Choppy month end trading.

The Euro-Zone industrial sentiment index dipped to –5.2 for May from –2.8 previously while the services-sector index also retreated to 7.0 from 9.9 with both figures well below market expectations. The overall business and consumer survey index retreated to 96.5 from 99.0 and also below expectations.

US consumer confidence retreated to 102.3 for May from 103.7 in April, although there was a significant upward revision to the April reading from 101.3 and the may figure was above expectations of 99.0.

There was only a slight decline in the expectations index as it remained below the key level of 80 and in recession territory. Confidence in the labour market deteriorated, although confidence in incomes and wages held firm.

Cleveland Fed President Mester stated that there was no compelling case to wait on further rate hikes while Richmond head Barkin stated that there was evidence of a slowing economy, but businesses were still looking to raise prices. Fed Funds futures indicated a 65% chance of a rate hike at the June meeting.

The yen jumped just after Tuesday’s European open with the announcement of an emergency meeting by Japanese authorities.

Japanese top currency diplomat Kanda stated that officials are watching forex moves closely and it was important for currencies to move stably reflecting economic fundamentals. He did, however, add that he was not focussing on any specific forex levels.

The dollar posted fresh 9-week highs on Tuesday, but retreated from 9-week highs as US yields moved lower and the yen recovered ground.

The latest Chinese PMI data was weaker than expected with the manufacturing index edging lower to 48.8 from 49.2 while the non-manufacturing index retreated to 54.5 from 56.4.

The data maintained reservations surrounding the Chinese outlook.

The US JOLTS job openings data will be released on Wednesday. Markets will consider this as important evidence on whether the labour market is easing.

The US House of Representatives will hold a vote on the debt-ceiling deal during Wednesday. Markets assume that there will be enough votes to pass the deal.

Choppy moves on month-end trading .

There will be potentially choppy trading on Wednesday with month-end position adjust a significant element.

The Euro remained under pressure after Tuesday’s market open with EUR/USD dipping below 1.07 for 9-week lows. Markets continue to expect a further rate hike by the Federal Reserve with no significant change in Fed pricing during the day. The dollar was unable to hold initial gains as US yields moved lower. EUR/USD moved back above the 1.0700 level before drifting lower again.

There were sharp yen moves after the Japanese verbal intervention. After an initial slide USD/JPY surged to re-test 6-month highs at 140.90. Selling returned quickly with a move back below 140.00. USD/JPY was held below 140.00 on Wednesday with a dip to 139.50.

The Swiss KOF index dipped lower for May. The Swiss franc overall lost some traction on Wednesday. EUR/CHF edged back above 0.9700 with USD/CHF securing a net gain to 0.9085.

Sterling posted gains on the day, helped by position adjustment. GBP/USD found support below 1.2350 with a surge to near 1.2450 before a fresh move to below 1.2400.

Commodity currencies were unable to hold intra-day gains. AUD/USD settled at 0.6510 from 0.6560 highs on Tuesday. The monthly Australian CPI inflation rate increased to 6.8% from 6.3% and above expectations of 6.4%. AUD/USD traded below 0.6500 after the weaker than expected Chinese data. USD/CAD consolidated close to 1.3600 before advancing to 1.3640 as oil prices came under pressure.

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