On Tuesday there was little in the way of news flow, except of the G7 emergency teleconference, which yielded very little in the way of results or news. And there was even less on the eco calendar.
The fundamentals affecting the markets on Tuesday were:
Australia GDP grows 1.3%, more than twice estimates Australia’s economy expanded at more than twice the pace economists forecast last quarter driven by household spending and engineering construction. GDP advanced 1.3% qoq compared with revised 0.6% growth in previous qtr.
U.S. ISM service index sustained growth in May Service industries sustained their pace of growth in May, showing the biggest part of the U.S. economy is withstanding the impact of European debt crisis. ISM non-manufacturing index rose to 53.7 from 53.5 in April.
Euro Zone Service PMI falls to 3-yr low Euro Zone composite PMI fell to 46.0 in May up slightly from a preliminary reading of 45.9, but down from 46.7 in April. The final May services PMI reading fell to 46.7 from 46.9 in April. A reading of less than 50 indicates a contraction in activity.
Australia central banks cuts cash target Reserve Bank of Australia yesterday cut its key cash interest rate by 25bps to 3.5%, a widely-expected effort aimed at protecting the domestic economy from increasing global growth risks.
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EURUSD (1.2513) The euro retreated Tuesday after a Group of Seven teleconference on Europe’s sovereign debt and banking crisis did not yield a formal statement from the body.
Comments from Japan’s finance minister Jun Azumi and the U.S. Treasury, however, did indicate that officials on the call said they would closely monitor developments in Europe. The euro traded at $1.2448, down from $1.2493 in North American trade late Monday. The shared currency had traded as high as $1.2542 in earlier activity.
“European leaders appear to be moving with a heightened sense of urgency. We’re hoping to see accelerated European action over the next several weeks,” a Treasury official said.
The Great British Pound
GBPUSD (1.54.29) UK markets have been closed since last week in celebration of the Queens Jubilee. Markets reopen later today. The GBP moved in tandem to the EUR/USD fluctuating on the DI value.
Asian –Pacific Currency
AUDUSD (98.58) Better than expected gross domestic product (GDP) figures could help push the Australian dollar toward 99 US cents, with the currency half a cent higher at noon.
The Australian dollar was trading at 98.49 US cents, up from 97.82 cents on Tuesday. Australian GDP rose by 1.3 per cent in the three months to March – much better than the 0.6 per cent forecast by economists surveyed.
Over the year to March, GDP grew by 4.3 per cent, the Australian Bureau of Statistics said today.
Gold (1628.55) consumers in India, the world’s biggest importer, are “aggressively” selling the metal after prices surged to a record, an industry group said.
Gold in India climbed to a record on June 2 after the rupee fell to an all-time low against the dollar, while global prices are down 16 per cent from a peak reached in September. The jump in scrap sales adds to evidence of slowing demand in India that may lose its spot as the world’s largest bullion market in 2012 to China, according to the World Gold Council (WGC).
Global prices for spot gold traded at $1,619.27 an ounce, down from an all-time high of $1,921.15.
Crude Oil (84.99) prices have ended the day mixed after Group of Seven (G7) talks to address the eurozone debt crisis yielded no clear action plan from European leaders.
New York’s main contract, West Texas Intermediate crude for July, on Tuesday added 31 US cents to settle at $US84.29 a barrel.