Dollar was sharply sold off as crude oil surged pass 73 level yesterday but recovered as oil retreated back to 72 level. After all, the greenback is still holding above recent low against major currencies and the dollar index is also staying above 79.03 minor support. Some strength is seen in early European session but the near term outlook is rather unclear. This weeks' price actions in EUR/USD, USD/CHF and USD/CAD are likely corrective in nature even though the rebound in Euro and Swiss Franc were stronger than expected. However, the development in GBP/USD and AUD/USD give some room for new highs. We're favoring upside in the greenback but will stay neutral for the momentum until we see the dollar taking out some minor resistance levels against major currencies at least.

While there have been talk of diversifications recently, Japanese Finance Minister Yosano expressed his confidence about outlook of US Treasuries and Japan has complete trusts on the strong dollar policy. Yield on 10 year note surged to as high as 4.014% yesterday but retreated sharply to since then and turned negative below last week's close.

In the Quarterly Bulletin, BoE analysts said that there are tentative signs that the asset-purchase program is having positive impacts on financial conditions. However, The U.K. and global macroeconomic outlook remained highly uncertain with significant upside and downside risks. The timing of exiting from its policy of low interest rates and quantitative easing will depend on medium term inflation outlook. And, to do so, it will be possibly be through a combination of rate hikes, bond sales or by reducing supply of reserves through issuing short term BoE bills.

New Zealand retail sales rose more than expected by 0.5% mom in Apr, but ex-auto sales unexpectedly dropped -0.1% mom. Japanese industrial production was revised up to 5.9% mom, -30.7% yoy in April. Household confidence improved from 34 to 35.7 in May. Germany WPI rose 0.1% mom, dropped -8.9% yoy in May. Eurozone industrial production, US import price and U of Michigan consumer sentiment will be released later today.