Daily Market Outlook

Currencies

• EUR/USD falls, as weekend’s G8 meeting left Germany and its strict stance on cutting debt first looking isolated as the tide turns on boosting growth. Whilst many watched with baited breath the G8 Summit has produced no exciting headlines and has turned out to be rather anticlimactic. While it is not a real surprise, the deterioration of the Euro zone debt crisis appears not to have disturbed the calmness surrounding these meetings, which continue to show an alarming lack of urgency surrounding the Euro-zone situation. This week on Wednesday EU Leaders will meet and Germany will take centre-stage as the country is expected to be asked to slightly ease austerity around peripheral economies in Europe, and rethink its strategy around the notion of ‘growth’.

• USD/CAD The Canadian dollar continued retreating against the soaring greenback, as European fears helped the USD and pushed oil prices lower. Retail sales are the highlight of this week. Canadian manufacturing sales soared in March amid an unexpected 1.9% boost in sales following a 0.2% contraction in February pulling the economy back on a growth track. This rebound came amid a rise in petroleum and coal products. With a strong labor market and a recovering manufacturing sector Canada has a lot to look forward to.

• AUD/USD The Australian dollar continues to tumble, and has now dropped almost 6 six cents in the month of May. For anyone who loves extreme volatility in the markets, there’s no need to look elsewhere. Given the turbulence an uncertainty in Europe, investors will be favoring safe haven currencies, which spells more trouble for the free-falling aussie.

Commodities

• Oil traded near the highest close in three days in New York on speculation that a strengthening U.S. economy will increase demand for fuel and the Obama administration will refrain from easing sanctions against Iran.
  • Futures gained as much as 0.5 percent as negotiators headed to Baghdad for a second round of talks tomorrow on Iran’s nuclear program. The U.S. won’t support relaxed sanctions that are hobbling Iran’s oil exports, according to officials who declined to be identified because of the sensitivity of the issue.
  • Crude for June delivery, which expires today, traded at $92.63 a barrel, up 6 cents, in electronic trading on the NYMEX at 9:17 a.m. Singapore time. The more- actively traded July contract climbed 9 cents to $92.95. Front- month futures rose 1.2 percent yesterday, the first gain in seven days, reducing their loss for the year to 6.3 percent.
  • London-based ICE Futures Europe exchange. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $16.04, up from $15.95 yesterday.

• Gold traded little changed on Tuesday, as investors await a European Union summit that is expected to discuss fresh action to solve the region’s debt crisis that has been threatening global growth.
  • Investors remain nervous over the situation in the Euro zone even after G8 leaders pledged their support for Greece to remain in the single currency bloc, and continued to favor German government bonds on Monday despite their near record high prices.

Equities

• Asian stocks rose for a second day, oil gained and South Korea’s won advanced as Germany’s finance minister said the nation will focus on measures to boost Europe’s economic growth.
  • Japan’s Nikkei 225 Stock Average rose 1.1 percent.

• European stocks markets have mostly rebounded as G8 support for Greece to remain in the eurozone boosted sentiment after last week’s sharp sell-off, traders say.
  • Spain on Monday denied needing foreign help for its banks, which are staggering under the mass of loans that turned sour after a 2008 property crash, but tasked two global consulting firms, Roland Berger and Oliver Wyman, with valuing their battered balance sheets.
  • FTSE 100 index fell +0.70% to reach level of 5,304.48.

• U.S stocks rose, giving the Standard & Poor’s 500 Index its biggest rally in more than two months, after China signaled it would support growth while German and French officials said they will work to keep Greece in the euro.
  • Dow Jones Industrial Average slid +1.1 % to reach the level of 12,504.48
  • The S&P 500 fell +1.6 % to reach the level of 1,315.99.