The London session saw the buck under pressure as economic reports across the pond were more upbeat than anticipated.
Euro was better bid as data in the eurozone improved. The most notable was the composite PMI (includes manufacturing and services) which popped to a better than expected 40.5 in April from a 38.3 result prior. This is the best print since October and the indicator has good leading properties for the overall economy to boot. EUR/USD was squeezed another 50 pips higher, adding to overnight gains. Look for a break above the 200hr moving average now at 1.3101 to elicit some more buying interest here -- needs below 1.3030/20 to shift the short-term focus lower.

In the UK, news about the bloated deficit and tax hikes continued to keep gains in GBP under wraps. Economic data showed little improvement with the Confederation of British Industry's monthly survey of manufacturers for April showing orders at -57 from -58 last month. Cable was relatively unchanged and trading near the 1.4540 open just ahead of the kickoff to NY trading.
This left EUR/GBP up about 30 pips to 0.8990 on the follow. Look for resistance here into 0.9000 and 0.9030 next.

The NY session now sees some important top-tier economic data. Initial jobless claims will be closely watched at 830am ET as the market braces for a reversal of last week's low-ball 610K number, which was influenced by seasonal adjustment difficulties around the Easter holiday.
The consensus is for an increase to 640K but forecasts range from 610K to 700K and we think the higher end is very much within reach. A number near or above 700K should put a dent in the risk rally this morning and send EUR and the JPY longs running for cover. Stay tuned!

Upcoming Economic Data Releases (NY Session) expected prior

  • 4/23 12:30 GMT CA Retail Sales MoM FEB -0.30% 1.90%

  • 4/23 12:30 GMT CA Retail Sales Less Autos MoM FEB 0.20% 1.30%

  • 4/23 12:30 GMT US Initial Jobless Claims 18-Apr 640K 610K

  • 4/23 12:30 GMT US Continuing Claims 11-Apr 6120K 6022K

  • 4/23 14:00 GMT US Existing Home Sales MAR 4.65M 4.72M

  • 4/23 14:00 GMT US Existing Home Sales MoM MAR -1.50% 5.10%

  • 4/23 14:30 GMT CA Bank of Canada Monetary Policy Report