Friday wrap....

Last week ended with disappointing US jobs data which further added to the prospect of QE3. Subsequently, the week opened with all major currencies falling against the Greenback as well as further selling in the Yen due to its new status as a funding currency. The risk-on mode continued throughout the week with positive data coming out of the UK and stronger than expected GDP numbers form Australia and New Zealand. However, traders were cautious as given the extreme levels seen in the Commitment of Traders report this could have just been a round of short covering. All eyes were on the central banks this week as many were speaking regarding their rate statements and the economic outlook. The Bank of England on Thursday did not disappoint traders, as economists and investment banks widely expected an additional £50bln for QE. Whilst action was not taken this time round, comments hinted at the prospect of an increase to QE sometime in the near future; subsequently the British Pound rallied on the back of the news. Comments from the Fed chairman Ben Bernanke disappointed traders as no commitment was made to additional stimulus in response to the disappointing employment number last week. However, Bernanke expressed their commitment to more quantitative easing if necessary; precious metals fell and the US Dollar rallied on the back of this. 


Today's rate announcement from the Bank of Canada is widely anticipated to be left as is due to weakening Chinese growth and uncertainty around the Euro but they are known to surprise the market. All eyes have know turned to Spain as the Greek election is now closes with results to be released on 17 June. Fears of Spain asking for a bailout from the ECB and IMF, as well as their banks asking for a national bailout will all weigh on the Euro in the coming weeks. Watch the bond auctions for further market direction. Many hedge funds are employing polling agencies to forecast what the Greek vote shall be. Given the fact the two running parties of opposing views on the Euro, watch price action for a leading indicator in the run up to this.