Archived IMT (2011.04.21)

Tech earnings see risk appetite soar, US dollar plunges, Australian PPI rises, euro shrugs off Greek debt talk, UK Public finances & retail sales may undermine the pound, Canada retail sales set to push loonie higher, and gold and silver surge.

The earnings story continued apace after the Dow closed at 34 month highs last night as Apple continued the good news theme after the bell, trouncing expectations of $5.36c a share coming in at $6.40c a share.

On the flip side the US dollar got an absolute caning as investors deserted the greenback in the belief that the Federal Reserve will make no attempt to tighten monetary policy anytime this year. Given that virtually every other G10 country with the exception of Japan, are looking at tightening monetary policy the US dollar appears friendless for the moment as the US dollar index breaks below its 2009 lows at 74.17 and looks headed for its all-time lows at 70.70 posted in 2008.

Even fairly positive economic data was unable to save it with positive existing home sales data for March rising by 3.7%. Todays US weekly jobless claims are expected to drop back under the 400k mark to 390k after last weeks surprise jump to 412k, while US Philadelphia Fed for April is expected to slip back slightly to 36.4 from Marchs 43.4.

The Australian dollar continues to pump in fresh post float highs day after day, pushing above 1.0700, as quarterly Australian PPI exceeded expectations of 1%, coming in at 1.2% and increasing the likelihood of firmer rates in the coming months.

The single currency has shrugged off all manner of bad news as it benefits from the ECBs continued hawkish tone, while it was also helped by successful Spanish and Portuguese bond auctions yesterday albeit at fairly high yields. Talk of a possible restructuring of Greek debt over the Easter weekend was shrugged off with the 2010 highs at 1.4580 taken out with a sustained break targeting the 1.5000 level.

UK public finances for March are also due and being the last month of the tax year Public Sector Net Borrowing is expected to have increased from Februarys 10.3bn to 18.7bn, however the figures are expected to come in under the Chancellors annual borrowing forecast of 146bn. The health of the UK consumer also comes under scrutiny with expectations of a slight improvement in retail sales for March after Februarys dreadful number. Expectations are for a decline of 0.4%, an improvement on Februarys 1% decline. Key levels in EURGBP are 2010 highs at 0.8940, and on the GBPUSD at 1.6460, the 2010 highs with a break targeting 1.6780.

Canadian consumers are also in the spotlight with retail sales for February set to bounce back by 0.5% from Januarys decline of 0.3% which in turn could well see the Canadian dollar make fresh highs after making new all-time highs against the US dollar yesterday.

Gold and silver ratio pushes to new 25 year lows as silver continues to outperform, declining 12 out of the last 13 weeks, as gold breaks through $1,500 and silver $45.