The euro has found support in the overnight market after reports suggested that China would be a potential buyer of Portuguese bailout bonds. The news comes just after Finland officially approved of the bailout. While the outlook for Portugal has improved and is helping to lift the euro, problems continue to abound in Greece. A G8 summit will offer a platform for politicians to make comments on the European debt crisis as well as the outlook for global growth.

Sterling

First quarter GDP data was left unrevised and allowed investors a sigh of relief, which supported sterling. Investors had been nervous that weaker than expected declines in output could potentially crimp growth figures.

US dollar

The US dollar was pushed lower by a strengthening seen in the euro. The drop in durable goods was the largest in six months. The decline suggests further moderating of US economic growth with activity cooling in all sectors of the report. Clearly there was a negative impact seen from Japan’s supply constraint, which eventually allowed the figures to be shrugged off.

Euro

The euro has opened higher after a report was circulated that suggested that China would be interested in “bailout bonds” for Portugal. The bonds are expected to be issued mid-June and will help to limit the Euro’s downside until that time. The euro also found support in when commodity prices began to turn around, suggesting fears over a global economic slowdown had dissipated somewhat and investors were looking to take on riskier assets.

Japanese yen

The Japanese yen reacted calmly to data that showed exports fell in April. The Bank of Japan governor said that the Japanese economy is already recovering, but that there still remained downside risk factors. The yen remains under pressure as risk appetite has improved.

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