Traders were fleeing bonds of peripheral European economies, fueling talks that the European Central Bank will add monetary stimulus during its June policy meeting. There are rumors that the Bundesbank has already agreed on such measure. Yet EUR/USD did not extend its drop on the speculations. In fact, it demonstrated rather weird behavior, rallying after the positive housing report from the United States and turning down after disappointing data about US consumer confidence.
Housing starts and building permits rose in April. Housing starts were at the seasonally adjusted annual rate of 1.07 million up from the revised March estimate of 0.95 million. This is compared to the forecast of 0.89 million. Building permits were at the seasonally adjusted annual rate of 1.08 million up from the revised March rate of 1.00 million. Market expectations were at 1.01 million. (Event A on the chart.)
Michigan Sentiment Index dropped from 84.1 in April to 81.8 in May, according the preliminary estimate, instead of rising to 84.7 as was predicted by analysts. (Event B on the chart.)
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