U.S. Dollar Trading (USD) the markets were under pressure during the Asian session yesterday but the European traders took the weekend election news with more positively and we saw a short covering rally back to Friday levels on most pairs. Stocks in the US were almost positive by the end of the session as March consumer Credit soared 22.4bn on increasing student and car loans. Looking ahead, May IBD Economic Optimism Indicator previously at 49.3.
The Euro (EUR) the EUR/USD opened under 1.3000 but we saw the level retaken going into Europe and we moved back to 1.3050 by the close. The Outlook is mixed but the EUR/USD is still showing signs of resilience in the face of so many negative factors. The Spanish and Italian bond markets are still closely watched for indications on how the Debt crisis is evolving.
The Japanese Yen (JPY) the USD/JPY is being very quiet just under Y80 with risk aversion early in Asia reversed later on but not affecting the major only the Crosses. GBP/JPY and EUR/JPY are both well positioned to bounce if things improve
Australian Dollar (AUD) the range break to the downside was in danger of reversing yesterday with the market rallying from 1.0120 to 1.0220 in the European/US session. The outlook is for more negativity but there is expected to be two-way action on most days even if we enter a downtrend. Looking ahead, March Trade Balance forecast at -1400mn vs. -480mn previously.