FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
USD
The dollar got a boost when a major futures exchange raised silver margin requirements, prompting a wave of profit taking in gold and silver, which soon spread to FX markets, though ECB President Trichet also exerted an influence when he said a strong dollar is in the interests of the US. EURUSD traded 1.4494-1.4588, USDJPY 81.57-81.98. Gold is trading just below $1501/oz at the time of writing. US new home sales were roughly in line with estimates at 11.1% m/m (consensus 12.0%). The February decline was revised higher to -13.5% m/m. The Dallas Fed manufacturing index was unexpectedly soft, in line with some weakening across other regional manufacturing indexes in April. Housing remains a concern and confidence measures are being scrutinized to gauge the effect of higher oil and gasoline prices on the consumer. But neither the upcoming S&P/Case Shiller index nor the Conference Board Consumer Confidence Index will be conclusive enough to affect the dollar, given the looming FOMC decision and Q1 GDP advance estimate.
EUR
ECB Governing Council member Liikanen said inflation expectations are well-anchored but the ECB will work to prevent any second-round effects. He said that inflation pressures in emerging countries could complicate monetary policy in the ECB. Liikanen also mentioned that any potential restructuring of Greek debt would not solve any fundamental economic problems.
JPY
BoJ Governor Shirakawa said the bank could reassess a recently introduce lending program, which keeps the possibility of some changes at this week’s policy meeting. Shirakawa also said that it is undesirable for the BoJ to underwrite government debt, which was in line with comments by DPJ member Nakagawa, who leads a committee tasked with drafting a bill to facilitate Japan’s reconstruction. Nakagawa ruled out asking the BoJ to directly underwrite bonds issued to fund the programm.
TECHNICAL OUTLOOK
GBPUSD 1.6387 support
EURUSD BULLISH Focus is on 1.4649/85 resistance zone, break of this would open 1.4776 next. Support is at 1.4500.
USDJPY BEARISH Move below 81.62/55 support area would open the way towards 80.69. Resistance is at 82.60.
GBPUSD BULLISH As long as support at 1.6387 holds, look for gains towards 1.6553/99 area ahead of 1.6672.
USDCHF BEARISH While resistance at 0.9000 holds, look for further weakness towards 0.8769/00 area.
AUDUSD BULLISH Move above initial resistance at 1.0845 would expose 1.1000. Near-term support is at 1.0584.
USDCAD BEARISH Break through 0.9600 would trigger a short term reversal, while support is at 0.9455/46.
EURCHF BEARISH Focus is on initial support at 1.2801, break of this would expose 1.2730. Resistance is at 1.2974.
EURGBP BULLISH Momentum is positive; focus on initial resistance 0.8879, break of this would expose 0.8924/42 area. Support lies at 0.8780.
EURJPY NEUTRAL Resistance is at 120.39/71 zone, while support is at 118.27.
SCHEDULE
Please visit GCI’s Economic Calendar for a schedule of market news and events.
