Releases from Japan:
                                                                 Forecast   Actual
April Domestic Corporate Service Prices (YoY)   +0.6%    +0.5%

Corporate service prices were more-or-less as forecast, falling short by only 0.1% in registering a 17th consecutive month of YoY increases. Higher costs of transportation and real estate services fueled the increase.

The only other piece of news out this morning came from the U.K. which saw the U.K.’s Confederation of British Industry's quarterly survey reporting a continuing rocky services sector that sees neither consumer nor business services firms being positive about business expansion over the coming year.

Services firms saw business volumes fall at rates similar to those seen in 2001 while costs accelerate rapidly. Professional services such as lawyers, accountants and architects also saw substantially lower business volumes.

Very clearly cost cutting by both consumers and businesses are being seen in areas that are considered non-essential represent the first signs of a drive to control costs and this looks likely to continue over the coming months.

The following economic releases are due today:

Q1
German GDP (F)                    (QoQ)     +1.5%
German GDP (F)                     (YoY)     +2.6%

April
Swiss Trade Balance                 CHF 
Swiss UBS Consumption Indicator
U.S. New Home Sales              (MoM)    +0.1%
U.S. New Home Sales                             527K

May
French Business Confidence Indicator      105.0
French Production Outlook Indicator        - 10.0
Italian Business Confidence                     86.9
German IFO Business Climate Survey 
U.S. Consumer Confidence                       60.1
U.S. Richmond Fed Manufacturing Index      0.0

June
German GfK Consumer Confidence            5.70

Friday didn’t bring the additional Dollar gains as expected but lost ground again though the long weekend in the States and U.K. has taken the steam out of the Dollar losses overall. I do still expect further losses in the Dollar but where I have uncertainty is in whether this will occur directly or whether we’ll see the pullback recycle. The slowing of momentum over the last two days tends to cloud the true underlying picture and provides a few short term alternatives.

I’m therefore going to have to be rather conservative with today’s movements and base most views off of break levels. I have suspicions that the recycling of the correction may well be the result.

To bring a different perspective where I feel the wave structure does seem to provide a clearer picture I can see the Pound still underpinned and should therefore make some gains. We should be aware that these could again be quite sharp. The 1.9909-14 area is one resistance but this could get blown away and if so the next targets will be around 2.0031 and possibly as high as 2.01.

We should also note that Dollar-Yen saw a deep pullback lower and this is beginning to sway in favor of additional losses but I suspect this is unlikely to be direct. It does seem to have the look of providing some short term range trading first.

The risk though to watch for is still Euro-Yen and while this has continued to creep higher my longer term expectations are still for stronger losses and at the moment this would favor a weak Dollar-Yen rather than the Euro. That should change in the not too distant future but for now it does seem to be putting more pressure on Dollar-Yen.

Note important support and resistance areas:

          USDJPY        EURUSD       USDCHF       GBPUSD
Res:  104.37-70    1.5894-10    1.0353-72    1.9978-00
Res:  103.86-15    1.5805-15    1.0275-00    1.9908-14

Spt:   102.72-05    1.5740-56    1.0203-14    1.9750-75
Spt:   101.94-18    1.5672-92    1.0126-34    1.9650-96

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