Pound continues slide against Dollar

The US Dollar was marginally up but was well within its technical range against its major counterparts in trade yesterday.
Sterling saw a brief spurt on the release of higher than expected monthly UK retail sales data, but the rally was soon neutralized on aggressive technical selling near 1.8425.
Dollar gained slightly earlier in the session on positive US jobless claims data and shrugged off weak manufacturing data from the Federal Reserve Bank of Philadelphia.
Jobless claims in the US fell to 321,000 in the week ended May 14 from 341,000 in the previous week. The Philadelphia Fed manufacturing index slumped to 7.3 in May compared to 25.3 in the month of April, falling way below forecasts of a drop to 18.3 causing concerns of a slowdown in manufacturing sector.
In another data release, Eurozone Industrial production in March dropped by 0.2% compared to a 0.6% dip the previous month.

Outlook for the day
EUR/USD - Euro is expected to trade in a range today. Expected range 1.2600-1.2700.
GBP/USD - GBP is expected to test the resistance at 1.8400. A breach could send it to 1.8500 levels. Expected range today 1.8350-1.8450.
USD/JPY - With resistance at 107.75, USD/Yen is likely to fall back to 107.00 levels.

Far East currencies realign

The currency markets’ focus was clearly on Asia on Wednesday after the Hong Kong Monetary Authority surprised traders when it chose the day that China initiated domestic trading of foreign currency pairs to widen the trading band of the Hong Kong dollar.
The move was designed to deter speculators from using the HK dollar as a proxy to bet on the long-awaited revaluation of the renminbi.
Much later, in afternoon trade in New York, the dollar dipped after South Korea’s central bank governor said the bank had “sufficient reserves. He did not anticipate raising reserves further"- which led observers to conclude it planned no more interventions to weaken the won, currently near seven-year highs at about Y1,002 to the dollar.
The recent Dollar rally witnessed a healthy correction yesterday triggered by subdued US inflation data release. But earlier in the Asian session, Dollar moved to a new multi-month high against GBP (below 1.8300) and also pushed Euro and Yen to their intraday lows of 1.2587 and 107.81 respectively. US April CPI rose by 0.5% from an increase of 0.6% in the previous month, while core CPI was unchanged in April after a climb of 0.4% in the previous month.
In other news, minutes of the latest BOE meeting showed 8 members (out of 9) favored holding the benchmark short-tern rate at 4.75%. UK unemployment rate remained unchanged at 2.7% in April vs. the previous month.
Outlook for the day
EUR/USD - Euro is expected to test the resistances at 1.2700 and 1.2750 levels. Expected range 1.2625-1.2725.
GBP/USD - Resistance in 1.8420-1.8450 range seems difficult to be challenged and hence GBP is expected to trade in 1.8330-1.8430 range.
USD/JPY - USD/Yen is testing the supports near 106.90 and a breach would trigger a fall to 106 levels. Expected range 106.50-107.50 with a downward bias.

Dollar gains after Treasury currency report

With yesterday’s mixed bag of data from the US and with the US Treasury stopping short of accusing China of keeping its currency artificially low, the Dollar remained relatively unchanged against majors.
US PPI came out to be 0.6% against the expected number of 0.4% whereas industrial production dropped by 0.2% against expectation of increase by 0.2%. The housing scenario in US also improved with housing starts at 2038K (Exp: 2000K; Prv: 1836K). With US CPI expected today at 0.4% against the previous figure of 0.6%, a major breakout of current levels is expected in majors.
The recent data is building up a case for further dollar strength in the near future, as dollar bulls are operating full throttle.
Also expected is the unemployment data from UK, which seems to be providing a temporary support to cable before further downfall.

Outlook for the day
EUR/USD - Euro is expected to trade in 1.2550 – 1.2650 range today. A major break out of the 1.2600 support is expected during the day.
GBP/USD - Cable is showing further weakness, with the range being 1.8280 – 1.8350.
USD/JPY - Technically Yen looks weak, with current range being 107.30 – 108.10 and marching towards 108.50 in the near future.

Dollar slips on inflows news

The US Dollar slipped slightly against the Euro and Yen in the overnight markets on lower than expected US capital inflows data release. US capital inflows showed a drop to $45.7 billion in March from $84.1 billion in the previous month, well below the expected $70 billion.
The data release came as a bit of disappointment, after optimism in the markets from a string of positive data releases in the US over the last week.
Data on the New York region manufacturing activity was also weak. New York Empire state manufacturing index for May dropped to -11.11 from 2.3 in the previous month.
However, the UK's Pound's downward slide continued after convincing breach of 1.8500 support. Britain's house prices showed the slowest pace of growth for April.
The Yen got further support after the release of first quarter GDP. Japan's real GDP rose 1.3% in Q1 higher than forecasts of a 0.6% rise.
Players now await important US PPI data release expected later this evening.
Outlook for the day
EUR/USD - After a series of continuous daily falls, Euro managed to find some ground near 1.2600 levels. Expected to trade in 1.2600-1.2700 range. We would suggest selective import hedge positions near 1.2600.
GBP/USD GBP is still struggling to find the supports and is expected to remain volatile today. Expected range 1.8300-1.8450.
USD/JPY USD/Yen reversed its course yesterday and is likely to move down to 106.50 levels. Expected range 106.50-107.50.

US Dollar up on data hopes

The rejuvenated US dollar pushed sharply higher last week as buoyant economic data raised hopes that the latest “soft patch” in the US economy may have passed.
Thursday’s strong retail sales data were the defining point, allowing the dollar to comprehensively break through a key technical barrier of $1.2732 to the euro – the dollar’s February year-to-date high.
The US Dollar ended the week higher against most of its major counterparts, after a string of positive data releases in the US during the course of the week. Weaker University of Michigan US consumer sentiment index had little impact on the Dollar even though it fell lower than forecasts.
University of Michigan consumer sentiment index declined to 85.3 against a forecast of 88. In other data releases from the US, March business inventories rose less than expected at 0.4% while import prices increased by 0.8% in April from 2% in the previous month.
On a separate front, India's forex reserves fell by USD 423 million to USD 141.475 billion in the week ended May 6.
Outlook for the day
EUR/USD - Despite a lot of correction having already taken place, Euro is looking still weak for a day or two before any correction. Expected range today 1.2550-1.2650 with a slightly weaker bias.
GBP/USD - GBP too is expected to trade in 1.8450-1.8550 range with a slightly weaker bias.
USD/JPY - Dollar rally seems to be peaking against Yen near 108.00. Expected range today 107.00-108.00.