• USD: Lower, EU rescue plan, stock market surge, uncertainty whether the rescue plan will work
• JPY: Lower, tracking stocks, BOJ minutes state that the economy is improving
• EUR: Lower, impact of coordinated EU/IMF and G-7 bailout plan for Europe fades
• CHF: Lower, gains limited by selling in cross trade to the EUR, rescue plan skepticism
• GBP: Higher, BOE monetary policy & asset purchases unchanged, coalition government may be forming
• CAD and AUD: AUD & CAD higher, commodity markets, equities surge on the EU bailout news

Overview
The USD traded sharply lower and global equity markets surged in reaction to report that the EU/IMF announced a near $1trln rescue package to calm the global markets, support the EUR and try to prevent the Greek debt crisis from spreading. The rescue package includes EU plans to buy bonds, provide loan guarantees, and G-7 central banks will reopen swap lines to alleviate USD funding strains. EUR surged posting its biggest two-day rally versus USD since 2009 in reaction to the aid package. EU buying of European bonds Monday has helped to cut in half the cost of financing the sovereign debt. EUR gains were limited by concern that despite the bailout news the EU faces considerable debt risk. GBP traded higher supported by report that the BOE elected to hold monetary policy and asset purchases unchanged. The commodity currencies surged in reaction to improving risk sentiment and firmer commodity prices. CAD finds additional support from speculation that that Friday’s release of a record monthly rise in employment growth increases the odds of a June BOC rate hike. JPY traded lower pressured by firmer equity market trade and selling pressure in cross trade to Europe. The EU/IMF rescue plan announcement sparked rallies in global equity markets and the EUR. It is not clear whether today’s announcement will have lasting impact as there remain a number of uncertainties about the fiscal outlook in peripheral European nations. The size of the bailout confirms that the EU is committed to try and stabilize the markets and defend the EUR. Equities and the commodity markets held gains better than the EUR.

Today’s US data:
No major US economic data was released in today’s trade.

Upcoming US data:
This week’s US economic includes the May 11th release of March wholesale inventories and sales. Inventories are expected to rise by 0.5% compared to 0.6% last month and wholesale sales are expected at 0.7% compared to 0.8% last month. On May 12th March trade balance will be released along with the April treasury budget. The trade balance is expected to widen to -40bln from -39.7bln last month. On May 13th April import prices and jobless claims for week ending 05/08 will be released. Import prices are expected to rise by 0.8% compared to 0.7%last month. Jobless claims are expected to fall to 438k from 444k last week. On May 14th April retail sales industrial production, capacity utilization and University of Michigan sentiment will be released along with March business inventories. Retail sales are expected to rise by 0.3% compared 1.6% last month. Industrial production is expected to rise by 0.5% compared to 0.1% last month. Capacity utilization is expected at 73.6 compared to 73.2 last month. Michigan consumer sentiment is expected at 73.2 compared to 72.2 last month. Business inventories are expected to rise by 0.3% compared to 0.5% last month.

JPY
JPY traded sharply lower pressured by improving risk sentiment and firmer equity market trade on news of the announcement of a substantial EU/IMF rescue package. The rescue package specifically includes a pledge to support the EUR and this pledge helped spark a sharp rally in the EUR/JPY cross. A statement from the BOJ’s Yamaguchi confirming that the BOJ has joined with other central banks to alleviate funding strains in Europe adds to today’s improvement in risk sentiment. Yamaguchi went on to say that the current financial market conditions are strained but are not comparable to the period after the Lehman shock. The BOJ minutes for the April policy meeting were released Monday. The minutes state that the Japanese economy is picking up due to improvement in overseas economic conditions but there is not yet sufficient momentum to support a self-sustaining recovery. The minutes also note a pickup in private consumption and business investment. Some of the board members suggested that there are signs that the Japanese recovery may be coming self-sustaining but given the current economic conditions it was appropriate to maintain steady monetary policy. The BOJ went on to say that it would maintain extremely accommodative policy. JPY direction is expected to trade inversely to equities and risk sentiment.

On May 12th March leading indicators will be released expected at 1% compared to 1.2% last month. On May 13th March current account will be released expected at ¥2.15trln compared with ¥1.47trln last month. April money supply and bank lending will also be released on May 13th. Money supply is expected to rise by 0.1% compared to 0.2% last month and bank lending is expected to rise by 0.4% compared to 0.2% last month.

Key technical levels to watch in USD/JPY include support at 91.84 the May 10th low with resistance at 93.98 the May 6th high.

EUR
EUR rebounded from 14 month low versus the USD supported by report of a mega EU/IMF bailout plan. The size of the bailout plan totaling near $1trln surprised investors and helped to boost risk sentiment and lower the cost debt financing throughout Europe. The fact that other G-7 central banks joined the bailout offering to help reduce USD funding strains adds to the impact of the bailout announcement and generates hope that the rescue plan will reduce the risk of a debt default in Greece and contagion risk. It is unclear what the long-term lasting impact of the bailout plan will be for the EUR. In return for the pledge of bailout funds peripheral European nations will be required to take significant austerity measures including severe spending cuts and raising taxes. These austerity cuts could be a significant drag on the EU recovery. In addition, the EU purchase of bonds floods the system with liquidity and could threaten price stability and ECB credibility. ECB President Trichet rejected criticism that the ECB bowed to pressure to buy bonds and he would not say what the size of the bond purchases were today. The ECB’s purchase of bonds Monday helped to reduce the cost of funding in peripheral European nations by about half. Today’s EU economic data was overshadowed by the rescue plan announcement. EU May Sentix index declined to -6.4 from 2.5 last month. German March industrial output climbed by 3.7%. The EUR should remain supported on breaks by threat of intervention.

On May 11th April German final CPI will be released expected unchanged at 0.5%. On the 12th EU Q1 GDP and industrial production for March will be released. GDP is expected to rise by 0.4% and industrial production is expected at 1.1% to 0.9% last month. On May 13th German Q1 GDP will be released expected at 0.3%.

The technical outlook for the EUR is mixed as EUR trades above 1.2900. Expect EUR support at 1.2790 the May 10th low with resistance at 1.3095 the May 10th high.

CHF
The CHF edged higher with gains limited by selling in cross trade to EUR and diminished safe haven demand sparked by today’s announcement of a mega EU/IMF rescue plan for Europe. Last week the SNB took an unusual step and decided to stop intervening in the EUR/CHF cross. The SNB had been defending the cross with physical and verbal intervention partly because of fear that the strengthening of the CHF contributes inflationary pressures. After the SNB pulled its bid for EUR the CHF rallied to an all-time high versus the EUR. The SNB’s decision to stop intervention may have reflected concern that the SNB was fighting a losing battle in an effort to support the EUR. CHF is supported by safe haven demand sparked by the Greek debt crisis. The SNB has increased its holding of EUR by 19bln to 56.4bln in Q1 reflecting the impact of intervention. Recent Swiss economic data confirms that the Swiss economy is improving. Last week Switzerland reported a sharp increase in retail sales and a drop in unemployment. The improvement in the Swiss economy may make the SNB more comfortable in allowing CHF to rise versus the EUR. The SNB may have also backed off of intervention because it was operating at cross purposes by trying to weaken the CHF as the economy improves and ahead of a likely tightening policy before year end. CHF will be benefit from SNB rate hike speculation. In light of today’s announcement of EU effort to support the EUR the SNB will no longer be acting alone in support of the EUR. On May 12th Swiss producer and import prices will be released expected at 0.6% compared to flat last month. Expect USD/CHF support at 1.0732 the May 3rd low with resistance at 1.1245 the May 6th High.

GBP
GBP traded higher supported by BOE decision to hold monetary policy steady, improving risk sentiment in reaction to the report of the major EU/IMF rescue package and optimism that a new UK coalition government will soon be formed. The BOE elected to hold monetary policy steady at 0.5% and the level of asset purchases unchanged at £200bln. The BOE did not issue a statement with its policy decision but recent UK economic data has confirmed improving economic outlook and building inflationary pressures. This data may encourage the BOE to soon begin to normalize monetary policy. GBP was also supported by improving risk sentiment sparked by a surge in equity markets on news of EU/ IMF bailout plan for Europe. Last week’s UK election resulted in a hung parliament with the Conservative Party gaining the most parliamentary seats but not enough for a majority. The lack of parliamentary majority generates fears that the UK will not take quick action to reduce its record budget deficit. The Conservative Party is meeting with the Liberal Democratic Party to try to form a coalition government. The formation of a coalition government of these two parties could increase the likelihood of quicker action to reduce the UK budget deficit. Both parties pledged in their campaigns to take action to reduce the debt. GBP upside was limited by selling in cross trade to the EUR sparked by today’s rescue announcement.

This week’s UK economic includes the May 11th release of April BRC retail sales expected  at 4.7% compared to 4.4% last month. UK March industrial production will also be released on May 11th expected at 1.2% compared to 1.1% last month. On May 12th March unemployment, average earnings claimant count will be released. On May 13th March trade will be released expected to widen to -7.2bln from -6.2bln in March.

The technical outlook for GBP is negative as GBP trades below 1.5000. Expect near-term support at 1.4760 with resistance at 1.5149 the May 6th high.

CAD
CAD traded higher supported by a surge in commodity prices and firmer equity markets sparked by news of a mega bailout for the EU. The EU bailout news contributes to improving risk sentiment and demand for growth led currencies. CAD is also benefiting from BOC rate hike speculation sparked by Friday’s release of Canada’s employment data which posted a single monthly record rise in employment growth. Canada’s unemployment rate declined to 8.1% from 8.2%. Employment growth rose by a record monthly amount of 108.7K, a 25k rise was expected. The Canadian employment report confirms that the Canadian recovery is gaining momentum. Strong Canadian employment report will likely increase the odds of an earlier BOC rate hike. There had been some doubt the BOC policy outlook in light of BOC concern about the impact of the Greek debt crisis. The new EU rescue plan should reduce fears of the impact of the EU debt crisis. Canada’s housing starts for April came in slightly below expectations 201.7k, a reading of 205k was expected. Today’s data had little impact trade CAD trade.

On May 12th March trade balance will be released expected at 1.7bln compared to 1.4bln last month along with March new housing price index expected at 0.3% compared to 0.1% last month. On May 14th March manufacturing shipments and new motor vehicle sales will be released. Manufacturing shipments are expected up 0.6% compared to 0.1% last month. Motor vehicle sales are expected to rise by 3% compared to 8.1% last month.

The technical outlook for CAD is mixed as USD/CAD trades below 1.0300. Look for near-term support at 1.0101 the May 3rd low with resistance at 1.0571 May 7th high.

AUD
AUD traded higher supported the surge in equity and commodity markets sparked by today’s announcement of a huge bailout plan for Europe. The bailout plan generates hope that the Greek debt crisis contagion will be contained and encourages risk appetite. The fact that the European Central Bank is buying bonds also fueled gains in equities and commodities because of increased liquidity. AUD gains were partly limited by mixed Australian economic data. Australia’s April NAB business conditions index declined to +8 from +13 last month and Australia’s April job ads declined by 1.2%. Weaker business conditions and the drop in job ads may reflect recent tightening of monetary policy by the RBA. These reports may also contribute to speculation that the RBA will pause its tightening cycle. The RBA Monetary Policy report released Friday states that the RBA believes interest rates are near average level. This suggests that the RBA plans to soon pause in its rate hike cycle. Diminished RBA rate hike speculation is negative for the AUD. The RBA Monetary Policy statement also said that inflation pressures are rising faster than expected. This could mean that the RBA will still leave the door open for possible future rate hikes if inflationary pressures continue. AUD price direction remains closely tied to risk appetite. It remains to be seen if the EU bailout announcement will be sufficient to stop the recent deleveraging in commodities, equities in currency markets.

On May 12th March housing finance will be released expected at -1% compared to-1.8% last month. On May 13th April employment growth and unemployment rate would be released. Employment growth is expected at 25k compared to 19.6 K. last month. The unemployment rate is expected to fall to 5.2% from 5.3% last month.

The technical outlook for the AUD is mixed as the AUD trades above 9000. Expect AUD support at 8947 the May 10th low with resistance at 9095 the May 6th high.

Read More

• USD: Lower, EU rescue plan, stock market surge, uncertainty whether the rescue plan will work
• JPY: Lower, tracking stocks, BOJ minutes state that the economy is improving
• EUR: Lower, impact of coordinated EU/IMF and G-7 bailout plan for Europe fades
• CHF: Lower, gains limited by selling in cross trade to the EUR, rescue plan skepticism
• GBP: Higher, BOE monetary policy & asset purchases unchanged, coalition government may be forming
• CAD and AUD: AUD & CAD higher, commodity markets, equities surge on the EU bailout news

Overview
The USD traded sharply lower and global equity markets surged in reaction to report that the EU/IMF announced a near $1trln rescue package to calm the global markets, support the EUR and try to prevent the Greek debt crisis from spreading. The rescue package includes EU plans to buy bonds, provide loan guarantees, and G-7 central banks will reopen swap lines to alleviate USD funding strains. EUR surged posting its biggest two-day rally versus USD since 2009 in reaction to the aid package. EU buying of European bonds Monday has helped to cut in half the cost of financing the sovereign debt. EUR gains were limited by concern that despite the bailout news the EU faces considerable debt risk. GBP traded higher supported by report that the BOE elected to hold monetary policy and asset purchases unchanged. The commodity currencies surged in reaction to improving risk sentiment and firmer commodity prices. CAD finds additional support from speculation that that Friday’s release of a record monthly rise in employment growth increases the odds of a June BOC rate hike. JPY traded lower pressured by firmer equity market trade and selling pressure in cross trade to Europe. The EU/IMF rescue plan announcement sparked rallies in global equity markets and the EUR. It is not clear whether today’s announcement will have lasting impact as there remain a number of uncertainties about the fiscal outlook in peripheral European nations. The size of the bailout confirms that the EU is committed to try and stabilize the markets and defend the EUR. Equities and the commodity markets held gains better than the EUR.

Today’s US data:
No major US economic data was released in today’s trade.

Upcoming US data:
This week’s US economic includes the May 11th release of March wholesale inventories and sales. Inventories are expected to rise by 0.5% compared to 0.6% last month and wholesale sales are expected at 0.7% compared to 0.8% last month. On May 12th March trade balance will be released along with the April treasury budget. The trade balance is expected to widen to -40bln from -39.7bln last month. On May 13th April import prices and jobless claims for week ending 05/08 will be released. Import prices are expected to rise by 0.8% compared to 0.7%last month. Jobless claims are expected to fall to 438k from 444k last week. On May 14th April retail sales industrial production, capacity utilization and University of Michigan sentiment will be released along with March business inventories. Retail sales are expected to rise by 0.3% compared 1.6% last month. Industrial production is expected to rise by 0.5% compared to 0.1% last month. Capacity utilization is expected at 73.6 compared to 73.2 last month. Michigan consumer sentiment is expected at 73.2 compared to 72.2 last month. Business inventories are expected to rise by 0.3% compared to 0.5% last month.

JPY
JPY traded sharply lower pressured by improving risk sentiment and firmer equity market trade on news of the announcement of a substantial EU/IMF rescue package. The rescue package specifically includes a pledge to support the EUR and this pledge helped spark a sharp rally in the EUR/JPY cross. A statement from the BOJ’s Yamaguchi confirming that the BOJ has joined with other central banks to alleviate funding strains in Europe adds to today’s improvement in risk sentiment. Yamaguchi went on to say that the current financial market conditions are strained but are not comparable to the period after the Lehman shock. The BOJ minutes for the April policy meeting were released Monday. The minutes state that the Japanese economy is picking up due to improvement in overseas economic conditions but there is not yet sufficient momentum to support a self-sustaining recovery. The minutes also note a pickup in private consumption and business investment. Some of the board members suggested that there are signs that the Japanese recovery may be coming self-sustaining but given the current economic conditions it was appropriate to maintain steady monetary policy. The BOJ went on to say that it would maintain extremely accommodative policy. JPY direction is expected to trade inversely to equities and risk sentiment.

On May 12th March leading indicators will be released expected at 1% compared to 1.2% last month. On May 13th March current account will be released expected at ¥2.15trln compared with ¥1.47trln last month. April money supply and bank lending will also be released on May 13th. Money supply is expected to rise by 0.1% compared to 0.2% last month and bank lending is expected to rise by 0.4% compared to 0.2% last month.

Key technical levels to watch in USD/JPY include support at 91.84 the May 10th low with resistance at 93.98 the May 6th high.

EUR
EUR rebounded from 14 month low versus the USD supported by report of a mega EU/IMF bailout plan. The size of the bailout plan totaling near $1trln surprised investors and helped to boost risk sentiment and lower the cost debt financing throughout Europe. The fact that other G-7 central banks joined the bailout offering to help reduce USD funding strains adds to the impact of the bailout announcement and generates hope that the rescue plan will reduce the risk of a debt default in Greece and contagion risk. It is unclear what the long-term lasting impact of the bailout plan will be for the EUR. In return for the pledge of bailout funds peripheral European nations will be required to take significant austerity measures including severe spending cuts and raising taxes. These austerity cuts could be a significant drag on the EU recovery. In addition, the EU purchase of bonds floods the system with liquidity and could threaten price stability and ECB credibility. ECB President Trichet rejected criticism that the ECB bowed to pressure to buy bonds and he would not say what the size of the bond purchases were today. The ECB’s purchase of bonds Monday helped to reduce the cost of funding in peripheral European nations by about half. Today’s EU economic data was overshadowed by the rescue plan announcement. EU May Sentix index declined to -6.4 from 2.5 last month. German March industrial output climbed by 3.7%. The EUR should remain supported on breaks by threat of intervention.

On May 11th April German final CPI will be released expected unchanged at 0.5%. On the 12th EU Q1 GDP and industrial production for March will be released. GDP is expected to rise by 0.4% and industrial production is expected at 1.1% to 0.9% last month. On May 13th German Q1 GDP will be released expected at 0.3%.

The technical outlook for the EUR is mixed as EUR trades above 1.2900. Expect EUR support at 1.2790 the May 10th low with resistance at 1.3095 the May 10th high.

CHF
The CHF edged higher with gains limited by selling in cross trade to EUR and diminished safe haven demand sparked by today’s announcement of a mega EU/IMF rescue plan for Europe. Last week the SNB took an unusual step and decided to stop intervening in the EUR/CHF cross. The SNB had been defending the cross with physical and verbal intervention partly because of fear that the strengthening of the CHF contributes inflationary pressures. After the SNB pulled its bid for EUR the CHF rallied to an all-time high versus the EUR. The SNB’s decision to stop intervention may have reflected concern that the SNB was fighting a losing battle in an effort to support the EUR. CHF is supported by safe haven demand sparked by the Greek debt crisis. The SNB has increased its holding of EUR by 19bln to 56.4bln in Q1 reflecting the impact of intervention. Recent Swiss economic data confirms that the Swiss economy is improving. Last week Switzerland reported a sharp increase in retail sales and a drop in unemployment. The improvement in the Swiss economy may make the SNB more comfortable in allowing CHF to rise versus the EUR. The SNB may have also backed off of intervention because it was operating at cross purposes by trying to weaken the CHF as the economy improves and ahead of a likely tightening policy before year end. CHF will be benefit from SNB rate hike speculation. In light of today’s announcement of EU effort to support the EUR the SNB will no longer be acting alone in support of the EUR. On May 12th Swiss producer and import prices will be released expected at 0.6% compared to flat last month. Expect USD/CHF support at 1.0732 the May 3rd low with resistance at 1.1245 the May 6th High.

GBP
GBP traded higher supported by BOE decision to hold monetary policy steady, improving risk sentiment in reaction to the report of the major EU/IMF rescue package and optimism that a new UK coalition government will soon be formed. The BOE elected to hold monetary policy steady at 0.5% and the level of asset purchases unchanged at £200bln. The BOE did not issue a statement with its policy decision but recent UK economic data has confirmed improving economic outlook and building inflationary pressures. This data may encourage the BOE to soon begin to normalize monetary policy. GBP was also supported by improving risk sentiment sparked by a surge in equity markets on news of EU/ IMF bailout plan for Europe. Last week’s UK election resulted in a hung parliament with the Conservative Party gaining the most parliamentary seats but not enough for a majority. The lack of parliamentary majority generates fears that the UK will not take quick action to reduce its record budget deficit. The Conservative Party is meeting with the Liberal Democratic Party to try to form a coalition government. The formation of a coalition government of these two parties could increase the likelihood of quicker action to reduce the UK budget deficit. Both parties pledged in their campaigns to take action to reduce the debt. GBP upside was limited by selling in cross trade to the EUR sparked by today’s rescue announcement.

This week’s UK economic includes the May 11th release of April BRC retail sales expected  at 4.7% compared to 4.4% last month. UK March industrial production will also be released on May 11th expected at 1.2% compared to 1.1% last month. On May 12th March unemployment, average earnings claimant count will be released. On May 13th March trade will be released expected to widen to -7.2bln from -6.2bln in March.

The technical outlook for GBP is negative as GBP trades below 1.5000. Expect near-term support at 1.4760 with resistance at 1.5149 the May 6th high.

CAD
CAD traded higher supported by a surge in commodity prices and firmer equity markets sparked by news of a mega bailout for the EU. The EU bailout news contributes to improving risk sentiment and demand for growth led currencies. CAD is also benefiting from BOC rate hike speculation sparked by Friday’s release of Canada’s employment data which posted a single monthly record rise in employment growth. Canada’s unemployment rate declined to 8.1% from 8.2%. Employment growth rose by a record monthly amount of 108.7K, a 25k rise was expected. The Canadian employment report confirms that the Canadian recovery is gaining momentum. Strong Canadian employment report will likely increase the odds of an earlier BOC rate hike. There had been some doubt the BOC policy outlook in light of BOC concern about the impact of the Greek debt crisis. The new EU rescue plan should reduce fears of the impact of the EU debt crisis. Canada’s housing starts for April came in slightly below expectations 201.7k, a reading of 205k was expected. Today’s data had little impact trade CAD trade.

On May 12th March trade balance will be released expected at 1.7bln compared to 1.4bln last month along with March new housing price index expected at 0.3% compared to 0.1% last month. On May 14th March manufacturing shipments and new motor vehicle sales will be released. Manufacturing shipments are expected up 0.6% compared to 0.1% last month. Motor vehicle sales are expected to rise by 3% compared to 8.1% last month.

The technical outlook for CAD is mixed as USD/CAD trades below 1.0300. Look for near-term support at 1.0101 the May 3rd low with resistance at 1.0571 May 7th high.

AUD
AUD traded higher supported the surge in equity and commodity markets sparked by today’s announcement of a huge bailout plan for Europe. The bailout plan generates hope that the Greek debt crisis contagion will be contained and encourages risk appetite. The fact that the European Central Bank is buying bonds also fueled gains in equities and commodities because of increased liquidity. AUD gains were partly limited by mixed Australian economic data. Australia’s April NAB business conditions index declined to +8 from +13 last month and Australia’s April job ads declined by 1.2%. Weaker business conditions and the drop in job ads may reflect recent tightening of monetary policy by the RBA. These reports may also contribute to speculation that the RBA will pause its tightening cycle. The RBA Monetary Policy report released Friday states that the RBA believes interest rates are near average level. This suggests that the RBA plans to soon pause in its rate hike cycle. Diminished RBA rate hike speculation is negative for the AUD. The RBA Monetary Policy statement also said that inflation pressures are rising faster than expected. This could mean that the RBA will still leave the door open for possible future rate hikes if inflationary pressures continue. AUD price direction remains closely tied to risk appetite. It remains to be seen if the EU bailout announcement will be sufficient to stop the recent deleveraging in commodities, equities in currency markets.

On May 12th March housing finance will be released expected at -1% compared to-1.8% last month. On May 13th April employment growth and unemployment rate would be released. Employment growth is expected at 25k compared to 19.6 K. last month. The unemployment rate is expected to fall to 5.2% from 5.3% last month.

The technical outlook for the AUD is mixed as the AUD trades above 9000. Expect AUD support at 8947 the May 10th low with resistance at 9095 the May 6th high.

FX Highlights

• The USD is trading higher with the EUR pressured by ongoing worries about the Greek fiscal outlook as Greek credit spreads widen to a new record level and the Greek budget deficit is revised higher, GBP trades lower pressured by UK election polls which point to a hung parliament and report of record UK public borrowing in March, GBP downside was limited by report of higher than expected mortgage approvals and gains in cross trade to the EUR, commodity currencies trade lower in reaction to weaker equity markets and a dip in risk appetite, AUD trades lower in reaction to report of weaker than expected new vehicle sales, CAD trades lower pressured by a 1% decline in price of crude oil, JPY is trading higher tracking equities and the drop in risk appetite with gains limited by Fitch warning on Japan’s sovereign debt
• Focus turns to today’s release of US jobless claims, PPI and existing home sales and Canada’s leading index
• Greek/German 10 year bond spread widens to record 519bps, Greek 2009 budget deficit revised to 13.6% of GDP from 12.7%,EUR lower
• Japan’s March trade surplus came in at ¥948.9bln, exports rose by 43.5%, imports rose by 20.7%, Fitch warns that Japan’s sovereign debt rating is at risk from rising government debt, IMF says Japan may need to consider new stimulus measures, JPY higher
• Australia’s March new vehicle sales fall 2.7%,AUD lower
• UK public sector borrowing rises to a record level in March of 23.49bln, March retail sales rose by 0.4%, mortgage approvals rise to 52k from 48k last month, GBP lower
• The IMF increased its global forecast to 4.2% and says the EUR is somewhat overvalued and major currencies of indebted nations may need to weaken, says Yuan substantially undervalued
• US mortgage applications rose in week ending April 16th as mortgage rates slide
• US equity markets set to open lower, European equities 1% lower, Nikkei closed 140 points lower

Upcoming Events

• US-Thursday, initial jobless claims for week ending 04/17 will be released expected at 455k compared to 484k last week along with March PPI expected at 0.4% compared to -0.6% last month and March existing home sales expected at 528k compared to 502k last month
• CAN-Thursday, March LEI will be released expected unchanged at 0.8%

FX Highlights

• The USD is trading higher with the EUR pressured by ongoing worries about the Greek fiscal outlook as Greek credit spreads widen to a new record level and the Greek budget deficit is revised higher, GBP trades lower pressured by UK election polls which point to a hung parliament and report of record UK public borrowing in March, GBP downside was limited by report of higher than expected mortgage approvals and gains in cross trade to the EUR, commodity currencies trade lower in reaction to weaker equity markets and a dip in risk appetite, AUD trades lower in reaction to report of weaker than expected new vehicle sales, CAD trades lower pressured by a 1% decline in price of crude oil, JPY is trading higher tracking equities and the drop in risk appetite with gains limited by Fitch warning on Japan’s sovereign debt
• Focus turns to today’s release of US jobless claims, PPI and existing home sales and Canada’s leading index
• Greek/German 10 year bond spread widens to record 519bps, Greek 2009 budget deficit revised to 13.6% of GDP from 12.7%,EUR lower
• Japan’s March trade surplus came in at ¥948.9bln, exports rose by 43.5%, imports rose by 20.7%, Fitch warns that Japan’s sovereign debt rating is at risk from rising government debt, IMF says Japan may need to consider new stimulus measures, JPY higher
• Australia’s March new vehicle sales fall 2.7%,AUD lower
• UK public sector borrowing rises to a record level in March of 23.49bln, March retail sales rose by 0.4%, mortgage approvals rise to 52k from 48k last month, GBP lower
• The IMF increased its global forecast to 4.2% and says the EUR is somewhat overvalued and major currencies of indebted nations may need to weaken, says Yuan substantially undervalued
• US mortgage applications rose in week ending April 16th as mortgage rates slide
• US equity markets set to open lower, European equities 1% lower, Nikkei closed 140 points lower

Upcoming Events

• US-Thursday, initial jobless claims for week ending 04/17 will be released expected at 455k compared to 484k last week along with March PPI expected at 0.4% compared to -0.6% last month and March existing home sales expected at 528k compared to 502k last month
• CAN-Thursday, March LEI will be released expected unchanged at 0.8%

Read More

• USD: Mixed, re-emergence of concern about the Greek debt crisis
• JPY: Higher, BOJ expected to hold rate policy steady, gains in cross trade to Europe
• EUR: Lower, Greece may seek to amend the IMF/EU aid plan, investor confidence rises
• GBP: Lower, election polls point to increased risk of a hung parliament
• CAD and AUD: AUD & CAD higher, RBA hikes rate and signals more rate hikes are coming