Releases from Europe:
 

Q1                                          Forecast    Actual
German GDP                (QoQ)    +0.7%     +1.5%
German GDP                 (YoY)    +1.8%     +2.6%
French GDP (F)             (QoQ)    +0.5%     +0.6%
French GDP (F)              (YoY)    +1.9%     +2.2%

April
Swiss SECO Consumer Climate       10.0          2.0
German CPI (F)            (MoM)    - 0.2%     - 0.2%
German CPI (F)             (YoY)    +2.4%     +2.4%

France and specifically Germany showed that last year’s calamities hadn’t ruffled any feathers by the end of the first quarter. Both posted above consensus forecast results which provided a solid base for the year. Business investment was still firm though consumer spending was already under a little pressure.

Well, that was Q1 and the monthly figures in Q2 have clearly shown a sharp downturn so the market shouldn’t get carried away with these numbers though the knee jerk reaction was to buy back some short Euro positions. Sustainability of the Euro rally will depend on a break above the 1.5569-93 area.

The following economic releases are due today:

April
U.S. Industrial Production    (MoM)   - 0.3%

May
U.S. Initial Jobless Claims   (10th)     370K
U.S. Continuing Claims        (3rd)    3035K
U.S. Empire Manufacturing                   0.0
U.S. Philadelphia Fed                      - 19.0
U.S. NAHB Housing Market Index      +20.0

Comments I am reading today suggest that the market is feeling more confident that the U.S. economy has found a bottom and this is driving the Dollar higher. However, its now a week since the highs were seen and very clearly the intensity of buying seen until then has lessened considerably.

Certainly recent numbers from the States have become more positive compared to forecasts but there has been little to suggest that a recovery is assured.

On the other side of the coin European data has clearly worsened and this makes the argument for reducing Dollar short positions more valid. However, it doesn’t really suggest going long Dollars just yet.

At turns in the economy the data tends to become more volatile. There hasn’t been sufficient time for the fiscal stimulation to have any significant impact and until then the risk remains for disappointing numbers to inflict nasty surprises.

Today sees the U.S. announce industrial production and the NAHB housing market index while both the Fed Empire State manufacturing report and the Philadelphia report are due to be published.

Given the strong rebound in the Empire number in April there is risk of failure to follow-through and this may be echoed by the Philadelphia report. With housing starts and building permits unlikely to shine like a star tomorrow there is still significant risk for the Dollar to come back under pressure.

Note important support and resistance areas:

          USDJPY        EURUSD       USDCHF        GBPUSD
Res:  105.91-36    1.5651-71    1.0599-23    1.9546-72
Res:  105.25-43    1.5569-93    1.0530-50    1.9493-05

Spt:   104.21-46    1.5450-80    1.0446-73    1.9363-89
Spt:   103.65-90    1.5394-30    1.0389-10    1.9300-35

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