The forex market is still moving in a sideway eyeing on the changes of the equity markets. The greenback is trading down versus the single currency edging up above 1.3 while it is still keeping its gained ground versus the British pound which suffered yesterday from Darling's admitting of a contraction in UK can reach 3.5% this year. Darling has declared that the government is adopting an easing policy to stimulate growth by increasing the imposed taxes on the rich ones while the government is increasing its spending and encouraging the borrowing which can reach £175bn this financial year before falling to £173bn in 2010 and £130bn in 2011. The cable has reached 1.4396 before retracing above 1.45 again as it is trading currently at 1.455.

The single currency was under pressure recently as the continued declines of the inflation rates which can expose the EU economy to deflation risks which have been a downplayed probability by the ECB president Jean Claude Trichet in his press conference after the ECB recent cut by just .25%. the single currency is still facing resistance capping its gains below at 1.31 versus the greenback which is reinforced currently from being a safe haven in these current time of losing confidence in investing in the equity market which shed loses from the beginning of this week after 6 weeks of gains. The US treasuries secretary Geithner has tried to calm down the market and staving off these loses expressing his trust in the banking sector to lend again and make profits in the coming period.

There was a spreading believe recently that the worst of the crisis is over after the recent earning reports of the first quarter last month which referred to an ability of making profits again and improving of the consuming sentiment in US but the jobs shrugging off is still on for drawing down the costs and shrinking the activities for meeting the demand that can spur growth back again which can cause a second round effect. The market has focused this week on the huge amount of the toxic assets which are carried on the balance sheets of the banking sector and the changing of the FASB accounting rule could undervalue them by about 20% at this first quarter released earning reports.

The uncertainty has increased today about the future of the housing market after the release of March existing home sales which have fallen by 3.0% to a 4.57M y/y from 4.71M in Feb following the housing starts slumping in March to .51m and the building permits falling to .513m. These dovish data can undermine the market confidence of a solid recovery in the housing sector which caused the financial crisis which can decrease the risk apatite. The gold could creep above 900$ after 3 weeks below it within the release dovish data which increased the stock markets loses.