Dollar and yen pare some gains during the day as European stocks recover and turn positive in late session while US stocks also open higher. But after all, markets are generally in range. Focus turns to FOMC minutes for March meeting to be released later today. After the 2-day FOMC meeting, the Fed, apart from keeping interest rate at 0.25%, announced a massive quantitative easing plan which includes purchase of up to $300B of long term Treasury securities over the next 6 months as well as expansion of the mortgage debt purchase program to $1.450 trillion in total - $1.25 trillion in agency MBS, from $500B, and $200 billion in direct agency debt, from $100B. Recently, professionals from the commercial mortgage-backed securities (CMBS) industry suggested the Fed to extend the loans to 5 years or above from the current 3 years. The Fed may announce plan today about offering longer-term loans at higher interest rates to buy the CMBS.

Canadian dollar is lifted mildly following release of stronger than expected housing starts which rose to 154.7k in march versus expectation of 130l. Euro is mixed after data showed Germany's factory orders plummeted -3.5% mom in February (consensus: -2.1), the 6th consecutive monthly drop, after falling -6.7% a month ago as demand from both home and overseas contracted due to global recession. On annual basis, the reading plunged by a record -38.2%, worse than -36.8% as market expected and in January. Germany trade surplus widened to 8.7b in Feb with -4.2% mom fall in exports and -0.7% mom fall in exports.

In the UK, NIESR estimated that the nation's GDP declined -1.5% in 1Q09 from -1.8% in the previous quarter. The agency also said that the recession we are currently facing is similar to the one began in 1979 and 'if the 1980s profile were followed, output would continue to decline for up to another year and it would take two further years before the level of output enjoyed at the start of 2008 would be reached again'. Nationwide consumer confidence returned to record low of 41 in March (consensus: 45) after a slight uptick to 43 in January, mainly due to uncertainty in the job market.

Swiss Franc pares some gains against Euro after Philipp Hildebrand was named as SNB's next chairman, succeeding Jean-Pierre Roth who'll retire at the end of 2009. Markets believe Hildebrand will continue SNB's policy to limit appreciation against Euro.

Japanese government is believed to be formulating another 15T yen stimulus package, around 3% of Japan's GDP and will bring the total stimulus spending to 25T yen since PM Aso took office last Sep.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4616; (P) 1.4695; (R1) 1.4810; More

GBP/USD continues to stay in tight range below 1.4777 minor resistance today further decline could still be seen. But after all, note that short term outlook will remain bullish as long as GBP/USD stays above near term rising trend line (now at 1.4361). Rise from 1.3654, which is treated as the third leg of consolidation from 1.3503, is still expected to extend further to 100% projection of 1.3503 to 1.4984 from 1.3654 at 1.5135. Above 1.4777 will flip intraday bias back to the upside for 1.4957/84 resistance zone first. However, below the trend line support will be an early signal that rise from 1.3654 has completed and will turn focus to 1.4109 support for confirmation.

In the bigger picture, medium term consolidation from 1.3503 is still in progress to correct the five wave sequence from 2.0158 (1.7445, 1.8668, 1.4557, 1.5722, 1.3503). While it's uncertain how far this correction will go, we're expecting upside to be limited by resistance zone of 1.5722 and 38.2% retracement of 2.0158 to 1.3503 at 1.6045. On the downside, below 1.4109 will confirm that rise from 1.3654 has completed and turn short term outlook bearish for retesting 1.3503. But after all, break of 1.3503 is needed to confirm long term down trend resumption. Otherwise, further sideway consolidation could still be seen.

GBP/USD