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Activity in Foreign Exchange Markets Rules Overall Direction


Today's financial recap and tomorrow's financial outlook.

Overnight, the Bank of South Korea cut its main interest rate to 2.5% from 2.75%, the 511th rate cut by global central banks since 2007, according to Bank of America Merrill Lynch. In other central bank news, the Bank of England kept its policy on hold. Bank of Canada Governor Mark Carney will take over in July for outgoing governor Mervyn King. It is unlikely that we will see any drastic actions at next month's meeting as a result.

In foreign exchange markets, the USDJPY pair crossed the 100 level for the first time in four years. Following the stronger 30-year Treasury auction, the USDJPY rose sharply, suggesting that the above-average number of indirect bidders originated in Asia or Japan. The Treasury sold $16 billion of 30-year bonds at a high yield of 2.980%, 1.1bps below the when-issued levels pre-auction. However, other auction metrics did not sync with the stronger demand represented by the lower auction yields.

Weekly initial jobless claims were below expectations at 323,000 vs. estimates of 335,000. Also, last week's claims were revised up to 327,000 from the prior 324,000. The 4-week moving average of claims now stands at 336,800, down from 343,000 last week.

Tomorrow's Financial Outlook

Tomorrow the Treasury will release its monthly budget statement with a surplus of $110 billion expected. In the global economic spectrum, China will release information on its money supply and Canada will release employment figures for April.

One market-moving event will be the speech by the Federal Reserve president at 9:30 a.m. EDT at the Chicago Fed's conference on economics and monetary policy. This will be the first time Bernanke has spoken on the subject in over a month and the first time since last Wednesday's monetary policy meeting.

The only notable earnings report on the calendar is Hecla Mining (NYSE:HL).

Twitter: @Minyanville

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