There is a spreading believe currently 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 demand can spur growth back again which can cause a second round effect and also the huge amount of the toxic assets is still existing in the balance sheets of the banking sector which can exceed 4 trillion$ as the recent evaluation by the IMF and it is well known to the market that these toxic assets have been actually underestimated by about 20% because of the FASB changing of the accounting rules and from another side the deflation risks are uprising which show a current capping of spending over the producing level or the consuming level which effected negatively on the gold last week after the releases of US PPI of March which came lower than the market expectations of -2.2% yearly and 0% m/m at -3.5%y/y and 1.2% monthly and US CPI broad figure of this same month which came down by .1% monthly and .4% yearly ensuring the deflation pressure.

We have seen last week also the housing starts slumped to .51m and the building permits have fallen to .513m which put doubts about the stability in the housing sector in US after the credit crisis as the down side risks are still existing negatively impacted by the current low level of consuming and business spending which lead to further losing jobs.

The case is not much betted in EU which had the same rate of inflation of Feb as March HICP came as expected and as the same of Feb at .4% m/m and .6% y/y which weighed on the single currency to break 1.3 versus the greenback waiting for further stimulation steps to come from the ECB as the current low level of inflation which can come lower further exposing the EU economy to a 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% on the second day of this month.

The cable also came of its high above 1.5 yesterday. The cable was well-supported after breaking out above 1.48 earlier in the beginning of the week after thin trading between 1.479 and 1.458 by the Easter holidays but it was meeting profit taken directly after crossing 1.5 with no major change of the current market sentiment to support it further and the last week bear closing could help the greenback to make further momentum gains versus the British pound which can bring 1.458 to a check by god's will and if it felled then 1.448 and the major support level currently at 1.41. The way up can meet a resistance at 1.494 then 1.507.

The market is just waiting today for the release of US leading indicators of March which is expected to be -.2% from -.4% in Feb

Best wishes