Special Report-Japan’s business sentiment has improved

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Deflationary pressures continue in Japan with February CPI reported to have declined by an annual rate of 1.2%. This marked the 12th consecutive month that Japan’s CPI has declined. The Japanese government has been pressuring the BOJ to take actions to combat deflationary pressures. Earlier in the month the BOJ elected to increase the size of its lending operations but decided not to increase its purchase of Japanese bonds. The expansion of the lending operation is passive and unlikely to have any significant impact on deflationary pressures in Japan. If the BOJ wanted to get more serious about combating deflation the central bank could buy Japanese bonds or set an inflation target. The purchase of bonds would increase Japans money supply. Setting an inflation target would help the central bank steer inflation towards the target and let investors more easily anticipate interest rate changes. In theory an inflation target can lead to increased economic stability. The minutes for the March BOJ policy meeting indicate that the BOJ board was split on the outlook for the Japanese economy and need for additional easing of monetary policy. A number of the BOJ board members are reluctant to take aggressive easing actions as the Japanese economy shows signs of recovery. Monday Japan reported that retail sales for February rose at the fastest annual rate in 12 years. Tuesday Japan reported mixed economic data with industrial production and household spending declining more than expected and unemployment unchanged. Last week Japan reported a sharp increase in January all industry activity. This week’s main focus for JPY trade will be the release of Japans March Tankan business survey for the first quarter. The Tankan business sentiment survey is one of the key Japanese economic reports that influence BOJ monetary policy decisions.

 The Tankan survey is a gauge of business confidence and corporate sentiment in Japan.  Japans March Tankan survey will be released on April 1st and is expected to improve to -16 compared to -24 last quarter. Improvement in the March Tankan survey is expected because the Reuters Tankan manufacturing sentiment index rose to its highest level since June 2008 and Japanese exports are rising. The Reuters Tankan manufacturing index shows that Japanese companies are less gloomy about the Japanese economy with the index improving 19 points to -8.The BOJ Tankan survey has a 95% correlation to the Reuters Tankan manufacturing index. In addition, Japan reported that February exports rose by 45.3%. Japan’s export growth turned positive for the first time since August 2007.The rise in Japanese exports confirms that Japan’s economy is gradually improving.

 The December Tankan survey sent mixed signals on the outlook for Japan’s recovery. December business sentiment improved and capital spending expectations declined. CAPEX (capital) spending is the fuel of economic growth. The BOJ will be looking closely at the CAPEX component of the March Tankan report. March CAPEX spending is expected to improve to-11.5% from -13.8% last quarter. Based on the Reuters Tankan manufacturing survey and improving Japanese export sales the March Tankan survey is expected to show marked improvement. How the March Tankan survey impacts BOJ policy is open to debate. A sharp improvement in the March Tankan business survey will encourage the BOJ to hold monetary policy steady and resist government pressure to ease. The Tankan index however will likely remain in negative territory. The fact that the Tankan survey remains in negative territory could encourage some of the BOJ board members to consider additional easing of monetary policy. The March Tankan report may not resolve the divisions on the BOJ policy board. On balance we expect the March Tankan survey to reduce concern about the Japanese recovery and encourage the BOJ to remain on hold. JPY is trading at two month low versus the USD pressured by rising US bond yields and concern about Japan’s debt. Improvement in the March Tankan survey may boost short-term demand for JPY as the report could diminish uncertainty about the outlook for Japan’s economy and encourage the BOJ to resist government pressure to ease monetary policy.

Daily Forex Report-USD mixed, house prices flat, consumer confidence rises

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• USD: Mixed, house price rebound slows, consumer confidence rises more than expected, stocks turn lower
• JPY: Lower, industrial production and household spending declined , unemployment unchanged
• EUR: Lower, France AAA debt rating at risk of a downgrade, Greek bond spreads widen
• GBP: Higher, GDP revised up, house prices rise, trade gap narrows
• CAD and AUD: AUD & CAD higher, RBA rate hike speculation, Canada’s raw material prices rise

Overview
The USD traded mixed Tuesday weakening against the GBP and commodity currencies and firming versus the EUR and JPY. GBP outperformed supported by report of an upward revision in UK Q4 GDP and higher UK house prices. EUR erased early overseas gains pressured by rumors that France may lose its AAA debt rating and in reaction to ongoing concerns about the Greek debt crisis as Greek bond spreads continued to widen. AUD was supported by RBA rate hike speculation and the JPY traded lower pressured by improving risk appetite and firmer equity market trade with additional selling pressure noted in cross trade to the GBP and AUD. CAD traded higher supported by report of an unexpected rise in Canada’s raw material prices. Risk appetite was supported by news from China about possible Yuan revaluation and US China tensions. Reuters reports of divisions in China over the Yuan value. Two PBOC advisors said that China should allow the Yuan to gradually appreciate but the Chinese trade minister said that the Yuan is not the cause of US China trade gap. US Chinese tensions may be easing in reaction to comments from President Obama that he wants to work with China to create balanced and sustained global growth. US economic data was mixed with the Case Shiller House Price Index unchanged last month. The rebound in house prices seen last fall has faded. Consumer confidence came in above expectations and USD edged higher rising to a fresh two month high versus the JPY. Focus turns to Wednesday’s release of the ADP employment report for March. Investors will be looking at the ADP for clues to Friday’s US unemployment report. March nfp is expected to post a gain of 200k.

Today’s US data:
January Case Shiller Home Price Index declined by 0.7%, a 0.8% decline was expected. March consumer confidence rose to 52.5, a reading of 49.5 was expected.

Upcoming US data:
On March 31st March ADP employment will be released expected at 20k compared to -20k last month. Also on March 31st March Chicago PMI and factory orders will be released. The Chicago PMI is expected at 61 compared to 62.6 last month and factory orders are expected to rise by 0.5% compared to a 1.7% rise last month. On April 1st initial claims for the week ending 3/27 will be released expected at 438k compared to 442k last week along with February construction spending, the March ISM index and March domestic auto sales. Construction spending is expected to fall by 1.1% compared to a 0.6% decline last month. The ISM index is expected unchanged at 56.5. On April 2nd the March unemployment rate and nonfarm payrolls will be released. Nonfarm payrolls are expected to rise by 200k compared to -36k last month and the unemployment rate is expected unchanged at 9.7%.

JPY
JPY traded lower pressured by improving risk sentiment, selling in cross trade and in reaction to mixed economic data. President Obama’s call for cooperation with China may help to ease US China trade tensions and contributed to an improvement in risk appetite. JPY traded lower in cross trade to the GBP with GBP supported by report of improving UK house prices and an upward revision in UK GDP.JPY traded lower in cross trade to the AUD with AUD supported by RBA rate hike speculation. EUR/JPY traded lower with EUR gains limited by rumors that France may face a credit rating downgrade and in reaction to ongoing concerns about the Greek debt situation as demand for Monday’s Greek bond auction was weak. Japan’s February unemployment rate was unchanged at 4.9%. Japan’s February industrial production declined by 0.9% and household spending dropped by 1.6%. These reports contrast with Monday’s release of strong Japanese February retail sales and paint a mixed picture for Japan’s economy. JPY traded to the days lows after the release of above expectation US consumer confidence. This week’s main focus will be the release of Japan’s tankan business sentiment Thursday survey and US March unemployment report Friday.

 On March 31st February housing starts and construction orders will be released.  Housing starts are expected to rise by 2% compared to 5.4% rise last month. Construction orders are expected at 9.1% compared to 15.7% last month. On April 1st March tankan survey will be released expected -16 compared to -24 last month with CAPEX spending expected -11.5% and -13.8% last quarter.

Key technical levels to watch in USD/JPY include support at 91.75 the March 25th low with resistance at 92.96 the March 25th high.

EUR
EUR traded lower erasing early overseas gains pressured by ongoing worries about the Greek fiscal outlook and rumors that France may see a downgrade of its credit rating. Monday, Greece auctioned a seven-year bond that was poorly received and Greek bond yields continued to widen. The poor reception for the Greek bond auction and widening of Greek bond spreads generates concern about the financing of Greek debt. EUR has been supported over the last couple trading sessions by last week’s announcement that the IMF and EU agreed to aid Greece if needed. EUR remains vulnerable to concern about sovereign debt risk in the EU with today’s focus on rumors that France may lose its AAA credit rating. Last week Portugal’s debt rating was downgraded and there is concern that the EU faces more sovereign debt risks with investors keeping a close eye on Ireland, Spain and Portugal. The Irish government announced today that it will take a bigger stake in the banking sector. EUR traded lower despite report of rising import prices in Germany. German February import prices rose by 1% a 0.4% rise was expected. If today’s report of higher import prices in Germany is the start of a trend towards higher EU inflation investors may begin to look for the ECB to shift to a more hawkish policy bias. Many analysts expect the ECB hold rate policy steady and delay rate hikes because of concern about the impact of sovereign debt risks on the EU recovery. EUR may see additional selling pressure as interest rate differential is moving in favor of the USD. Monday, three month USD Libor rate hit a six-month high in anticipation of an eventual Fed policy shift. In contrast EU Libor rates held at record low in anticipation of fresh liquidity add expected from the ECB Wednesday. This week’s release of US March unemployment report will be key to the outlook for the US recovery and interest rates.

On March 31st, German March unemployment will be released expected unchanged at 8.2% along with EU HICP for March expected at 1% compared to 0.9% last month. On April 1st EU March manufacturing PMI will be released expected 54.2.

The technical outlook for the EUR is negative as EUR trades below 1.3400. Expect EUR support at 1.3350 with resistance at 1.3537 the March 30th high.

GBP
GBP traded higher supported by report of an upward revision in UK GDP, firmer UK house prices and a narrowing of the UK current account gap. UK Q4 GDP was revised up 0.1% to 0.4% and February Nationwide Building Society house price index rose by 0.7%. These reports suggest that the UK recovery is gaining momentum. UK Chancellor Darling says that he expects to see a sustainable recovery in the UK. Darling went on to say that weaker GBP has helped to support the rebound in the UK economy. Q4 current account gap narrowed to 1.7bln from a revised 5.9bln in Q3 as exports rise. GBP was also supported by gains in cross to the EUR with EUR pressured by ongoing worries about the Greek debt outlook and fresh worries about a potential downgrade for France’s credit rating. Investors remain concerned about the UK debt outlook but in its pre-election budget announcement the UK forecast that the budget deficit will narrow in the years ahead and the latest UK election polls suggest that the Conservatives may gain a parliamentary majority. The Conservative party has pledged to take action to reduce the UK deficit. GDP direction will be linked to UK debt and election outlook.

On March 30th GFK consumer confidence will be released expected -13 compared to -14 last month. On April 1st March CIPS manufacturing PMI will be released expected at 56.8 compared to 56.6 last month.

The technical outlook for GBP is mixed as GBP traded above 1.5000. Expect near-term support at 1.5000 with resistance at 1.5329 the March 18th high.

CAD
CAD traded higher supported by rising commodity prices and by hope US China tensions are easing. Canada’s IPPI was flat last month and the RMPI rose by 0.4%. The IPPI was in line with expectations and the RMPI rose more than expected.  A statement by President Obama that he wants to work with China to achieve stable and balanced growth generates hope that US and Chinese trade tensions may ease. US Chinese trade tensions are seen as a threat to the global recovery. CAD generally benefits from optimism about the global recovery. Equity markets are trading at an 18 month high adding to optimism about the global recovery. Crude prices traded above $82 a barrel and the price of copper was also firm. CAD price direction maintains a very close correlation to the price of crude. CAD traded higher last week supported by hawkish comments from BOC Governor Carney. Carney said that the Canadian recovery was faster than expected and he suggested that he was open to consideration of possible rate hike as early as June 1st. The BOC has pledged to maintain low yields through June of 2010 conditional on inflation remaining in check. Canada’s core inflation rate rose to its highest level in 16 months. Canada’s February CPI rose by 0.4%, a 0.3% rise was expected. The core inflation rate rose by 2.1%. The core inflation rate is above the BOC’s 2% inflation target. The above target CPI increases the risk of an earlier BOC rate hike.  CAD has been outperforming supported by improving Canadian domestic economic outlook and speculation that rising Canadian inflation will encourage the BOC to make an earlier rate hike. Today’s report of an unexpected rise in Canada’s February raw material prices may increase pressure on the BOC to consider an earlier rate hike. CAD should remain well supported on breaks by speculation that the BOC will hike rates before the Fed. Focus turns to this week’s release of Canada’s GDP. The trade will be looking to the GDP for confirmation that the Canadian recovery is gaining momentum.

On March 31st January GDP will be released expected unchanged at 0.5%.

The technical outlook for CAD is positive as USD/CAD trades below 1.0100. Look for near-term support at 1.0062 the March 19th low with resistance at 1.0273 the March 29th high.

AUD
AUD traded higher supported by RBA rate hike speculation and speculation that China may allow the Yuan to gradually appreciate. RBA watcher McCrann said that it would be extraordinary if the RBA did not hike rates next week. McCrann’s comments follow yesterday’s statement by the RBA Governor Stevens that interest rates are too low and cannot remain at prior levels. His comments fuel speculation that the RBA will hike rates at the April RBA policy meeting. RBA’s Debelle said that rate policy will be tied to mortgage rates and home prices. Australian home prices have been rising. RBA assistant governor Lowe said last Thursday that interest rates will continue to rise towards normal and that waiting for improving global outlook to raise rates would be too late. The normal range for RBA rates is thought to be 4.25% to 4.75%. Australian financial markets are pricing a 70% chance that the RBA will hike rates 25 basis points to 4.25% next week .The RBA is expected to hike rates from the current 4% level to 5% by year-end. Next RBA policy meeting will be held on April 6th. AUD was also supported by Yuan revaluation speculation. PBOC advisor Bin says that China should let the Yuan gradually rise. Firmer Yuan could help to reduce global trade imbalance and improve Australian export demand. AUD gains were limited as US equities turned lower for the day and US bond yields rise in reaction to report of improving US consumer confidence.

This week’s Australian economic calendar includes the March 31st release of February building approvals expected at 3.5% compared to -7% last month along with February retail sales expected at 0.8% compared to 1.2% last month and February private sector credit expected unchanged at 0.4%. On April 1st February trade balance will be released expected at -1.63bln compared to -1.18bln last month. 

The technical outlook for the AUD is positive as the AUD rallies above 9100. Expect AUD support at 9166 the March 30th low with resistance at 9253 the March 17th high.

US Morning Notes - USD lower, UK GDP revised higher, house prices rise

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FX Highlights

• The USD is trading mixed to lower pressured by speculation China will soon allow the Yuan to rise and in reaction to improving UK economic data, GBP was supported by an upward revision in UK GDP and better than expected housing data, EUR gains limited by rumors that France may lose its AAA credit rating and weak reception for yesterday’s Greek bond auction, AUD supported by RBA rate hike speculation, JPY trades lower as stocks rise
• Focus turns to today’s release of US Case Shiller HPI and consumer confidence and Canada’s industrial producer prices
• PBOC’s advisor Bin says that China should let the Yuan gradually rise, China’s trade Minister says Yuan is not the cause of US China trade gap, US Chinese tensions ease in reaction to comments from President Obama that he wants to work with China to create balanced growth
• Japan’s February industrial production declines by 0.9%, February unemployment unchanged at 4.9%, February household spending falls by 1.6%,JPY lower
• UK final Q4 GDP revised up 0.1% to 0.4%, Q4 current account gap narrows to 1.684bln from 5.912bln, UK February house prices rose by 0.7% in February according to Nationwide Building Society, GBP higher
• RBA watcher McCrann says it would be extraordinary if the RBA did not hike rates next week,AUD higher
• EUR erased early gains pressured by rumors that France may lose its AAA credit rating and in reaction to widening of Greek bond spreads, EUR lower
• Three month USD Libor rate hits a six month high in anticipation of a Fed policy shift and US debt worries, EUR Libor rates held at a record low in anticipation of fresh liquidity from the ECB Wednesday
• World Gold Council says China’s demand for gold may double in the next decade on rising jewelry and investment demand
• Feds Evans says he is very worried about US unemployment, US inflationary risks are minimal and US monetary policy is appropriate, Evans also said that monetary policy is not effective in pricking bubbles
• US equity markets set to open higher, European equities mixed, Nikkei closed 110 points higher

Upcoming Events

• US- Tuesday, January Case Shiller Home Price Index will be released expected at -0.8% compared to-3.1% last month along with March consumer confidence expected at 50 compared to 46 last month
• CAN-Tuesday, February IPPI and RMPI will be released expected at 0.1% and - 1% respectively

EU Morning Report - Heavy UK financial calendar today volatility expected in GBP pairs!

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Heavy UK financial calendar today volatility expected in GBP pairs!

•  Monday’s trading saw the USD weaken against all majors as the EU / IMF rescue package has stabilized the markets and now will most likely enter a consolidation period. The markets, in terms of risk, will be looking at the next Greek bond issue and how the markets receives the offer. On the financial calendar side we saw US Personal income remain unchanged for the month however a big surprise was reported in regards to consumer spending as the figures showed a 3.1% increase as opposed to a 2% expectation. Equity markets closed positive 0.57% for the S&P 500 WTI OIL gained over $2 to 82.17 and the 2 year US Treasuries traded between 1.11% - 1.03%. USDJPY as expected tracked the yields lower as well to 92.13 from the 92.90 highs.
•  In Europe yesterday we saw an improvement in both business and economic sentiment for the month of February. Greece also went ahead with a 7 year bond issue which funded all of Greece is debt needs however the yields did remain elevated. Focus turns to Wednesdays Euro zone CPI report as focus shifts to growth and inflation expectations within Europe as a whole and has slightly moved away from focusing on a possible Greek default. EURUSD yesterday traded between 1.3419 - 1.3500
•  In the United Kingdom we saw plenty of short covering in the GBPUSD pair as traders covered their short trades tracking the Euro. Currently the major focus in GBP trade is the outcome of the UK parliamentary elections. There is great risk of a ‘hung’ parliament in the country meaning that a minority government will find it hard to pass tough austerity measures so as to bring the UK budget deficit back under control. Consumer Credit saw an increase of GBP 0.528 bn and there was also an increase of 0.3% in the M4 money supply. GBPUSD traded between 1.4890 - 1.5018.
•  Today the market will shift its attention to UK nationwide house prices looking for a 0.2% increase for the month. We will also have the UK Q4 GDP report expected at 0.3% qq and the UK consumer confidence for March expected at -13. There is plenty of major indicators today for the pound expected to elevate volatility in GBP pairs. In the US we will have consumer confidence and the Case Shiller 20 mm also expected to cause some volatility in the USD.    

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3365 with a preference to enter into long positions at 1.3375
• § The USDJPY pivot point is at 92.25 with a preference to enter long positions at 92.30

 Today’s calendar and market movers:

• § UK Nationwide House Prices for March expected to grow by 0.2%
• § UK Q4 GDP qq expected to remain unchanged at 0.3%
• § US Case Shiller 20 for January expected to improve to 50
• § US Consumer Confidence for March expected to improve to 2

 Equity Markets:

•  US equities closed positive on Monday with the DJIA and the SP500 closing 0.42% and 0.57% respectively.  The European bourses were positive on Monday with the FTSE up 0.13% the DAX and the CAC closing positive at 0.60% and 0.29% respectively. The NIKKEI and the HSI at the time of writing is 1.01% and 0.60% respectively.

Daily Forex Outlook - USD Strength Retreats

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CURRENCY TRADING SUMMARY - 30th March (00:30GMT)

U.S. Dollar Trading (USD) was under pressure from the open as the Euro rally flowed over from Friday and dragged the rest of the pairs higher against the Greenback. February Core PCE was 0.0% vs. 0.1% forecast. US stocks rallied on the large move higher in Oil. In US stocks, DJIA +45 points closing at 10895, S&P +6 points closing at 1173 and NASDAQ +9 points closing at 2404. Looking ahead, March Consumer Confidence is forecast at 50 vs. 46 previously. Also released, January Case Shiller House Prices are forecast at -0.2%m/m.

The Euro (EUR) tested 1.3500 in early Asia but was capped from heavy profit taking above the figure and fell back to the mid 1.34 range. March Consumer Sentiment was unchanged at -17. EUR/JPY struggled above the Y125 once again. Overall the EUR/USD traded with a low of 1.3418 and a high of 1.3508 before closing at 1.3480. Looking ahead, February Import Prices are forecast at 0.4% vs 1.7% previously.

The Japanese Yen (JPY) was on the back foot for most of the day as crosses led by AUD/JPY continued their recent rally. USD/JPY was contained on USD weakness to the Y92 level but the prospect of further gains still remain. February Retail Sales surged 4.2% vs. 1.8% forecast y/y. Overall the USDJPY traded with a low of 92.33 and a high of 92.81 before closing the day around 92.40 in the New York session. UPDATE February Unemployment Rate remains at 4.9%. February Industrial Production at -0.9% vs. -0.5% forecast.

The Sterling (GBP) traded briefly above 1.5000 but resistance was strong and the pair held under just the figure for the rest of the day. EUR/GBP continued to pivot the 0.9000 level as the market waits for further direction. February Mortgage Approvals at 47k vs. 48k. Overall the GBP/USD traded with a low of 1.4890 and a high of 1.5022 before closing the day at 1.4980 in the New York session. Looking ahead, Q4 GDP is forecast to remain at 0.3%. March Nationwide House Prices are seen at +0.2% vs. -1% previously.

The Australian Dollar (AUD) was the strongest currency in the market Monday on the back of RBA Governor Steven’s unprecedented TV appearance in which he warned against over-speculation in the Australian housing market. AUD/JPY also rallied up to the key Y85 level. Overall the AUD/USD traded with a low of 0.9045 and a high of 0.9181 before closing the US session at 0.9180.

Oil & Gold (XAU) was steady above the $1100 level failing to track the Oil rally higher. Overall trading with a low of USD$1103 and high of USD$1115 before ending the New York session at USD$1108 an ounce. Oil enjoyed a major rally on the back of a weaker Dollar. Crude Oil was up +$2.17 ending the New York session at $82.17.

TECHNICAL COMMENTARY

Euro - 1.3485

Initial support at 1.3270 (March 26 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3507 (Mar 24 high) followed by 1.3569 (Mar 23 high)

Yen - 92.50

Initial support is located at 91.77 (Mar 25 low) followed by 91.09 (Mar 24 low). Initial resistance is now at 92.96 (Mar 25) followed by 93.77 (Jan 8 high).

Pound - 1.4985

Initial support at 1.4784 (Mar 1 low) followed by 1.4704 (April 30 low). Initial resistance is now at 1.5049 (Mar 24 high) followed by 1.5113 (Mar 23 low).

Australian Dollar - 0.9160

Initial support at 0.8978 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9199 (Mar 23 high) followed by 0.9250 (March 17 high).

Gold - 1109

Initial support at 1085 (Mar 24 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1124 (0.618 of 1144.98-1092.47) followed by 1133 (Mar 17 high).

Oil - 82.50

Initial support at 82.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 83.20 (Intraday Resistance) followed by 85.00 (Intraday Resistance).

Special Report-US bond yields highest since last June

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US 10 year bond yields traded at the highest level since June 2009 reaching a yield of 3.94% last week. The credit crisis sent ten year bond yields to a record lows in December 2008 as investors sought safety in US treasuries and the Federal Reserve lowered the Fed funds rate to a record low. The worst of the credit crisis has passed and bond yields are rising. Are bond yields rising because of optimism about the US recovery or because of concern about rising US debt? The answer to this question may be crucial to the outlook for the USD.

 The US government reported a record $221bln monthly budget deficit in February. February marked the 17th straight month that the US government has posted a deficit. The Obama administration is forecasting 1.56trln deficit for 2010. US government deficits are projected at 1trln or more through 2020. Last week the U.S. Congress passed a health reform bill. The estimated cost of the health reform bill is just under 1trln over the next 10 years with the CBO estimating that the reform bill could reduce US budget deficit by close to $200bln in the next decade. Many analysts are skeptical that the health reform bill will reduce the deficit and warn that the health care bill could cost more than the government estimate. This may partly explain why it might not have been a coincidence that US ten year yields hit their highest level since last June after the announcement of the passage of the health reform. Additional deficit concerns include report that the US Social Security administration will for the first time pay out more this year than it takes in and last week the Obama administration  unveiled  new measures to help the unemployed reduce their mortgage payments. The revamped mortgage plan will expand the administrations $75bln foreclosure relief effort but it’s not clear by how much.

 US bond yields have been rising because of weak demand for US bond auctions sparked by increased bond supply and investor concern about the rising US deficit. Last week’s US bond auctions were poorly received with reduced demand from foreign central banks. Ten-year bond yields posted their biggest weekly jump last week since December. The Greek debt crisis, Dubai World debt restructuring and sovereign debt risks in the UK and Japan may have dampened demand for US bonds forcing investors to shine a light on US fiscal troubles. According to the CBO, US debt will rise to 90% of GDP and that the 2011 fiscal budget would generate $10trln cumulative budget deficits over the next 10 years. The rise in GDP debt ratio could weaken US long-term growth outlook and force investors to demand higher yields to buy US debt.

 Over the past few months China has been reducing its holding of US treasuries. China and Japan are the two largest holders of US debt. Indirect bidders at last weeks US seven year note auction declined to 41.9% compared to 49.7% in the last four auctions. Indirect bidders include foreign central banks. Diminished demand for US treasuries by foreign central banks could lead to higher interest rates and higher cost for the US funding of its deficits. The function of the market is to discipline governments. The spike in US yields may be the first sign that the US government is spending too much and that the Fed has maintained low yields for too long. At the same time that the US federal government is posting record monthly deficits many US state governments are falling deeper into the red. State governments will be competing with the federal government to raise capital and this could add additional upward pressure to yields and eventually crowd out investors. The US may find it more difficult to fund its debt.

 Bond yields may also be rising because of optimism about the US recovery. Although recent US economic data has been mixed, the Federal Reserve Board raised its economic outlook for the US economy and begun laying the foundation for an eventual exit from accommodative monetary policy. Optimism about the US recovery is fueled by report of strong US Q4 GDP. US Q4 GDP grew by 5.6%.Most of the Q4 GDP growth was due to rebuilding of inventories.Q4 consumer spending was weak. The rebound in GDP may not be sustainable without increased consumer spending. US GDP is expected to grow by an average of 3% in 2010. This would be respectable growth but not strong enough to send yields surging because US inflation is subdued. In addition, US equities are trading at an 18 month high. The strength of the equity market rally is seen as further evidence of optimism about the US recovery. This Friday’s release of US March unemployment will be key to investor optimism about the US recovery. The March nonfarm payrolls report is expected to show significant improvement. Fed policy has been closely tied to the US employment outlook. Once jobs growth becomes self-sustaining the Fed is likely to hike interest rates.

 A number of analysts expect the recent rebound in the US economy to slow in the second half of the year as consumer spending remains weak, fiscal and monetary stimulus is withdrawn and unemployment remains elevated. If bond yields continue to rise it could add additional risk to the strength of the recovery. The USD is trading at its best level versus Europe in ten months and a two month high versus the JPY. The USD is benefiting from the rise in US bond yields. If yields continue to rise solely because of investor concern about US fiscal outlook and growth slows the USD may experience fresh selling pressure. Note in the graph below that US ten year yields are approaching the high end of the recent range at 4.20%. A break above this level could set off alarm bells about the US deficit. Rising bond yields could become a negative for the USD if yields are rising because the US is borrowing more than it can repay.

Daily Forex Report-USD lower, stocks rise, growth currencies outperform

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• USD: Lower, improving risk sentiment, RBA rate hike speculation, diminished Greek uncertainty
• JPY: Lower, retail sales post best annual gain in 12 years, selling in cross trade
• EUR: Higher, EU economic confidence rises to a two year high, Greek bond spreads remain wide
• GBP: Higher, consumer credit rises, mortgage approvals dropped, Conservatives expand lead
• CHF: Higher, EUR/CHF rebounds from all-time low, threat of intervention
• CAD and AUD: AUD & CAD higher, hawkish comments from the RBA, firmer equities, higher crude

Overview
The USD starts the week lower pressured by improving risk appetite as equity markets firm. The improvement in risk sentiment is attributed to last weeks announcement of an EU/IMF aid plan for Greece, stronger economic data from the EU and Japan and speculation that this week’s US nonfarm payrolls will post a sharp rise. The EU/ IMF aid plan for Greece limits some of the uncertainty about Greece and reduces the risk of a Greek debt default. The head of the IMF says there is no immediate sign that Greece needs help. EU economic confidence rose to a two year high and Japan’s retail sales rose at the fastest pace in 12 years. These reports fuel optimism about the strength of the global recovery. Commodity currencies traded higher tracking the improvement in equities and firmer commodity prices. AUD traded higher supported by hawkish comments from the RBA Governor Stevens that interest rates are too low and could not remain at prior levels.  This week’s main focus will be Friday’s release of US March unemployment. Nonfarm payrolls are expected to rise by as much as 190k. Anticipation of improving US employment outlook adds today’s improvement in risk appetite. Today’s US economic data was mixed with personal income unchanged, and personal consumption in line with expectation. Bloomberg reports that analysts at Goldman Sachs have changed their negative USD bias stating that the USD is supported by low inflation, rising equities and safe haven demand sparked by the Greek fiscal crisis.

Today’s US data:
February personal income was unchanged, a reading of 0.1% was expected. February personal consumption at 0.3% as expected.

Upcoming US data:
On March 30th January Case Shiller Home Price Index will be released expected at -3.3% compared to -3.1% last month along with March consumer confidence expected at 49.5 compared to 46 last month. On March 31st March ADP employment will be released expected at 20k compared to -20k last month. Also on March 31st March Chicago PMI and factory orders will be released. The Chicago PMI is expected at 61 compared to 62.6 last month and factory orders are expected to rise by 0.5% compared to a 1.7% rise last month. On April 1st initial claims for the week ending 3/27 will be released expected at 438k compared to 442k last week along with February construction spending, the March ISM index and March domestic auto sales. Construction spending is expected to fall by 1.1% compared to a 0.6% decline last month. The ISM index is expected unchanged at 56.5. On April 2nd the March unemployment rate and nonfarm payrolls will be released. Nonfarm payrolls are expected to rise by 168k compared to -36k last month and the unemployment rate is expected unchanged at 9.7%.

JPY
JPY drifted lower pressured by improving risk sentiment and selling in cross trade. Japan’s February retail sales rose at the fastest annual rate in 12 years. February retail sales rose by 0.9%m/m and 4.2% y/y. The strong Japanese retail sales data Japan helped to fuel today’s improvement in risk sentiment. JPY weakened in cross trade to the EUR with the EUR supported by less uncertainty about the Greek fiscal outlook and report of strong EU economic confidence. GBP/JPY traded higher with GBP supported by S&P affirmation of the UK AAA credit rating and UK election polls which suggest the Conservatives are expanding their lead over the Labor Party. AUD/JPY traded over 1% higher with the AUD supported by hawkish comments from the RBA Governor Stevens. Last week, Japan reported that CPI declined for the 12th consecutive month. The CPI report confirms that deflationary pressures continue in Japan. The CPI report is likely to increase pressure on the BOJ to ease monetary policy to try and combat deflationary pressures. Today’s report of strong Japanese retail sales may make it more difficult for the BOJ to take action to combat deflation. At the March BOJ policy meeting the BOJ elected to expand its funding operation but the policy board was split over this decision with some board members stating that it’s more difficult to justify BOJ ease as the economy is improving. JPY is trading at a two-month low  versus the USD pressured by widening yield gap with the US and concern about Japan’s budget outlook. US bond yields are trading near their highest level since last June. In light of the recent easing of monetary policy by the BOJ and spike in US bond yields, yield differential is moving in favor of the USD. The widening of the US and Japanese yield gap makes the USD less attractive as a funding currency. Yield differential is emerging as a key driver for JPY trade. Japan announced a record $1trln budget for next fiscal year. The budget includes a record ¥44.3trln in new bond issues. The sharp increase in Japan’s bond issuance and budget deficit increases the risk that Japan will face a downgrade of its debt rating. Focus turns to this week’s release of Japan’s tankan business sentiment survey and US March unemployment report.

This week’s Japanese economic calendar includes the March 30th release of February household spending, unemployment and industrial output. The household spending is expected to rise by 1.4% compared to 1.7% last month. Unemployment is expected to rise by 0.1% to 5% from 4.9% last month and industrial output is expected to fall by 1.5% compared to 2.7% rise last month. On March 31st February housing starts and construction orders will be released.  Housing starts are expected to rise by 2% compared to 5.4% rise last month. Construction orders are expected at 9.1% compared to 15.7% last month On April 1st March tankan survey will be released expected -16 compared to -24 last month with CAPEX spending expected -11.5% and -13.8% last quarter.

Key technical levels to watch in USD/JPY include support at 91.75 the March 25th low with resistance at 93.80 the January 8th high.

EUR
EUR traded higher supported by diminished threat of Greek debt default and strong EU economic data. Last week’s announcement of an EU/IMF plan to aid Greece if necessary helps to reduce the imminent threat of a Greek debt default. Investors are watching the reception of today’s Greek bond auction. Despite the EU/IMF safety net for Greece there remains concern about whether Greece will follow through on plans to cut its deficit. EUR gains were limited as the spreads for the Greek bonds widened to pre EU/IMF aid plan levels generating concern that the cost of funding the Greek debt will remain high. Investors will be looking to see how upcoming Greek bond auctions are received to determine whether there’s been any change in sentiment about the Greek fiscal outlook in light of the announcement of an aid plan for Greece. EU March economic sentiment improved to 97.7 from 95.9 last month. EU economic sentiment is at its best level in two years. Improving EU economic outlook is overshadowed by EU sovereign debt risk and speculation that the ECB will remain on hold because of the potential drag the Greek debt crisis may have on the EU economic recovery. ECB’s Weber said that current interest rate levels are appropriate. Focus may shift from Greek worries to yield and growth differential. The Wall Street Journal notes that the EUR has been pressured by the Greek crisis and the EUR may experience additional selling pressure with the USD supported by the recovery in the US economy and rising US bond yields. This week’s release of US March unemployment report will be key to the outlook for the US recovery and interest rates.

On March 31st, German March unemployment will be released expected unchanged at 8.2% along with EU HICP for March expected at 1% compared to 0.9% last month. On April 1st EU March manufacturing PMI will be released expected 54.2.

The technical outlook for the EUR is negative as EUR trades below 1.3400. Expect EUR support at 1.3350 with resistance at 1.3506 the March 29th high.

GBP
GBP traded higher supported by S & P affirmation of the UK AAA credit rating and mixed UK economic data. S&P maintains its negative outlook for UK debt and affirmed the UK AAA credit rating. S&P said that it will review the UK credit rating after the general election and warned that absent a strong plan to reduce its debt UK debt rating may be at risk. The UK election is expected on May 6th. The latest election polls show the Conservatives expanding a slight lead over the Labor Party. The Conservatives have pledged to take action to reduce the UK debt. The main risk for the GBP is the possibility that the election results in a hung parliament. A hung parliament will make it difficult for the UK to take action to reduce its deficit. UK mortgage approvals declined to nine month low at 47,094 from 48,099 last month. February consumer credit rose to 0.528bln from 0.349bln last month and mortgage lending improved to 1.586bln from 1.53 6bln last month. Last week the UK reported weaker than expected inflation and stronger retail sales. Today’s report of improving consumer credit and weaker mortgage approvals will encourage the BOE to maintain steady rate policy. GDP direction will be linked to UK debt and election outlook.

On March 30th GFK consumer confidence will be released expected -13 compared to -14 last month. On April 1st March CIPS manufacturing PMI will be released expected at 56.8 compared to 56.6 last month.

The technical outlook for GBP is mixed as GBP retests 1.5000. Expect near-term support at 1.4781 the March 1st low with resistance at 1.5038 the March 24th high.

CHF
CHF traded mixed with gains limited by selling in cross trade to the EUR. The main focus of CHF trade is the EUR/CHF cross. The EUR/CHF cross traded at record low 1.4232 last week with demand for CHF attributed to safe haven flows related to Greek fiscal worries and indications that the SNB is preparing for a tightening of monetary policy. The price movement of the EUR/CHF has increased the risk of intervention but so far the SNB has refrained. One Swiss firm suggests that the CHF has made most of its gains versus the EUR. The EUR traded higher versus the CHF Monday supported by report of strong EU economic confidence and diminished worries about Greek debt  default in light of last week’s EU/ IMF plan to aid Greece. In addition, the SNB monthly says that Swiss banks are going to start to buy foreign assets to improve their balance sheets. This week’s Swiss economic calendar includes March 30th release of UBS February consumption indicator expected at 1.39 compared to 1.36 last month. On March 31st March KOF leading indicator will be released expected at 1.99 compared to 1.87 last month. On April 1st SVME purchasing manager index will be released expected 59.5 compared to 57 for last month. Expect USD/CHF support at 1.0507 the March 17th low with resistance at 1.0795 the March 10th high. Rumors are circulating that the SNB may intervene at 1.4200 in EUR/CHF.

CAD
CAD traded higher supported by firmer equity and commodity markets and improving risk sentiment. Diminished risk of imminent Greek debt default coupled with the release of strong economic data from the EU and Japan sparked demand for equities and commodities in Monday’s trade. CAD was also supported by firmer crude prices with crude oil approaching $82 a barrel. CAD is expected to remain well supported on breaks by speculation that the BOC may hike interest rates as early as June and in reaction to the improving Canadian domestic economy. CAD traded higher last week supported by hawkish comments from BOC Governor Carney. Carney said that the Canadian recovery was faster than expected and he suggested that he was open to consideration of possible rate hike as early as June 1st. The BOC has pledged to maintain low yields through June of 2010 conditional on inflation remaining in check. Canada’s core inflation rate rose to its highest level in 16 months. Canada’s February CPI rose by 0.4%, a 0.3% rise was expected. The core inflation rate rose by 2.1%. The core inflation rate is above the BOC’s 2% inflation target. The above target CPI increases the risk of an earlier BOC rate hike.  Carney suggested that the higher than expected inflation was result of transitory factors and underlying economic strength. He went on to state that BOC plan to hold interest rates low was conditional. CAD has been outperforming supported by improving Canadian domestic economic outlook and speculation that rising Canadian inflation will encourage the BOC to make an earlier rate hike. CAD should remain well supported on breaks by speculation that the BOC will hike rates before the Fed. Focus turns to this week’s release of Canada’s GDP. The trade will be looking to the GDP for confirmation that the Canadian recovery is gaining momentum. CAD direction will track the price of crude and equities.

This week’s Canadian economic calendar includes the March 30th release of February IPPI and RMPI. IPPI is expected flat and RMPI expected at -1%.On March 31st January GDP will be released expected unchanged at 0.5%.

The technical outlook for CAD is positive as USD/CAD trades below 1.0100. Look for near-term support at 1.0170 the March 25th low with resistance at 1.0304 the March 26th high.

AUD
AUD traded sharply higher supported by hawkish comments from RBA Governor Stevens. Stevens said that interest rates are too low and cannot remain at prior levels. His comments fuel speculation that the RBA will hike rates at the April RBA policy meeting. AUD gains have been limited by RBA policy uncertainty. Last week Stevens said that he sees stronger growth in Asia. His comments follow a statement from the RBA assistant governor Lowe last Thursday that interest rates will continue to rise towards normal and that waiting for improving global outlook to raise rates would be too late. The Stevens and Lowe comments increase the odds that the RBA will hike interest rates at the April policy meeting. The RBA is expected to hike rates from the current 4% level to 5% by year-end. Futures markets are pricing a 65% chance of an RBA rate hike next week. Next RBA policy meeting will be held on April 6th. The RBA is expected to hike rates 25 bps to 4.25%. AUD was also supported by improving risk sentiment as equities rise in reaction to diminished fear of an imminent Greek debt default, stronger economic data from the EU and Japan and anticipation of a strong US nonfarm payrolls report Friday.

This week’s Australian economic calendar includes the March 31st release of February building approvals expected at 3.5% compared to -7% last month along with February retail sales expected at 0.8% compared to 1.2% last month and February private sector credit expected unchanged at 0.4%. On April 1st February trade balance will be released expected at -1.63bln compared to -1.18bln last month. 

The technical outlook for the AUD is positive as the AUD rallies above 9100. Expect AUD support at 9034 the March 29th low with resistance at 9253 the March 17th high.

US Morning Notes - USD lower, AUD firms on hawkish RBA comments

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FX Highlights

• The USD is trading lower pressured by improving risk appetite sparked by firmer equity market trade and recovery hope, the improvement in risk appetite is attributed to the EU/IMF aid plan for Greece, strong data from the EU and Japan and anticipation that this week’s US nonfarm payrolls will post sharp gains, EUR trades higher supported by diminished fear of Greek debt default and report that EU economic confidence rose to a two year high, AUD supported by hawkish comments from RBA Governor Stevens, JPY trades lower pressured by improving risk sentiment with downside limited by report of strong retail sales from Japan, GBP underperforms as UK mortgage lending slows
• Focus turns to today’s release of US personal income and consumption
• Japan’s February retail sales rose by 0.9%, JPY mixed
• RBA Governor Stevens says interest rates are too low and cannot remain at previous levels, AUD higher
• S&P maintains negative outlook for UK debt, affirms UK AAA credit rating, UK February consumer credit rose to 0.528bln compared to 0.349bln last month, mortgage approvals dipped to 47,094 from 48,099 last month and mortgage lending improves to 1.586bln from 1.536bln last month, GBP higher
• ECB’s Weber says current interest rate levels are appropriate, EU March economic sentiment improves to 97.7 from 95.9 last month,EUR higher
• Fed’s Bullard says finance reform could retard growth
• OECD warns Germany on reliance on exports calls for the country to broaden it economic performance
• White house plans to extend mortgage relief and encourage lenders to modify current payments for the unemployed
• US equity markets set to open higher, European equities 0.25% higher, Nikkei closed 10 points lower

Upcoming Events

• US- Monday, February personal income will be released expected unchanged at 0.1% along with personal consumption expected at 0.3% compared to 0.5% last month
• CAN-Monday, no major Canadian economic data is due for release today

EU Morning Report - The EU and IMF step in to rescue Greece!

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The EU and IMF step in to rescue Greece!

•  Friday’s trading saw the announcement by the EU on a plan to support Greece with some help from the IMF. The agreement will be in the form of bilateral loans from the EU and the IMF. The help is only expected to be used as a last resort measure. ECB President Trichet accepted the plan despite calls before that any IMF involvement puts in to question EU solidarity. The EURUSD rallied following the news putting in to place a short term bottom for the pair. Q4 growth in the US was released on Friday and came just below expectations at 5.6% however Michigan Consumer Sentiment beat expectations and came in at 72.5. Equity markets in the US closed 0.08%, 2 year US Treasury’s traded between 1.04 % and 1.09 % and the USDJPY remained near the highs and traded between 92.28 - 92.88.
•  The Euro rallied to 1.3490 from the lows of 1.3260 following the news of the Greek bailout as large speculators covered their short positions. The news does not necessarily mean that Greece is out of trouble or that it will be in a position to roll over its future debt again without help. Investors turn their attention to Greece’s next bond auctions to see how the sentiment has changed in regards to the Greek bond market and also will be closely monitoring Spain, Portugal and Ireland gauging the credit risk in those countries as well. S&P announced also that the credit rating of Greece will not be affected following the bailout.
•  In Japan we had a BoJ board member Miyao say that ”keeping rates low or trying to push them down could have a stimulating effect on growth”. This comes after pressure from the Japanese Ministry of Finance pushing the BoJ to further loosen its monetary policy. The BoJ is against further QE measures however as they believe that there is a lack of evidence on its usefulness.
•  In Australia over night we saw RBA Governor Stevens appear on TV saying that mortgages will eventually rise to average levels which is thought to be around 5%. Analysts feel that the next RBA rate hike will be in the May meeting. AUDUSD price action was between 0.9115 - 0.9000.
•  Today the market will turn its focus to European consumer confidence reports widely expected to remain unchanged at -17. In the US the focus will be on personal spending reports and on Treasury Sec Geithner’s speech. In Japan overnight we will have the unemployment rate widely expected to remain unchanged at 4.9%.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3365 with a preference to enter into long positions at 1.3375
• § The USDJPY pivot point is at 92.25 with a preference to enter long positions at 92.30

 Today’s calendar and market movers:

• § EU Consumer Sentiment for March expected unchanged at -17
• § US Core PCE mm for February expected to grow by 0.1%
• § Japan Unemployment rate expected to remain unchanged at 4.9%

 Equity Markets:

•  US equities closed positive on Friday with the DJIA and the SP500 closing 0.08% and 0.07% respectively.  The European bourses were negative on Friday with the FTSE down -0.43% the DAX and the CAC closing negative at -0.21% and -0.29% respectively. The NIKKEI and the HSI at the time of writing is -0.17% and 0.82% respectively.

Weekly Outlook - Dollar Bulls in Charge

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Last week’s currency trading review

The Dollar broke higher against all currencies last week as the as the Euro losses continued and USD/JPY broke out of a 2 week range to the topside. US stocks traded at year highs above 10900 on the Dow Jones before settling slightly lower on fresh Korean peninsula concerns surfacing Friday. January Core Durable Goods climbed 0.9% vs. 0.6% previously and weekly jobless claims dropped to 442k vs. 456k previously. The Euro traded at fresh 10 month lows below 1.3300 on Thursday as the market’s concern about Greece debt and the EU’s bailout plan were put to the test. The EU summit on Friday emerged with a EU/IMF compromise bailout strategy that let the Euro stage a solid relief rally into the weekend. March German IFO surprised at 98 vs. 95.8 forecast. The EUR/USD fell -0.92% closing at 1.3406, after opening the week at 1.3529.

The Japanese Yen was the weakest currency in the market last week as the USD/JPY broke to the topside surging over 2 Yen. The main catalyst for the move higher was the change in yields on US Bonds leading the market to replace the Dollar with the Yen as the cheapest funding currency. Also weighing on the Yen was the differing monetary policy outlooks with US set to pare back support for the bond market whilst Japan is considering expanding support. The USD/JPY gained +2.14% closing at 92.52, after opening at 90.54 previously. The GBP fell below the key 1.5000 level on USD strength and ongoing political concerns in the UK. February Retail Sales jumped 2.1% vs. 0.8% forecast but this was offset from a January revision to -3.00% vs. -1.8% initially. GBP/USD fell -0.77% closing at 1.4897 after opening at 1.5011. The AUD held ground well against USD strength until Friday when heavy unwinding of short EUR/AUD positions sent the AUD/USD towards 0.9000. AUD/JPY traded at month highs above Y84.50 before slipping on Friday. High Australian interest rates continue to support the Aussie on dips. The AUD/USD fell -1.26% closing at 0.9039 after opening at 0.9153.

The forex trading week preview

In the States; On Monday, February Core PCE is forecast at 1.3% vs. 1.4% y/y previously. Also released, February Personal Spending is forecast at 0.3% vs. 0.5% m/m. On Tuesday, March CB Consumer Confidence is forecast at 50 vs. 46 previously. On Wednesday, March Chicago PMI is forecast at 61 vs. 62.6 previously. Also released, February Factory Orders forecast at 0.5% vs. 1.7% previously. On Thursday, Weekly Jobless Claims are forecast at 440k vs. 442k previously. Also released, ISM March Manufacturing is forecast at 57 vs. 56.5 previously. On Friday, March Non Farm Payrolls are forecast at 190k vs. -36k previously. The March Unemployment Rate is forecast at 9.7% vs. 9.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, German CPI is forecast at 0.9% vs. 0.6% y/y. On Wednesday, March German Unemployment Rate is forecast at at 8.2% vs. 8.2% previously. February EU Unemployment rate is forecast at 10.0% vs. 9.9% previously. On Thursday, March PMI manufacturing final is forecast unchanged at 56.3. In the UK; On Monday, February Mortgage Approvals forecast at 48 vs. 48.2k previously. Also, BOE Dale speaks. On Tuesday, Q4 GDP Final is forecast unchanged at 0.3% Q/Q. On Thursday, March PMI Manufacturing forecast at 56.8 vs. 56.6 previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, February Industrial Production is forecast at 31.75 vs. 18.5% previously. On Thursday, Q1 Tankan is forecast at -14 vs. -24 previously. Q1 Tankan Capex is forecast at -0.4% vs. -13.8% previously. In Australia; On Wednesday, February Retail Sales are forecast at 0.35 vs. 1.2% previously. On Thursday, February Trade Balance is forecast at -1.37bn vs. -1.18bn previously. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro - 1.3435

Initial support at 1.3270 (March 26 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3507 (Mar 24 high) followed by 1.3569 (Mar 23 high)

Yen - 92.40

Initial support is located at 91.77 (Mar 25 low) followed by 91.09 (Mar 24 low). Initial resistance is now at 92.96 (Mar 25) followed by 93.77 (Jan 8 high).

Pound - 1.4910

Initial support at 1.4784 (Mar 1 low) followed by 1.4704 (April 30 low). Initial resistance is now at 1.5049 (Mar 24 high) followed by 1.5113 (Mar 23 low).

Australian Dollar - 0.9050

Initial support at 0.8978 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9139 (Mar 25 high) followed by 0.9199 (March 23 high).

Gold - 1107

Initial support at 1085 (Mar 24 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1109 (Mar 22 high) followed by 1124 (0.618 of 1144.98-1092.47).

Oil - 80.00

Initial support at 79.50 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 83.20 (March high).