Releases from Japan:
         
                                      Forecast    Actual
March Retail Sales  (MoM)   +0.7%    +0.5%
March Retail Sales  (YoY)    +1.0%    +1.1%

Retail sales in Japan extended its run of positive annual numbers for the 8th consecutive month which caused the government to retain its assessment as “picking up.” How much of the rise is attributable to rising fuel and food costs is uncertain but there must be a big question mark over the level of sales in the rest of the economy.

Japanese consumers retain low confidence but the fact t hat there has been no dramatic decline in sales is a positive. It certainly seems as if the turn down in Japan has been modest but there is little dispute that domestic demand remains weak.

Releases from U.K.:

                                                    Forecast    Actual
April Hometrack House Prices (MoM)   - 0.5%    - 0.6%
April Hometrack House Prices (YoY)    +0.0%    - 0.9%

The event that British building societies declared would not happen 6 months ago has finally hit the news. U.K. house prices have registered their first YoY decline in more than two years.

No change in the underlying reasons which were described by Hometrack as “While the availability of finance is impacting on demand in certain segments, the reality is that weak confidence is effectively resulting in a buyers strike with households sitting on the sidelines and waiting to see how events unfold.”

They also reported that the average time to sell a home had increased to 9.1 weeks in April from 8.5 weeks in March. The growth in property listings has slowed by 1% to 3.6% and t he numbers of buyers registering with agents fell 2.8% over the month.

The following economic releases are due today:

April
German CPI                     (MoM)    +0.2%
German CPI                      (YoY)    +2.8%
Italian Business Confidence               88.5

May
German GfK Consumer Confidence     4.50

The Dollar appears to have taken the middle road on Friday, seeing new highs but amid hourly bearish divergences it does seem to have found an intermediate high and suggests a short period of correction. The automatic assumption may be that it’ll consolidate ahead of the two main releases of the week – the Q1 GDP and FOMC rate decision on Wednesday.

I can’t say it’s totally impossible but it will really need to stretch out the correction to last for what is the best part of three days. So we’ll need to be aware of the potential patterns developing and understand the implications of each.

I’ll actually point to the Pound as being a prime indicator in this since this has pulled back into range almost as expected and appears therefore to be in the midst of a triangle that has a 1.9710-1.9985 range. This does imply an eventual break lower and thus (unless some other event pushes it lower directly) it may well be an indicator of the timing of any sustained break higher for the Dollar.

To cover another pattern that developed last week, the Euro saw a solid bearish reversal week having seen a new high and closing below the prior week’s low. These commonly cause a one-bar correction but once we see a breach of the 1.5510 corrective low it would appear to imply stronger losses that, as I see things now, should imply loss of the 1.5340 corrective low.

So the week does have the promise of some solid movement so watch the Dollar’s support levels for good MT buying opportunities.

Note important support and resistance areas:

         USDJPY        EURUSD       USDCHF       GBPUSD
Res:  105.56-98    1.5786-10    1.0429-70    1.9938-59
Res:  104.81-16    1.5702-33    1.0375-00    1.9869-89

Spt:   104.14-35    1.5554-83    1.0280-00    1.9775-04
Spt:   103.48-89    1.5497-10    1.0213-46    1.9710-46

See Also

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