The dollar slumped to its lowest level against the euro since late March at 1.3706 and easing toward the 96-level versus the yen. Oil jumped past the $60 per barrel level and gold edged up to $924.10 amid burgeoning hopes for the global economic recession may be moderating.
The trade deficit in March was less than anticipated at $27.58 billion, edging out calls for the deficit to increase to $29.0 billion from $25.97 billion in February. The economic calendar on Wednesday consists of April retail sales, import/export prices and March business inventories. The headline retail sales figure is seen improving by 0.2% in April versus a 1.2% decline in March while the excluding automobiles reading is estimated to edge up by 0.1% compared with a 0.9% fall previously.
Euro Edges Higher
The euro was propped higher past the 1.37-level against the dollar following comments from ECB Board member Weber, who stressed there is currently no further need to buy private debt outright as there is no credit crunch in the Eurozone. Weber said that the present level of the main refinance rate is appropriate given current circumstances, while buying covered bonds issued in the Eurozone will help market liquidity, financing for firms and banks. He added that a relatively good exit was still possible from the ECB's current measures and intends to withdraw liquidity quickly once the economy improves.
Weber also issued a bleak outlook for Germany's economy, anticipating GDP contracted by more in Q1 than the 2.1% decline in Q4. While there are some positive signs, he doesn't expect the economy to bottom out quickly and sees a substantial contraction in 2009 GDP on an average annual basis with growth not likely until the second half of 2010.
EURUSD has given back some of its earlier gains, drifting toward the 1.3625. Support is seen at 1.36, followed by 1.3570 and 1.3540. Subsequent floors will emerge at 1.35, backed by 1.3460 and 1.3420. On the upside, gains will emerge at 1.3675, followed by 1.37 and 1.3750. Additional gains will target 1.38 and 1.3850.