Forex - Dollar helped by better PPI news; S&P500 up by 0.5%

Forex News and Events: The US dollar gained against the Euro higher on better than expected PPI figures yesterday. The PPI rose by 1.1% versus an expected +0.6% and +0.3% previous. The Empire Manufacturing Index came out better at 0.63 versus -22.33 previous and much better than -17 expected. These data figures are firmer than expected and point to a lower chance of an immediate US recession. Time will only tell whether the US can maintain firm data releases and prove itself to stay out of a recession. Traders continue to look for a catalyst to push the dollar up. This may come in the form of the Fed announcing greater inflation concerns in their commentary. Several investment banks are targeting the Euro at 1.47 over the medium-term (3 to 6 months). German ZEW sentiment index for April came out at -40.7 worse than the expected -30.0 and versus -32.0 previous. The current situation index came in strong at 33.2 versus 32.8 expected and 32.1 previous. The ECB will be looking forward to inflation data coming out this week. In the short to medium term, traders expect a healthy retracement in the Euro against the majors. The EURUSD pair has fundamentally and technically over-extended itself to 1.5913, levels that will not be sustained should any slowdown in euro-zone economic announcement come to fruition.

Today's Key Issues (time in GMT): 09:30 GBP Claimant Count Rate MAR 2.50% vs 2.50% 09:30 GBP Jobless Claims Change MAR -1.8k vs -2.8k 09:30 GBP Avg Earnings inc bonus 3M/YoY FEB 3.60% vs 3.70% 09:30 GBP Avg Earnings ex bonus 3M/YoY FEB 3.70% vs 3.70% 09:30 Unemployment Rate (3mths) FEB 5.20% vs 5.20% 09:30 GBP Manu.Unit Wage Cost (3Ms/YoY) FEB 10:00 EUR Euro-Zone CPI (MoM) MAR 0.90% vs 0.30% 10:00 EUR Euro-Zone CPI (YoY) MAR 3.50% vs 3.30% 10:00 EUR Euro-Zone CPI - Core (YoY) MAR 1.90% vs 1.80% 12:00 USD MBA Mortgage Applications Apr-11 12:00 USD Bloomberg Global Confidence APR 13:30 CAD Manufacturing Shipments MoM FEB 0.80% vs 1.30% 13:30 USD Consumer Price Index (MoM) MAR 0.30% vs 0.00% 13:30 USD CPI Ex Food & Energy (MoM) MAR 0.20% vs 0.00% 13:30 USD Consumer Price Index (YoY) MAR 4.00% vs 4.00% 13:30 USD CPI Ex Food & Energy (YoY) MAR 2.40% vs 2.30% 13:30 USD CPI Core Index SA MAR 13:30 USD Consumer Price Index NSA MAR 213.445 vs 211.693 13:30 USD Housing Starts MAR 1010K vs 1065K 13:30 USD Building Permits MAR 973K vs 978K 14:15 USD Industrial Production MAR -0.10% vs -0.50% 14:15 USD Capacity Utilization MAR 80.30% vs 80.90% 16:30 USD Fed's Yellen Speaks on U.S. Outlook 16:45 CAD Ontario Securities Commission David Wilson Speaks in Toronto 17:30 USD Fed's Plosser Speaks on Education and Economic Prosperity 19:00 USD Fed Releases Beige Book Economic Report 19:00 USD Fed's Beige Book

The Risk Today: EurUsd still in an uptrend for the short term. Flag formation intact, pointing to a large move up however downside risk very high. Should the pair break down through 1.5716, expect a bigger move down to 1.5500. GbpUsd a break of 1.9651 will open the door to 1.9588 and lower. Only a break of 1.9900 on the upside can we revisit 2.0000. UsdJpy very heavy under 102.80 with a risk down to 98.56. Should the pair break 102.80, this could signal a much larger rebound up to 108.50. UsdChf forming a upward flag, we expect a move to 1.0450. The risk on the downside is another visit of 0.9639.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6000 2.0577 111.92 1.0500 1.5913 2.0447 110.10 1.0200 1.5904 2.0100 105.00 1.0117 1.5838 1.9704 101.61 1.0037 1.5528 1.9650 100.00 0.9888 1.5400 1.9337 95.74 0.9639 1.5000 1.9105 95.00 0.9500 S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot