Daily Summary Report

EUR/USD

(Bloomberg) – The euro fell for the first time in three days against the dollar amid concerns that European governments will compete to resolve the regional debt crisis as global economic recovery slows. The euro declined against 14 of 16 major currencies. The yield spread between Portuguese and German 10-year bonds rose to a record high, while Italian bonds increased as the government sold debt. Greek Prime Minister said he would push for new austerity measures, failing to gain support from major opposition parties, as he aims to secure another loan and avoid default. American employers likely hired fewer workers in May, and the volume of manufacturing orders for the world’s largest economy grew at the slowest pace in seven months, according to economists in reports this week. Greece “will be in the spotlight this week, whether authorities can reach the necessary conditions,” said Tim Condon, head of Asia research at ING Groep NV, in an interview with Bloomberg Television from Hong Kong. Doubts about the global economy will first “hit the peripheral European countries with a debt crisis,” he said.

GBP/USD

(Bloomberg) – The British Chamber of Commerce delayed its forecast when the Bank of England would raise the key interest rate after lowering its growth prospects. The central bank would raise the rate to 0.75% in August from 0.5%, stated the chief economist of BCC, David Kern. London lobby said in March that the bank would raise the rate in May. A separate report showed that house prices in the UK fell this month. The Monetary Policy Committee of the Bank of England is holding back on raising interest rates to support the economic recovery, even after inflation rose more than double the target level of 2%. BCC forecasts GDP growth of 1.3% this year and 2.2% in 2012. It previously predicted growth of 1.4% and 2.3% respectively. “Although we would prefer interest rates to rise by the fourth quarter, we believe the British business will be able to withstand a small increase,” says Kern in a statement. “But the committee must act with great caution and should not be too aggressive in its actions.” The group sees an increase in the Bank of England’s key rate to 1% this year and 2.75% by the end of 2012.

USD/JPY

(Bloomberg) – Japanese stocks traded in a narrow range amid rumors that the stocks were oversold, as well as comments from the ‘Big Eight’ raised concerns that the US economic recovery was slowing. Sony shares, the producer of Bravia televisions, fell 1.9% after reports showed that home sales in the US fell more than expected, and the yen rose against the dollar. Honda Motor Co., the second-largest automaker in Japan, fell 1.3% after hackers accessed customer data in Canada. “Although there is concern about data indicating weakness in the US economy, the economy is not slowing its recovery,” says Hiroshi Fujimoto, fund manager at Tokyo Shinkin Asset Management Co., which manages $3.9 billion. “Investors are very comfortable with the current price level. When inventories grow, you get sales, and on the other hand, people buy during downturns.”