Archived IMT (2011.04.11)

Last week, USD hit its lowest since 2009 and this week doesnt look as if it will be any different. The backdrop of political turmoil inside the US allied to loose monetary policy continues to erode the appeal of the greenback as global central banks combat rising prices with rate hikes, further widening yield differentials over the US currency.

INFLATION DATA out of the US later this week is unlikely to lead to tighter monetary policy anytime this year, while rising inflation from German, UK and China is likely to show further rises in price pressures. US retail sales and industrial production will also be in focus later in the week.

With little in the way of data today, the main focus will be on tomorrows UK and German inflation numbers, as well as Portugal's meeting with IMF, ECB and European Union officials. Geopolitical factors are also likely to continue to put upward pressure on oil prices with US Crude surging through $110 a barrel at the end of last week, further boosting the Canadian dollar as turmoil throughout the Middle East and Africa threatens to spread.

EURUSD faces immediate resistance at the 2010 highs of around 1.4580, with support near the November highs of 1.4280. GBPUSD still looks set to test its 2010 highs of 1.6460. AUDUSD pushing to fresh float highs, boosted by the Aussies large yield differential against USD and yen and surging commodity prices. These 2 factors combined remain the winning formula for the currency as long as equity indices are not in sell-mode and the risk button is firmly pressed. Support now at 1.0420, the 4th April highs.

By KM - AshrafLaidi.com staff