Dollar and yen are generally higher today as European stocks weaken on concern that austerity measures in Europe might slow the continent's economic recovery. US stocks also open lower. Crude oil also drops sharply to as low as 72.72 while gold makes another record high 1249.7 on risk aversion. Meanwhile, dollar index rose to as high as 85.87 and is set to take on 86 level. Canadian dollar is so far the weakest currency today, weigh down by crude oil's fall. Nevertheless, it's still the biggest winner this week on speculation that BoC will hike rates in June.
Data fro US saw retail sales rose for the seventh straight month in April, by 0.4%. Ex-auto sales also jumped 0.4%. Industrial production rose more than expected by 0.8% mom in April while capacity utilization rose to 73.7%. From Canada, manufacturing shipments rose 1.2% mom in March. New motor vehicle sales dropped -4.2% mom in March.
Dollar index rises to as high as 85.87 today so far and intraday bias remains on the upside as long as 84.91 minor support holds. Current rise should continue to 86.87 medium term resistance next. Recapping the larger picture, price from 74.19 is viewed as resumption of the long term rally from 2008 low of 70.70 and should now be in an acceleration phase. Some initial resistance might be seen around 86.87/89.62 but we'd expect dollar index to break through this range eventually.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.2472; (P) 1.2578 (R1) 1.2639;
EUR/USD drops further to as low as 1.2433 so far today and intraday bias remains on the downside for 1.2329 key support level. On the upside, above 1.2685 minor resistance will suggest that a temporary low is in place and bring recovery. But upside should be limited below 1.3093 resistance and bring fall resumption.
In the bigger picture, price actions from 1.6039 are treated as correction to long term up trend from 0.8823 and fall form 1.5143 is the third leg of such correction. Further decline should be seen to 1.1639 key support level and possibly further to 100% projection of 1.6039 to 1.2329 from 1.5143 at 1.1433. On the upside, break of 1.3691 resistance is needed to be the first signal of bottoming. Otherwise, outlook will remain bearish.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised 22:45 NZD Retail Sales M/M Mar 0.50% 1.20% -0.60% 22:45 NZD Retail Sales Ex-Auto M/M Mar 1.10% 1.50% -0.90% 12:30 CAD Manufacturing Shipments M/M Mar 1.20% 1.00% 0.10% 12:30 CAD New Motor Vehicle Sales M/M Mar -4.20% -4.00% 8.10% 12:30 USD Advance Retail Sales Apr 0.40% 0.30% 1.60% 1.90% 12:30 USD Retail Sales Less Autos Apr 0.40% 0.50% 0.60% 0.90% 13:15 USD Industrial Production Apr 0.80% 0.60% 0.10% 13:15 USD Capacity Utilization Apr 73.70% 73.70% 73.20% 13:55 USD U. of Michigan Confidence May P 73.5 72.2 14:00 USD Business Inventories Mar 0.40% 0.50%