EUR/USD Forms Triple Bottom

* The dollar traded mixed on Monday as investors, while cherishing more signs of a global economic recovery, continued to worry about the sovereign debt situation in Greece and other weak EMU countries. The Dallas Fed general business activity index climbed to the highest level since February 2007. The finance ministers of the G-20 group of developed and emerging economies said the global economy is emerging faster than expected. The S&P 500 index fell 5.23 to 1,212.05. The yen was little changed. Sterling rose as UK home prices grew for a ninth consecutive month. The Australian dollar was up modestly while the Canadian dollar inched lower; both are at important resistance levels.
* The EUR/USD fell for the seventh out of eight days. Germany’s Chancellor Angela Merkel said she won’t release funds for Greece until the nation has a “sustainable” plan to cut its deficit. Greek bond spreads rose to a new record. After trading briefly below the important 1.33 handle, the EUR/USD climbed above that support in late New York trading. The pair had tested the 1.33 support for three times since last month. Since peaking in December, the EUR/USD has been pressured by the sovereign debt crisis in Greece and relatively weak eurozone economic growth outlook. The pair had broken its downtrend and made a triple bottom; thus, signaling a possible bottom. The problem with Greece and other high debt EMU countries remains, but negative sentiment against the euro makes a short covering rally more likely. Therefore, we lower our stop to 1.3625.

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Financial and Economic News and Comments

US & Canada

* The Dallas Fed general business activity index rose to 21.1 in April, the fourth positive reading in five months and the highest since February 2007, from 7.2 in March, according to the latest Texas manufacturing outlook survey released by the Federal Reserve Bank of Dallas. The production index rose to 18.2 in April from 8.7 the prior month, indicating Texas factory output expanded for a sixth straight month. The new orders index increased to 15.8, the fifth positive reading in six months, from March’s 10.9. Employment expanded for a second month, with the employment index climbing to 9.8 in April from 2.8 in March.

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Europe

* UK house prices increased 0.2% m/m in April, a ninth straight month-on-month-gain but the smallest in three months, to an average of £158,400 ($244,850) per home, after a 0.3% m/m advance in March, Hometrack reported. House prices rose 1.8% y/y, a third consecutive year-one-year rise, following March’s 1.3% y/y gain.

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Asia-Pacific

* Japan’s corporate service prices slipped 1.1% y/y in March, an 18th consecutive year-on-year decline, after a revised 1.2% y/y decrease in February, according to data from the Bank of Japan. March corporate service prices were up 0.5% m/m, a second month-on-month increase.

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Источник: Hans Nilsson

26.04.2010