Cable to see Euro relegated on the sidelines though still firmer closing near highs of 1.2121 in North American midday markets this coming off lows of 1.2021 in congesting Asian markets. Looking at the regions releases we start with French nonfarm payrolls for Q1 coming in as expected at -0.1% unchanged from previous levels. Trailing this were April Industrial Production for the second biggest member economy with the number contracting -0.4% against expectations of a 0.3% rise with the previous reading revised to 0.3%. On the other hand was Manufacturing for the period at 0.4% slightly lower the consensus of 0.5% though an improvement to the -0.1% revised previous reading. From Italy we also see Gross Domestic Product figures for Q1 reading as expected at 0.4% quarter-on-quarter with the annualized figure at 0.8% up from 0.1% previously inline with consensus expectations. In the end however market for Euro was mostly driven by position squaring ahead of the long weekend in the US.

After trading tight congestive markets for the first part of the day, the British Pound in the end turned out with a massive short squeeze against the US dollar as knee jerk reactions to a BoE rate hike initially pushed the currency lower before a quick rally back by North American markets turning out highs of 1.8448 going into European closed this coming from earlier lows of 1.8184 in European midday markets. Lack of fresh economic numbers not withstanding, the British Pound in the end still turned put the most active currency in the markets following reactions to a move by the Bank of England to raise its rates. Note at this point the Monetary Policy Committee’s decision to hike the repo by 25 basis points on account of inflationary pressures seen in the broader economy. Reactions to the move however widely varied with the initial conclusion by the market that the move was not enough with the premium differential between the US and the UK seen decline. Follow through pressures however turned out firmly supportive of the Cable to see the more than two and a half big figure move for Cable over the dollar.

Given a strong showing in domestic numbers and further signs of a soft landing in Japan, the Japanese Yen again turned out a strong performance over the US dollar, with USDJPY mostly on a steady decline, barring a brief interlude in Europe, to see lows of 109.14 in European markets this off earlier highs of 110.58 in Australasian morning trade. By the numbers, fresh figures from Japan should help reinforce expectations of a stronger Yen with things picking up across the board. Here we start with Japan’s usual strength the Current Account balance in April remaining at a surplus of 1.5828 trillion Yen as against a forecast of 1.5675 trillion while the Trade Balance stood at 1.2641 trillion Yen. Along with these were the Domestic CGPI figures for May at a month-on-month rate of 0.1% the revised previous reading at 0.2% with annualized figures at 1.1% from 0.6% implying improving corporate pricing ability. And wrapping things up was the core Machine Orders figure for April jumping up 16.9% month-on-month from the previous 0.2% against a 6.4% consensus forecast with annualized figures now at 11.8% from -3.2% previously.

Much as the single currency, the Swiss Franc initially started out on modestly ranging markets before being dragged around into firmer territory vis-à-vis the US dollar on a combination of weekend profit taking and speculative shorts on the latter to see USDCHF at lows of 1.2425 in European-North American dealing overlap this coming off earlier highs of 1.2580 in European midday markets. Following routine there were no releases of note coming out of Switzerland while US numbers mostly took the back seat in emotionally charged trading at the latter half of the day. Looking at US figures we note numbers supportive of rate hike talks for the June 29/30 meeting as the Import Price Index rose 0.7 from 0.2 the prior reading in part due to rising oil prices as much as a weaker currency, which should help ensure at least a 25 bps move up by the FOMC. Meanwhile weekly Claimants and Benefits for their part were generally ignored though proving a good reference as we note Initial Claims for the week ending 06/05 rising slightly above the 350 mark to read at 352,000 from 340,000 in revised previous figures with the State Benefits for their part at 2.88 million down from 2.987 million and better the 2.995 million consensus.