29.05.07

Broadly unchanged levels since yesterday. The soft housing numbers from US has dented the USD sentiment. GBP looks firm on back of robust growth figures , the economy expanded 0.7% in the third quarter, taking the growth to 2.9% , higher than expected. The monetary policy and minutes from BoE have added to the GBP bullish tone.

The dollar will be put back into the grinder on Tuesday with the Conference Board's consumer confidence survey for May. Taking their direction from the University of Michigan's report for the same month, economists expect tomorrow's confidence number to improve slightly to cross the wires at 105.0. Given the tame predictions, the indicator may not be the rally call that encourages bulls to drive the currency through resistance levels in its many pairings; but it certainly has meaning for its long-term strength. The consumer has single-handedly carried growth and inflation through the worst housing slump in 15 years, wavering factory activity and dried up business investment. Therefore, the potential energy this indicator holds for the markets is considerable - even if it does not translate into immediate price action. On the other hand, considering the aspects more pertinent to the American consumer this month, there is a real risk that the survey diverges considerably from expectations. Clearly in favor of the modest pickup the official consensus is calling for is the strong performance of the stock market. The Dow Jones Industrial Average has closed at numerous record highs over the past few weeks and the media has not missed one of them. Perhaps turning a little murkier, the labor market is expected to be a net contributor as well. Initial jobless claims over the past few weeks have marked four-month lows; though the lighter payroll numbers and deceleration in wage growth over the past few months should dampen the positive response. In clear contradiction to optimists will be the steady degradation of the housing market and record gasoline prices.
Opening Levels

EUR 1.3433
JPY 121.39
GBP 1.9834
CHF 1.2287
AUD 0.8181
CAD 1.0815
NZD 0.7261
EUR/GBP 0.6772
EUR/JPY 163.09