Greece Awaits Another Coalition; onto Chinese Data

Signals that political leaders in Greece may be able to avoid an election buffered sentiment on Thursday but overall move were small. On the day, AUD was the best performer while JPY lagged but a portion of those moves were unwound in US trading. The focus shifts to China where key economic data including CPI, retail sales and industrial production will be unveiled. Today's Intermarket Insights charts Euro bottoms and Daily/Weekly/Monthly charts on AUDUSD. More details see below.

The euro hit a session high of 1.2979 early in US trading after the Greek Democratic Left said he had a proposal for a unity government. Risk assets were also boosted by comments from Samaras suggesting he wants to avoid another vote.

If that vote comes, the polls continue to show staunch anti-austerity party Syriza gaining ground. They are polling at 23.8% -- 7 points higher than in the election.

US news was neutral. US initial jobless claims were virtually in-line with estimates at 367K vs the 368K consensus. Bernanke spoke to an audience in Chicago and said that credit remained tight but did not comment on the broader economy. First quarter US GDP estimates were trimmed after an unexpectedly large trade deficit.

Spain continues to struggle with 5-year CDS hitting a record high. An FT report said the European Commission will give Spain more time to meet deficit targets if it agrees to certain provisions.

Some fireworks hit the US banking sector late in the session as JPMorgan revealed that a position in the corporate CDS tracking index will cost the bank $2 billion. Risk trades declined and traders shuddered when CEO Jamie Dimon uttered synthetic credit portfolio losses.

The Chinese data begins at 0130 GMT with April CPI figures. The consensus is for a slowdown to 3.4% y/y from 3.6%. At the same time the producer price index is expected to fall 0.5% y/y.

The second round of Chinese data comes at 0530 GMT with industrial production expected up 12.2% y/y and retail sales expected up 15.1% y/y.

The lead focus will be on CPI because it will largely determine if China can lower interest rates. The secondary focus will be on industrial production. The market has probably built in slightly lower expectations about production due to soft import data a day ago.

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