Archived IMT (2011.04.14)

USD dollar stays weak ahead of US PPI and weekly jobless, euro firms ahead of ECB monthly report & GBP recovers ground on improving consumer confidence. Meanwhile, USDCHF at new lows.

The US dollar will once again be in the spotlight today, but if it is to arrest the declines of recent days then a pledge to cut $4trn off the deficit in 12 years by President Obama, while mildly supportive last night, will probably not be enough in the medium term. The combination of cuts and tax rises represents small change in the face of the ever growing national debt, and there is also the small matter of the debt ceiling and this will continue to target the 2009 lows in the US dollar index at 74.17.

In any event yesterdays slightly disappointing retail sales numbers for March suggest that the US consumer is starting to feel the pinch from rising food and energy costs, as they fell back to 0.4% from Februarys 1.1% figure.

The Fed beige book suggested that the US economy was growing gradually with some job growth, however commodity costs were starting to crimp margins and this afternoons producer prices for March look likely to confirm that synopsis with expectations of a rise of 6.4% for March.

Weekly jobless claims are expected to decline slightly to 380k from last weeks 382k.

For the US dollar to start to claw back some ground against a basket of currencies it needs to get back above the 75.25/30 level which was the March lows and to start to see some much more positive data.

The single currency continues to find support as members of the ECB queue up to talk up the prospect of firmer rates into the end of the year with Luc Coene and Yves Mersch the latest to stick their proverbial oars in, while the ECB monthly report should offer further insight into last weeks rate hike, though there shouldnt be too many surprises in it.

Some talk about the prospect of Greece having to restructure its debt prompted some euro weakness late in New York, but we would need to see a move back below 1.4250 to prompt a deeper correction.

The pound found some support from better than expected unemployment data yesterday, while GfK Nationwide consumer confidence data for March also improved to 44 from last months reading of 39.

The Swiss franc continues to surge making new all time highs against the US dollar taking out the double support at 89.15. Bids seen emerging right below the figure, but any resulting bounce seen capped at 08990s for now.

By KM - AshrafLaidi.com Staff