The euro (EUR) weakened to 1.3176 retreating from a two-week high at 1.3227 against the US dollar at the start of the new week following the French first round of presidential vote showing Socialist candidate Francois Hollande ahead of President Nicolas Sarkozy. Investors are concerned that a Sarkozy defeat may weaken the France-Germany cooperation in tackling the eurozone debt crisis. The International Monetary Fund increased its firewall to 430 billion dollar to deal with a potential eurozone debt contagion but this provided little boost to the single currency. The euro may become under pressure as investors are worried about debt auctions in Italy.

The US dollar (USD) strengthened against a basket of currencies today as heightened risk aversion in the market spurred a higher demand for the safe haven currency. Versus the Japanese yen (JPY), the greenback slid as low as 81.25 from 81.77 traded on Friday and all eyes now turn to the Bank of Japan and whether they will decide on more quantitative easing at their monetary policy this week. Eyes will be focusing on any hints on further bond-buying from the BoJ as well as the Fed policy meeting and the US Gross Domestic Product expected this week.

The Australian dollar (AUD) dropped versus the US dollar to 1.0326 from 1.0382 after Producer Price Index was weaker than expected. Investors appear cautious ahead of Australia’s Consumer Price Index due on Tuesday. In the scenario where inflation comes out softer than expected, expectations for a rate cut by the Reserve Bank of Australia may rise. Versus the greenback, the British pound (GBP) rallied to a five-month high at 1.6149 from 1.6038 after data revealed that the UK retail sales rose 1.8% higher than expectations for a 0.5% rise. Sterling got a boost after the release of the figures on beliefs that the UK economy is in recovery mode adding more on expectations that the Bank of England will not expand its asset purchasing program in May.

Oil rose to 104.66 dollars a barrel from 102.57. Gold (XAU) was little changed rising to 1642.60 dollars an ounce from 1641.09xau and fell to 1242.98 euro an ounce from 1250.47. Silver (XAG) dropped to 31.53 dollars an ounce from 31.90. Stay in tune throughout the day with !

 

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Outlook.PivotPreference1Sentiment2
.EURUSD1.3160LONG @ 1.316536% of deals buy EUR
.USDJPY81.50SHORT @ 81.4557% of deals buy USD
.GBPUSD1.6070LONG @ 1.607517% of deals buy GBP
.AUDUSD1.0390SHORT @ 1.039059% of deals buy AUD
.GOLD1634.00LONG @ 1634.0071% of deals buy GOLD
.OIL103.30LONG @ 103.3048% of deals buy OIL
1 data generated by Trading Central, 2 data obtained from easy-forex Inside Viewer
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CalendarCurrencyTime (GMT)EventForecast
.EUR07:58Purchasing Manager Index Manufacturing48.1
.EUR07:58Purchasing Manager Index Services49.4
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Movers Shakers
GBPJPY
The British Pound (GBP) produced a spectacular rebound against the Japanese yen (JPY) rising as high as 131.78 on Friday. The pair appreciated by 423 pips, and thus recorded a weekly return of 3.3%. Friday’s close was at 131.42, and the next resistance level is at 131.78. The pair slid today to 130.83 and what is interesting to see is whether there will be a reversal of the trend.