Releases from Australia:
                                                      Forecast           Actual
Private Sector Credit               (MoM)   +0.8%           +0.4%
Private Sector Credit                (YoY)   14.5%            14.1%

Releases from Japan:

April     Forecast Actual
Unemployment Rate                            3.9%              4.0%
Jobs-to-Applicant Rate                          0.94               0.93
Household Spending                (YoY)  - 0.7%            - 2.7%
Industrial Production               (MoM)  - 0.5%            - 0.3%
Industrial Production                (YoY)   +1.6%             +1.8%
National CPI                           (YoY)   +0.9%             +0.8%
National CPI ex food & energy  (YoY)   +0.0%             - 0.1%
Vehicle Production                   (YoY)   +2.3% (prior)   +5.4%
Housing Starts                        (YoY)  -11.8%             - 8.7%
Annualized Housing Starts                    1.111mn          1.151mn
Construction Orders                (YoY)   -16.0%            - 8.4%

May
Nomura/JMMA Manufacturing PMI            48.6 (prior)       47.7
Tokyo CPI                             (YoY)     +0.8%             +0.9%
Tokyo CPI ex food & energy    (YoY)     +0.0%             +0.1%

Higher unemployment, fewer available jobs for applicants and the manufacturing PMI moving further below the 50 boom/bust equilibrium hardly bodes well for the Japanese economy and the BOJ know it. Just a few months ago they were still uttering positive comments saying how the growth trend was still intact. Those positive comments have all but faded into memory as the global slowdown deepens and the already flat domestic economy begins to buckle under the strain of inflation.

The more positive signs are that industrial production hasn’t suffered as badly as feared and the decline in the housing market appears to be moderating but these are still under pressure.

Releases from U.K.:
                                       Forecast     Actual
GfK Consumer Confidence    - 25.0      - 29.0

The following economic releases are due today:

April
German Retail Sales       (MoM)    +0.6%
German Retail Sales        (YoY)    - 2.0%
French Producer Prices     (MoM)    +0.6%
French Producer Prices      (YoY)    +5.1%
Italian Producer Prices     (MoM)    +0.7%
Italian Producer Prices      (YoY)    +6.5%
Euro-zone Unemployment Rate       7.1%
U.S. Personal Income      (MoM)    +0.2%
U.S. Personal Spending    (MoM)   +0.2%
U.S. Core PCE                 (MoM)    +0.1%
U.S. Core PCE                  (YoY)    +2.1%

May
Euro-zone CPI (est)           (YoY)      +3.5%
Italian CPI                       (MoM)      +0.3%
Italian CPI                        (YoY)      +3.3%
Swiss KOF Leading Indicator                 1.09
U.S. Chicago Purchasing Manager         48.8
U.S. University of Michigan Confidence  59.5

Dollar strength was seen and actually exceeded my initial targets. It raises the likelihood that the Dollar has seen its lows and therefore the question is now more of whether the medium term rally can resume directly or whether we will see a longer sideways consolidation develop.

From what I can see the latter scenario of a sideways consolidation is quite strong. What did strike me yesterday was the inability for Cable to lose out along with the Euro and has remained at relatively high levels. It does bring the stronger bullish scenario back into my mind. However, it still seems to have potential for one further dip.

Indeed, the Euro appears to require that also, and the Swissie on the topside. The follow-through higher today for the Dollar may not be direct with the chance of a pullback quite high. However, I look for an eventual dip in the Euro to around the 1.5409-19 area while the Swissie will either get stuck around 1.0564 or possibly it could retest, but not break the 1.0623 high.

On the assumption that the above occurs it will raise the risk that we shall see the medium term consolidation. If not, well the Dollar could just keep going…

Much can be said for Dollar-Yen too which almost met its 105.95-05 target but there is probably chance for that later today. However, this should be seeing a pullback soon and I suspect to the broad 104.29-66 area at least. Once this correction is complete the long standing 106.82 target is then attainable.

This brings confusion for Euro-Yen and while my main view has been to look for a deeper move lower the manner in which it has remained aloft suggests out of prudence to wait for confirmation. Until that comes possibly we can see it edge erratically higher again…

Note important support and resistance areas:

          USDJPY        EURUSD       USDCHF        GBPUSD
Res:  106.41-82    1.5594-16    1.0592-23    1.9849-80
Res:  105.86-04    1.5536-73    1.0522-31    1.9770-01

Spt:   105.00-05    1.5471-84    1.0431-52    1.9671-84
Spt:   104.29-66    1.5409-47    1.0350-55    1.9604-47

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