DOLLAR: The Dollar is a touch higher today but it took supportive dialogue on the status of the Greenback from the Fed Chairman, the US Treasury Secretary and the US President to boost the Dollar. We think that the flap over a world currency and the marginalizing of the Dollar is now passing and that the trade is already picking up on the news that the Euro zone is not going to expand its spending/stimulus efforts. With the US President calling for aggressive global stimulus efforts overnight and the Saudi’s overnight announcing an infrastructure spending program, the news that the ECB is going to become conservative with spending might give the Dollar a fresh leg up. However, one should note that the Dollar fell sharply last week in the wake of the initial announcement of Treasury’s buying intentions and with the US Treasury actually expected to begin the buying later today, that could temporarily spoil the early upward bias in the Dollar. One might note that the June Dollar index has managed to forge a pattern of higher highs over the past 3 1/2 trading sessions and therefore one could suggest that the Dollar has a slightly positive technical bias into the opening today. However, in order for the Dollar to take advantage of a slightly bullish bias early this morning, might require something better than expected from the scheduled US number flow this morning.
EURO: With another new low for the move overnight in the Euro, ECB numbers depicting residual weakness and the Euro zone suggesting they will not be coming forth with fresh spending efforts, one sees justification for the argument that the ECB is going to remain behind the easing curve. In fact, the action in the currency and fundamental news from the Euro zone seems to point to the argument that in an eventual global recovery, the Euro zone economy will simply lag behind the others. Therefore, we assume a pattern of lower highs and lower lows on the June Euro chart, with initial downside targeting seen at 134.10 today.
YEN: While the Yen was showing signs of recovering in the early action, we are not sure that the market has the fundamental setup to completely throw off the general downward bias on the Yen charts. In fact, the US continues to ineffectively muddle through the process of change and is working feverishly to elicit recovery but efforts from Japanese officials just don’t seem to garner much respect in the marketplace. We think the Yen started the current slide in the face of the US Treasury buy back announcement last week and now that the US is set to actually start the process, that should bring about even more pressure on the Yen. Near term downside targeting in the June Yen is seen at 101.34.
SWISS: The Swiss continues to forge a pattern of lower highs on the charts and in general the Swiss seems to have a trading interest in the lower end of the last four trading sessions. In order to throw off the downward bias in the Swiss probably requires overtly weak and very discouraging US data this morning and perhaps even a lackluster interest in a 5 year Note auction, otherwise we assume the trend is down in the Swiss.
POUND: The Pound might have gotten slightly ahead of itself and to rekindle the upward pattern on the charts might require something very positive from the US numbers and or a very favorable reaction to the US auctions or to the US buyback program that is expected later in the trading session today. In short, one has to respect the Pound’s strength in March, but to effectively put the Pound into a fresh upside breakout, things have to become even more positive for global equity prices in the wake of the US events today. It would not be a good sign to see the June Pound fall back below the 145.15 level before the close today.
CANADIAN DOLLAR: The Canadian clearly seems to have met some solid resistance on the charts up at 82.03 and given the weak initial action today, the bear camp would seem to have a slight early edge. Like the Pound, the Canadian needs to see some distinctly positive action in the equity markets again or the Canadian will have to see some distinctly up beat action from the US Treasury buyback effort. For today, the bear camp has the edge, unless developments today provide some catalyst for change.