News from Europe:

No releases are due until 08:30 GMT. However, the market appears to be absorbing a Time article that points to the first fledgling shoots of optimism being seen for the U.S. economy. Already the market is pointing to the improvement in liquidity and that perhaps the worst is over as far as the credit crisis is concerned.

Indeed, this view point will definitely give confidence a boost. The article goes on to talk about how the Dollar is so oversold that a bounce back is now due, pointing to the batch of disappointing European numbers which now poses risks for European currencies.

Actually all that has been highlighted in these articles over the past few weeks so the Times are a bit out of date already. However, I’ll play devil’s advocate and say that now the market is beginning to believe the Dollar can rally that it’s time to seriously start looking for selling opportunities.

It’ll be for a correction only with the next leg of the Dollar recovery not really due until the end of June and possibly into July. The problem is that the Dollar bullish view is more based on anticipation rather than current positive numbers. As such the risk remains for U.S. stats to be on the erratic side until a stronger base has been formed. That should keep things fairly  choppy for the coming few weeks…

The following economic releases are due today:

March
U.K. DCLG House Prices         (YoY)      4.5%
U.S. Business Inventories     (MoM)    +0.5%

April
U.K. CPI                            (MoM)     +0.5%
U.K. CPI                             (YoY)     +2.6%
U.K. RPI                            (MoM)     +0.6%
U.K. RPI                             (YoY)     +3.9%
U.S. Import Price Index       (MoM)     +1.6%
U.S. Import Price Index        (YoY)     15.0%
U.S. Advance Retail Sales     (MoM)    - 0.2%
U.S. Retail Sales less autos  (MoM)    +0.2%

The U.S. retail sales number will also be an interesting figure to wait for. Last week reported consumer credit ballooned in March and could suggest better than expected numbers tonight.

Consensus forecast is for a -0.2% decline but there seems a good argument to expect something better. Such a result would certainly take the Dollar higher in the absence of any releases out of mainland Europe.

The other event that will be closely watched is the speech by Federal Reserve Chairman Ben Bernanke at a financial markets conference organized by the Federal Reserve Bank of Atlanta. While the market is desperate to hear something new from Bernanke, the likelihood of this is low.

There seems a good chance that the Dollar will rally tonight.

 
Note important support and resistance areas:

          USDJPY        EURUSD       USDCHF       GBPUSD
Res:  104.95-27    1.5692-14    1.0548-75    1.9631-66
Res:  104.02-30    1.5593-15    1.0486-10    1.9553-90

Spt:   103.12-25    1.5480-85    1.0406-24    1.9441-86
Spt:   102.18-56    1.5392-26    1.0298-31    1.9379-11

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