Endlos Long-Zertifikat auf den Euro gekauft...

The dollar failed to rally on stronger than expected consumer confidence and surging sales of existing homes before heading lower on a combination of bombings in Damascus and US attacks in Fallujah. Syrian security forces were reported to have clashed with “terrorists”, while CNN broadcasted prolonged live footage of US shelling on Fallujah. The one-two punch from the attacks in Iraq and Syria overwhelmed the double dosage of strong US data, thus, cutting gains in US equities while dragging the dollar across the board.

Rising confidence, homes sales overwhelmed by attacks
Stronger than expected figures on US consumer confidence and new homes sales generated failed to generate any positive reaction in the greenback. The Conference Board’s index of consumer confidence leapt to 90.6 in April from a revised 84.4 in March, beating estimates of 88.5. The expectations index also moved higher, rising to 94.5 from 91.3. The news also proved positive on the employment front. The number of respondents deeming jobs hard to find fell to a 17-month low at 27.6%, while the number of those deeming jobs plentiful rose to 15.8%, after 14.7%.

Meanwhile, sales of existing homes rose 5.7% to a 6.48 million annual rate in March, up from February's revised 6.13 million annual pace. The news follow yesterday’s release of the 8.9% rise in new homes to 1.228 million in March, which defied expectations of a reading of 1.168 mln. units in sales.

Euro’s retains breather despite strong US data
The euro pushed higher amid traders’s relucance in building new dollar longs following the day’s US data. Growing apprehesnion about a possible dollar overoptimism related to US monetary policy may have a role. But markets should not read too much into the next 24 hours’ activity where economic releases will come to a virtual standstill before the barrage of releases resumes subsequent 2 days. Meanwhile earlier in the European session, the euro shrugged positive external trade data, which showed a current account surplus of EUR 5.4 billion in February, up EUR 1.7 billion from January’s figures. Direct and portfolio investment flows also recorded a surplus, amounting to EUR 12.2 billion in net inflows in February 2004.

Germany’s leading 6 economic institutes downgraded the nation’s 2004 growth outlook to 1.5% from 1.7%, dragging it below the IMF’s 1.7% forecast. ECB Chief Trichet, however, shrugged calls for rate cuts and maintained the Bank’s outlook for a non-inflationary gradual recovery in the Eurozone.

EURUSD hovers around the 1.1870s, facing initial resistance at 1.19. Subsequent resistance held at the 200-day MA follows of t $1.1935 followed by 1.1965-70, the 38% retracement of the 1.1389-1.2926 rise. Key resistance stands at 1.2030-35. Support declines seen stabilizing around 1.1795. A drop below 1.1790 sees support at 1.1750, with further selling likely consolidating around 1.17. Key trend line support found around 1.1650, of the line extending from 91.07 through 1.0761.

Sterling maintains tightening -related bullishness
Sterling rose to a 1-week high against the dollar as carry-trade enthusiasts reopened the carry-trade gates amid resurfacing hopes of a rate hike by the Bank of England next week. The monetary policy picture changed after yesterday’s comments from Monetary Policy Committee member Paul Tucker indicating that a neutral level of interest rates was more suitable between 5.0% and 5.50%, well above their current 4.0%. In a blunt hint to the markets, Mr. Tucker added that the recent low inflation figures would not stop the BoE from raising interest rates, affirming that the Bank’s chief worry is rising personal debt and housing prices. Although inflation stands at 1.1%, well below the government 2.0% target, the figure excludes all housing related costs. Markets shall turn to Thursday’s release of the April house price data from Nationwide building society. The March data showed a 16.7% increase over a year ago, a decline from the February figure of 17.05%.

Cable lifted to a 1-week high at $1.7941, stopping at the 61.8% retracement of the decline from the $1.8143 high to the 1.7623 low. Subsequent gains seen capped at 1.7975, followed by 1.8. Key resistance stands at 1.8050. Interim support starts at 1.7880, with more durable foundation seen at 1.7825-30. Key support held at 1.7760, followed by 1.77.

USDJPY defies dollar rates
USDJPY pushed higher, shrugging the retreat in the dollar pairs amid lack of interest in the Japanese currency. But the pair ended lower from its 109.84 session highs. The Japanese could draw further interest as the Bank of Japan gets set to issue its semi annual economic outlook, and a possible upgrade of the economy. The Bank had already upgraded its outlook on the economy earlier this month, the first in 7 months, backing forecasters’ upward growth forecasts. Should the Bank issue an upgrade of its semi annual outlook, markets could start to speculate on a possible termination of the Bank’s quantitative easing policy of zero interest rates, which has been set since March 2001.
USJPY faces increased pressure at the 109.90 resistance, which is also a 5-week high. A breach above 110, sees temporary pressure at 110.35-40—the trend line resistance extending from the 120.62 high thru the 112.26 high. Support starts at 109, followed by 108.30. A drop below it sees subsequent support at 107.85--the 50% retracement of the decline from 112.34 to 103.40. Subsequent floor held at 107.45-50. Upside starts at 109, followed by today’s session high of 109.35-40.

Aussie gains as market awaits inflation report
Aussie rode the gains of the European currencies, while traders await Wednesday’s Q1 inflation report expected to show an annual inflation rate of about 1.8% from the previous 2.4%. This would mean further decline from the Bank’s 2.0-3.0% inflation target, thereby reducing chances of a May rate hike. Nonetheless, it’s worth pointing that the Reserve Bank of Australia’s concerns lie in rising personal debt, which could prompt it to tighten despite low inflation.

Upside seen initially capped at 73.65-70 cents, followed by 74.05 cents, the 38% retracement of the 78.88-72.32 decline. Key pressure stands at 74.30-35. A lower than expected inflation figure could push back Aussie towards 72.80 support. Subsequent support seen at the March 11 low of 72.52. A breach below it faces support at 71.75.