The Euro struggles as Spain yield tops 7%, Sterling offers clean

Euro: Spain 10-year yields tops 7%, the ECB, ZIRP British pounds to approve: maintains range bounce rates, all eyes on BoE minutes euro: Spain 10-year bond yields tops 7%, the ECB, cheap ZIRP
Euro fought to keep his reason on Friday, as 7% tied to the yield on Spanish 10 years debt, crowned, while Finland threatens Monetary Union leave as the Governments under the fixed exchange rate to get system struggle for their house in order. Response, Commission President José Barroso promised, the situation in Spain ' are'eng to watch and went to the group ' permanent contact with the Government of the prospects for the region as the sovereign debt crisis still have to dampen.
In turn, there is growing speculation that the European Central Bank additional steps to support the battered economy will be held, and we might see a NULL interest rate policy the Governing Council (ZIRP) support to avert in seeking a lasting recession. ECB Member Erkki Liikanen proposed a leader tone for monetary policy in an interview in Finland and said that the risk of dew point undershooting the Central Bank scope were the target of 2% for inflation to reduce benchmark interest rate of 1.00% for that, as it manages its and only to price stability mandate, to ensure. As the slowdown the prospects for price increases dampens recovery in Europe, the ECB provides balanced, perform to its easing cycle in the second half of the year, and we should the euro additional headwind in the near future as interest rate expectations falter to face see. We search annual lows in the EUR/USD as trending channel still fresh after below next form, and the environment of the single currency bearish sentiment can choose above in the week ahead as European policy makers struggle to win back investor confidence.
British pound: range bounce maintains prices, all eyes on BoE minutes
The British pound reduced the decline from earlier this week still acquired the area bounce price action by June and that can continue to pursue Sterling laterally in the days ahead, as market players weighing fundamental prospects for UK it increased speculation around the Bank of England minutes, as the Central Bank buy his system target GBP raised 375B, and it seems as if the monetary policy Committee approaches the end of its easing cycle, as the benchmark interest rate to 0.50% considers it. In turn we may see the GBPUSD continue to trade between 1.5500-1, 5750 before the policy statement due out on July 18, and the fresh batch of the Central Bank rhetoric should be a clearer picture to paint Sterling remains lackluster as the medium-term Outlook for the UK with high degree of uncertainty for the.
-Written by David song, currency analyst
David to contact by e-mail dsong@dailyfx.com. Follow me on Twitter at @ DavidJSong
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Euro Rally in aid blocked by the ECB, Sterling among the most at-risk EQ

Discussion points
Euro: EU strikes Deal on ESM, Spanish rescue - ECB to ease political pleased British pound: struggles to 61.8% Fib, BoE to lead more EQ US Dollar: weighed by risk-appetite, without profit to another K 90 Euro: EU strikes Deal on ESM, Spanish rescue - ECB to ease policy more
The Euro jumped to a maximum of 1.2692 that the European Union has agreed to recapitalized directly through the European stability mechanism commercial banks, while the group said he descended the ready status for the Spain: the Government seems to draw up to 100 EUR MSS. However, we have seen the German Chancellor Angela Merkel hold his ground as it continued to reject the Euro bonds and went to say this State for the Spain loan relaxation is unique - curb speculation that Italy can get a similar agreement if she need help.
Indeed, the move has helped alleviate the strains in the short term in the European financial system, but it seems that the Group made another attempt to buy more time that the agreement is to raise the fundamental Outlook for the region. Therefore, we might attend the single currency come under pressure next week as participants of the market see the Central Bank is taking additional steps to consolidate the sick economy, and we see the Council of Governors has its cycle of relaxation throughout the second half of the year as growth and inflation tapers off the coast. While 45 of 57 economists surveyed by Bloomberg News call for lower borrowing costs next week, the market players are pricing a chance to 37% for a 25bp rate cut according to Credit Switzerland night index swap, and the shift in the Outlook for the policy may reduce the appeal of the single currency as the Central Bank attempts to contain the risk of a prolonged recession. The ECB should continue to hit too consensual tone for monetary policy as the EURUSD excludes a high low around 1.2745, we should see the channel of downward trend of 2011 to continue to take shape and we see the pair to give in return for the relief rally.
Pound sterling: struggles of 61.8% Fib, BoE to lead more QE
The pound sterling pointe for a great night of 1.5697 in the rise in risk taking behaviour, but the sterling could come under pressure next week as participants of the market saw the Bank of England is taking additional steps to protect the debt crisis U.K. economy. According to a Bloomberg News study, 38 of 40 economists surveyed see the Central Bank, extend its program of purchasing assets beyond the target of 325 GBP, but we can see the majority of a stick to its current policy of the Committee in July as stickiness underlying price growth raises the threat of inflation. As the GBPUSD struggles to push above the tracing of Fibonacci 61.8% of 2009 low to high around 1.5690 - 1.5700, we can see the exchange rate consolidate before the rate decision, but the couple can retreat to 50.0% Fib about 1.5270 should the BoE take a very aggressive approach curb the decline in the risk for the region.
US dollar: weighed by risk-appetite, NFP is to increase another 90 K
The greenback gave in advance to leave earlier this month, with the Dow Jones index - FXCM U.S. Dollar (Ticker: USDOLLAR) a minimum of 10 048 and the marking reserve currency may heavy trade in trade in North America that FX traders increased their appetite for risk. However, as we expect to see US non-farm payroll increase another 90 K in June, the tepid recovery in the labour market may renew speculation for another program for the purchase of the assets on a large scale, but it seems that the FOMC move away from quantitative easing as the Committee extends "Operation Twist". In turn, we will maintain our appeal in the medium term for the USD, and we should see the continuous upward trend to take shape, as the Fed moderates its too consensual tone for monetary policy.
-Written by David Song, currency analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @ DavidJSong
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€ Euro Eyes 2012 Lows Ahead Of EU Summit, Sterling Weighed By BoE

26 June 2012 13:30 GMT  Talking Points
Euro: EU Makes Greater Push For Fiscal Integration Ahead Of Summit British Pound: BoE Governor King Looks At More QE On Euro-Area Risk U.S. Dollar: Richmond Fed Manufacturing, Consumer Confidence Disappoints Euro: EU Makes Greater Push For Fiscal Integration Ahead Of Summit
The Euro slipped to a low of 1.2454 even as European Commission President Jose Manuel Barroso, European Council President Herman Van Rompuy, European Central Bank President Mario Draghi and Euro Group President Jean-Claude Juncker laid out a tentative framework to foster a tighter-knit fiscal and banking union, and the single currency may face additional headwinds over the next 24-hours of trading should the summit in Brussels disappoint. Indeed, the EU may struggle to meet on common ground as the governments operating under the fixed-exchange rate system continue to act in their own interest, and heightening finance costs across the periphery countries may continue to drag on investor confidence as the group maintains a reactionary approach in addressing the debt crisis.
As we don’t expect to see much coming out of the meeting, we will maintain our bearish outlook for the EURUSD, and the pair may continue to give back the rebound from 1.2287 as the fundamental outlook for the region turns increasingly bleak. According to Credit Suisse overnight index swaps, market participants are now pricing a 44% chance for a 25bp rate cut at the July 5th meeting, but the European Central Bank may have little choice but to implement a range of tools to shore up the ailing economy as the region continues to face a risk for a prolonged recession. In turn, it seems as though the EURUSD has carved out a short-term top in June, and we anticipate to see fresh yearly lows in the exchange rate as the downward trend carried over from 2011 continues to take shape.
British Pound: BoE Governor King Looks At More QE On Euro-Area Risk
The British Pound pared the overnight advance to 1.5650 as Bank of England Governor Mervyn King continue to talk up speculation for more monetary easing, and currency traders may become increasingly bearish against the GBPUSD as the Monetary Policy Committee shows a greater willingness to expand the asset purchase program beyond the GBP 325B target. As uncertainties surrounding the euro-area dampen the outlook for the U.K., Governor King may sound increasingly dovish throughout the second-half of the year, and the GBPUSD may give back the rebound from 1.5268 as it appears to be carving out a short-term top ahead of July. In turn, we may see the pound-dollar fall back towards the 50.0% Fibonacci retracement from the 2009 low to high around 1.5270, but the pair may track sideways in the month ahead should the majority of the MPC stick to its current policy.
U.S. Dollar: Richmond Fed Manufacturing, Consumer Confidence Disappoints
The greenback is regaining its footing going into the North American trade, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) bouncing back from a low of 10,132, and the reserve currency may track higher over the next 24-hours of trading as the flight to safety picks up. However, the slowdown in manufacturing paired with the drop in household sentiment appears to be dampening the appeal of the greenback as the Federal Reserve keeps the door open to expand policy further, but we should see the central bank refrain from conducting another round of quantitative easing as the recovery gradually gathers pace. In turn, we remain bullish against the USD, and headlines coming out of Europe may continue to prop up the reserve currency as risk-trends continue to dictate price action across the FX market.

*Sterling clears earnings on stagnant Production UK

THE TAKEAWAY: UK industrial production unchanged in April, down 1.0% on the year -> Dovish MPC member Posen reiterates call for stimulus -> Sterling erases earlier gains
UK industrial production was stagnant during the month of April, while factory production dropped -0.7% from the previous month. The industrial production cam in slightly worse than the expected 0.1% output increase, while manufacturing production was way below the -0.1% expected drop. Compared to April of 2011, industrial production is showing a long-term decline of -1.0%, according to the UK Office of National Statistics.
Basic pharmaceuticals led the way in declining UK output, dropping -6.0% during April. Meanwhile, computer, electronic, and optical production were up 8.1% for the month.
Continued signs of a contracting economy increase hopes that the BoE will add to its stimulus program in next month’s meeting. The usually dovish Adam Posen recently reiterated his calls for added stimulus, saying additional QE is necessary to boost the UK’s struggling economy. The BoE left its asset purchase target unchanged at 325 billion pounds in June’s meeting.

Although GBPUS
D dropped following the stagnant industrial production, it was little more than a correction from a rally during the previous hours. Cable is down from yesterday’s high at 1.5581, as initial euphoria over the Spanish aid deal faded. Euro rallied against Sterling following the release, also correcting from earlier session declines.

$Australian dollar and the pound sterling outperform the PBoC, BoE

Fundamental headlines
-Finnish leader said we concerned European banks - Bloomberg
-Map of Obama re-election shaken after the victory of the Walker Wisconsin - Bloomberg
-Spain passes a Test market, Merkel plonge Summit hopes - Reuters
-China cut its interest rates - WSJ
-Officials say Fed may need to act - WSJ
Summary of Asian and European Session
After the massive rally of yesterday - in fact the largest gathering since December by the Australian Dollar and the Dow Jones Industrial Average since December 20, 2011 - it would seem that all the world's problems have been resolved. The Australian economy, for example, has completed the "Triple Crown" for his important releases this week: a dove under Reserve Bank of Australia than expected, which helps maintain yields high; a blowout first quarter, the growth of reading, which means may be exaggerated fears of Asian growth. and market the work of reading for may burst, and while he showed that the rate of unemployment to check higher (from 5.1% to 5.0%), which is a further symptom of workers entering the labour market.
Flash forward in the European and senior session giving currencies and correlated with the risk assets started out. The flight safety was purely temporary - as central banks were active in the market. In considering the economic role, action price near the beginning of the European session would lead one to believe that the Bank of England had crossed and eased its monetary policy. Instead, it is the people's Bank of China which was active in the market, and, in a surprise gesture, the Central Bank announced that its one year loan and deposit rates would increase by 25-basis points, effect of Friday. Thus, even if the market participants have been largely disappointed by the inaction of the Bank of England, they received stimulus package that they have been nostalgia, comes from a different source.
A large part of the event was based on the hope that the central banks around the world will be facilitated. Frankly, it is difficult to think of a legitimate reason how the testimony of today by the President of the Federal Reserve Ben Bernanke will respect the hype surrounding it since lamentable payrolls report non-farm Friday. The Fed has made clear that it is taking transparency and credibility seriously now, and a few months of employment after employment growth exceptionally strong growth is not to change monetary policy - yet. In addition, in the light of what is in course with the weakening of Asian and European growth prospects, the US economy has been perform relatively better. Also, for the form: when was the last time that a President of the Fed announced plans for a major boost in testimony to Congress?
Take a look at credit, the debt of the European periphery continues to show signs of improvement, led by none other than the notes of Italian and Spanish on the shorter end of the yield curve. The Italian 2-year note yield fell to 3.569% while the performance in Spanish note 2 years fell to 4.122%; These two are seated at their low weekly in terms of performance (or highs in price).
AUDUSD 5 graphic min: 7 June 2012

Graphing with Marketscope - prepared by Christopher Vecchio
The Australian Dollar was subsequently today top interpreter reading blowout labour market and the rate of the PBoC cut, wins an another 0.65% against the U.S. Dollar (and now is 3.02% since Friday). The pound sterling also exploded more after the BoE chose not to change monetary policy, including the GBPUSD of 0.54% appreciation. The Japanese Yen continues to weaken, excretion of 0.63%.
24-Hour price Action

Main levels: 14: 50 GMT
So far, on Thursday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is low, trade 10152.96 at the time when this report was written, after opening at 10171.71. The index traded mostly lower, with the high in the 10190.54 and the 10144.37 low.

Sterling Erases Losses on News of Steady UK Services Growth

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By Benjamin Spier, 7 June 2012 08: 56 GMT the takeaway: PMI shows Services steadily-> BoE should ensure that property purchase plan unchanged-> Sterling clears prior losses

Services United Kingdom output continues to grow at a steady rate, according to Index managers purchases by Markit Economics. Services PMI may was reported to 53.3, increases at the same rate that the previous month and beating the expectations of analysts for a fall to 52.4. A PMI of more than 50 indicates growth in the sector.

Constant growth is the result of gain in the new company, and UK PMI services survey reported growth during 17 months of straight lines. However, the business confidence is at its lowest point of the year according to the index, due to concerns about the crisis of the Euro.

Paul Smith of markit said in the report that although the British economy remains relatively weak, the GDP figures are "exaggerated the magnitude of the recession." Yesterday, a PMI UK survey reported that construction of exit growthslowed in May.

Later today, the Bank of England will announce June interest rates and make a decision on its programme of quantitative easing current (target of active purchase). Although most of the analysts surveyed by Bloomberg provides that the two measures will remain unchanged, there was that the Bank will increase its asset purchase program to try to combat the economic recession of the speculation.

GBPUSD erased the prior session losses on news of better than PMI for services. The pair rose yesterday as the appetite of the risk taken hold of the market following reports that the Germany is developing a plan in support of the Spanish banks.

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7 June 2012 08: 56 GMT

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? Sterling Unmoved on As-Expected UK Construction Data

06 June 2012 08:46 GMT THE TAKEAWAY: UK PMI construction fell in May -> Decline was expected by economists -> Sterling little changed versus US Dollar, Yen
The UK purchasing managers’ index for construction fell in May to 54.4 from 55.8 in April, Markit economics said today. The decline came in line with expectations. The index gauges industrial sentiment by surveying major players in the industry.
UK PMI construction reached a 21-month high of 56.7 in March before falling in April, and a reading above 50 indicates an expanding market. The data is part of a string of reports used by the Bank of England in policy decisions aimed at stimulating economic growth and managing inflationary pressures.
Referencing current political instability in the Eurozone, BoE Governor Mervyn King recently said that growth prospects in the UK are now lower than they were three months ago, adding that the UK cannot qualify the damage that would be done by a breakup of the Euro. Mr. King added that even the threat of Euro-area risk is enough to slow UK growth.
The British Pound remained stable after today’s release and was well supported against the US Dollar after recent weakness since the beginning of May.
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06 June 2012 08:46 GMT

Euro continues to threaten 1.2500, Sterling Outlook supported by BoE

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Euro Struggles As EU Summit Disappoints, Sterling Carving Higher Low?

Euro: EU Summit Disappoints, ECB To Ease Policy Further British Pound: RSI Dips Into Oversold, BoE Miles Highlights Above-Target Inflation Euro: EU Summit Disappoints, ECB To Ease Policy Further
The EU Summit failed to prop up the Euro amid the ongoing rift within the group, and we may see European officials continue to act in their own interest as the anti-austerity movement gathers pace. As French President Francois Hollande and Italian Prime Minister Mario Monti press for increased integration, German Chancellor Angela Merkel may come under increased pressure to push through a euro-area bond, but we may see the EU use this opportunity to buy more time as the governments operating under the single currency look for additional monetary support.
As the EU struggles to meet on common ground, there’s growing speculation that the European Central Bank will carry its easing cycle into the second-half of the year, and we may see the Governing Council take a more aggressive approach in shoring up the economy as the threat of a Greek exit continues to materialize. Nevertheless, it seems as though the 1.2500 figure is providing psychological support as the EURUSD remains oversold, and we may see a short-term correction take shape in the coming days as the relative strength index bounces back from the lowest level since May 2010. However, we are looking to sell rallies in the EURUSD as the fundamental outlook for the region turns increasingly bleak, and we may see former support around the 1.30000 figure act as new resistance as we expect to see a lower high in the exchange rate.
British Pound: RSI Dips Into Oversold, BoE Miles Highlights Above-Target Inflation
The British Pound pared the overnight decline to 1.5638 even as the preliminary GDP report showed an even larger contraction in the first-quarter, and the sterling may continue to retrace the decline from earlier this month as the Bank of England sticks to its wait-and-see approach. BoE board member David Miles said the ‘exceptionally expansionary’ policy remains appropriate as the U.K. slips back into recession, but highlighted the risks of a prolonged period of above-target inflation as policy makers expect to see a more robust recovery later this year. In turn, it seems as though the Monetary Policy Committee will preserve its neutral policy stance over the medium-term, but there may be increased pressure to start normalizing monetary policy as the central banks’ credibility to preserve price stability comes under increased scrutiny. As the GBPUSD holds above the 1.5600 figure, the pair could be carving out a higher low ahead of June, but we will be keeping a close eye on the relative strength index as it dips into oversold territory.

Euro Tests For Support Ahead Of G8 Summit, Sterling To Lag Behind

AppId is over the quota
AppId is over the quota
Talking Points

Euro: Remains Oversold, Germany Vows Additional Assistance For Greece British Pound: Rebounds Ahead Of Key Event Risks, BoE Posen Mulls More QE U.S. Dollar: Index Falls Back From Fresh 2012 High Ahead Of G8 Summit Euro: Remains Oversold, Germany Vows Additional Assistance For Greece

The Euro bounced back from a fresh monthly low of 1.2641 as a spokesperson for the EU denied rumors that the group is working on a contingency plan for a Greek exit, while German Chancellor Angela Merkel showed an increased willingness to further assist Greece as the sovereign debt crisis continues to dampen the outlook for the region. At the same time, German Finance Minister Wolfgang Schaeuble encourage the EU to ‘form a common position as quickly as possible’ as the group heads into G8 meeting, but warned that debt crisis may continue to weigh on the financial market for another two-years as European policy makers struggle to restore investor confidence.

As the EU maintains a reactionary approach in addressing the risk for contagion, the European Central Bank is certainly coming under increased pressure to shore up the ailing economy, and there’s speculation that the Governing Council will take additional steps at the next meeting on June 6 as the fundamental outlook for the region turns increasingly bleak. According to Credit Suisse overnight index swaps, investors are currently pricing an 11% chance for a 25bp rate, but the ECB may show an increased willingness to target the benchmark interest rate as the non-standard measures have a limited impact in addressing the risks surrounding the region. As the EURUSD continues to trade above the 23.6% Fibonacci retracement around 1.2640-50, it seems as though the pair is carving out a short-term base, and we will be keeping a close eye on the relative strength index as it continues to sit in oversold territory. Should the oscillator cross back above 30 next week, we will be watching former support around the 1.3000 figure for new resistance, and we will be looking for opportunities to sell the single currency as we expect to see fresh 2012 lows in the exchange rate.

British Pound: Rebounds Ahead Of Key Event Risks,BoE Posen Mulls More QE

The British Pound regained its footing during the overnight trade, with the GBPUSD snapping back from a fresh monthly low of 1.5731, but the economic developments on tap for the following week may drag on the sterling as the Bank of England turns increasingly dovish. Indeed, we’re expecting to see the headline reading for inflation expand at the slowest pace since September 2010, while the BoE Minutes may reinforce expectations for more quantitative easing as the central bank sees a renewed risk of undershooting the 2% target for price growth. Indeed, Monetary Policy Committee member Adam Posen argued that he may have been overly optimistic on the economy after scaling back his vote to expand the asset purchase program by another GBP 25B, and curbed his outlook for core of inflation despite the stickiness in price growth. Even though we’re seeing the RSI hold above oversold territory, we may see the recent weakness in the GBPUSD gather pace next week as market participants increase bets for additional monetary support, and we may see the pair come up against the 1.5600 figure as it continues to search for support.

U.S. Dollar: Index Falls Back From Fresh 2012 High Ahead Of G8 Summit

The greenback is struggling to hold its ground on Friday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) falling back from a fresh yearly high of 10,153, and the reserve currency may consolidate throughout the North American trade amid the rebound in risk-taking behavior. As the G8 Summit comes into focus, the group may try to talk up market sentiment, but we don’t expect to see any major developments over the weekend as European policy makers continue to look at the ECB for relief. Nevertheless, as the economic docket for the following week is expected to instill an improved outlook for the U.S., a slew of positive developments should continue to dampen speculation for additional monetary support, and we may see the greenback track higher in the week ahead as the Fed moves away from its easing cycle.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

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Nationwide Department Store Sales (YoY) (APR)

Tokyo Department Store Sales (YoY) (APR)

German Producer Prices (MoM) (APR)

Slowest pace of growth since June 2010.

German Producer Prices (YoY) (APR)

Italian Industrial Orders s.a. (MoM) (MAR)

Rises for the first time since December.

Italian Industrial Orders n.s.a. (YoY) (MAR)

Italian Industrial Sales s.a. (MoM) (MAR)

Fails to grow for the second time in 2012.

Italian Industrial Sales n.s.a. (YoY) (MAR)

Consumer Price Index (MoM) (APR)

Headline and core inflation rises for the first time since February, raising the scope for a BoC rate hike.

Consumer Price Index (YoY) (APR)

Bank Canada CPI Core (MoM) (APR)

Bank Canada CPI Core (YoY) (APR)

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? Sterling pour consolider davantage sur Colombe BoE, Correction de l'Euro sur robinet

Discussion points
Pound sterling: borders of BoE growth, Inflation - 1.5800 euro forecast view: eyes Fib of 23.6% for support, IMF frappes your prudent for the Italy to the United States Dollar: Index of high December approaches, the FOMC Minutes in Focus of Sterling: BoE borders growth, forecasts of Inflation - 1.5800 in view
The pound sterling fell to a monthly minimum fee 1.5888 as the Bank of England keep the door open to further develop the monetary policy, and the sterling may winds in the short term that the impact of the sovereign debt crisis dampens prospects for the region. Indeed, the BoE slowed its growth forecasts and saw an emerging risk of the target of 2% on the back of the controlled wage growth, but to say that the "big picture" has not changed in February that makers expect to see a gradual recovery in Britain.
At the same time, the Central Bank warned of a result of disorder in the euro area as the governments operating under the control of the single currency to meet on common ground, and it appears that the monetary policy Committee will focus its approach to wait and see in the second half of the year to protect the U.K. economy. Nevertheless, the BoE has continued to highlight the adhesion to the growth of the prices they see inflation remain over the target in 2013, and it can become increasingly more difficult for the Central Bank to defend its position as underlying pressures on prices are resurfacing. As the GBPUSD is unable to maintain the trend of channel earlier this year, we expect to see a test of the figure of 1.5800 for support and the pair may trade sideways for a Minutes BoE out next week as market participants weigh prospects of monetary policy.
Euro: The eyes Fib of 23.6% for support, IMF frappes your prudent for the Italy
The Euro broken return a minimum night of 1.2680 in upwelling of feelings of risk, but the additional winds before the end of the week as costs of public finance in the region increase the risk of contagion may deal with the single currency. Indeed, the performance related to the debt of 10 years of the Italy failed to 6% while the spread of 10 years between the Spain and German bonds extended to 500bp for the first time since November, and the current crisis in the area continues to throw a bearish Outlook for the EURUSD as European policy makers struggle to restore the confidence of investors. In response, International Monetary Fund argued that "much remains to be done" in Italy, the group sees the area of contracting in 2012, and the European Central Bank may come under increased pressure to develop a monetary policy that the region continues to face a risk of a prolonged recession. As we expect the ECB to carry its relaxation cycle in the second half of the year, will enable us to maintain our bearish Outlook for the EURUSD, but the pair seems ready for a correction in the short term, as the recent decline is oversold. As the entering against high 23.6% Fibonacci allows 2009 2010 low around 1. 2640-50, we see figure interim support, but we need to see the relative strength index crosses back over 30 to see a significant recovery in the exchange rate.
US dollar: approaches high December, the FOMC Minutes In Focus Index
The greenback has continued to gain ground on Wednesday, with the Dow Jones - FXCM U.S. Dollar Index (Ticker: USDOLLAR) rallying to a monthly maximum fee of 10 100, but we see the reserve currency to consolidate before of the Minutes of the FOMC as market participants weigh prospects of monetary policy. The Fed officials take note of the more robust recovery with growth of price stickiness, the Central Bank might tighten up this time and we could attend the Committee continue to talk in speculation for another program for the purchase of the assets on a large scale as the world gets more great economy on a more sustainable path. However, we may assist Fed Chairman Ben Bernanke to keep the door open for further monetary policy, as the sovereign debt crisis continues to pose a threat to the global financial system, and we could see the head of the Central Bank of renew the expectation of additional financial support that Mr. Bernanke continues to highlight the weakness continues in the private sector. In turn, a dove statement could trigger a correction in the short term of the USD, and the dollar may strengthen before the end of the week as the rally since the beginning of the month is surachat.

:: Sterling Falls as UK Trade Balance is Weakened by Euro Crisis

15 May 2012 09: 12 GMT THE TAKEAWAY: visible UK trade balance comes in worse than expected at - 8.56 billion pounds-> Lack of European demand for UK goods weakens trade balance-> Sterling falls
The UK visible trade deficit for March came in wider than expected at - 8.56 billion pounds, but still narrower than February's visible trade balance of - 8 billion pounds. February's deficit was revised lower from the previously thought - 8.77 billion, according to the Office for National Statistics. Trade balance to re-export narrowed to - 4.1 trillion pounds, better than the expected - 4.7 billon.
Import of goods from Europe was way up from 16.9 billion pounds to 17.6 trillion in March, while there was only a small rise in exports to Europe. Exports of goods to yield countries rose from 11.8 billion pounds to 13.2 billion. Therefore, the widening of trade deficit to Europe was offset by the narrowing of negative balance to re-export countries.
The euro-debt crisis has clearly curbed demand for British goods in Europe, which is the UK's biggest export market. As the pound continued to strengthen against the euro, as has been the trend over the past year, the trade deficit between the UK and Europe will continue to grow.
The lack of growth in European exports could be cited as one of the contributors to the fall in the first quarter UK GDP. Tomorrow, Bank of England Governor Mervyn King will hold a press conference to explain to the reason's behind the MPC's decision to not raise QE.
The narrower than expected visible trade balance was a bad sign for sterling. GBP/USD fell below 1.6100 and reversed gains the hand made over the past two days. EUR/GBP continued an earlier day uptrend back towards 0.8000.

€ Euro Under Pressure Amid Greek Threats, Sterling Supported By BoE

08 May 2012 13:15 GMT  Talking Points
Euro: Greece Threatens To Reject Bailout Terms, Need Close Below 1.3000 British Pound: Former BoE Members Talk Down Bets For More QE U.S. Dollar: Fed’s Dudley Softens Dovish Tone, Central Bank Hawks On Tap Euro: Greece Threatens To Reject Bailout Terms, Need Close Below 1.3000
The Euro slipped to 1.2989 as rising finance costs across the European periphery raised the threat for contagion, and the bearish formation in the EURUSD should continue to take shape as the fundamental outlook for the region turns increasingly bleak. Indeed, Greece sold EUR 1.0B in 182-Day bills yielding 4.69%, which compares to the 4.55% offered in April, while Greek policy makers are still making an effort to form a government as Alexis Tsipras of the left wing party threatens to reject the terms of the EU-IMF bailout.
As European policy makers struggle to meet on common ground, the lack of coordination certainly dampens the outlook for the region, and we may see the governments operating under the single currency become increasingly reliant on monetary support as the economy remains at risk for a prolonged recession. According to Credit Suisse overnight index swaps, market participants continue to see scope for a rate cut in the next 12-months as the European Central Bank’s non-standard measures have a limited impact in addressing the sovereign debt crisis, and the single currency is likely to face additional headwinds in the coming days as European policy makers fail to restore investor confidence. As the EURUSD continues to approach the apex of the descending triangle, we are still waiting for a major selloff in the exchange rate, but we would need to see the pair close below support around 1.3000 to reinforce our bearish forecast for the euro-dollar.
British Pound: Former BoE Members Talk Down Bets For More QE
The British Pound weakened to 1.6124 as market participants scaled back their appetite for risk, but the sterling may hold steady ahead of the Bank of England interest rate decision as the GBPUSD trades within the previous day’s range. Indeed, former BoE members Andrew Sentance, John Gieve and Charles Goodhart talked down speculation for more quantitative easing, with Mr. Sentance seeing scope for a rate hike later this year, while Mr. Gieve said the central bank may extend its asset purchase program for ‘a month or two’ amid the ongoing uncertainties surrounding the region. As the Monetary Policy Committee moves away from its easing cycle, we should see the bullish sentiment underlining the sterling gather pace throughout 2012, but we are still looking for a test of former resistance around 1.6000 as the relative strength index continues to come off of overbought territory.
U.S. Dollar: Fed’s Dudley Softens Dovish Tone, Central Bank Hawks On Tap
The greenback pared the decline from the previous day, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) rallying to 9,967, and the reserve currency may appreciate further during the North American trade as the U.S. equity market opens lower. Nevertheless, as Richmond Fed President Jeffrey Lacker and Dallas Fed President Richard Fisher are scheduled to speak later today, hawkish rhetoric from central bank officials should help to prop up the greenback, and we may see the FOMC continue to move away from its easing cycle as the economic recovery gradually gathers pace. Indeed, New York Fed President William Dudley said the FOMC would drop its asset purchase program ‘the moment they become inconsistent with our dual mandate objectives,’ and the committee may continue soften its dovish tone for monetary policy as the stickiness in underlying price growth raises the risk for inflation.

::: Sterling Correction Mired By Safe-Haven Flows- Selling Euro Advances

07 May 2012 16:07 GMT  Daily Winners and Losers

The British pound is the top performer ahead of the European close with an advance of 0.12% against the greenback. The gains come on the back of a sell-off in broader risk assets after results from this weekend’s elections in France and Greece stoked concerns about the ongoing European debt crisis. France incumbent Nicolas Sarkozy was defeated by Socialist Francois Hollande in the second round of the presidential elections with the president elect pledging to “bring back Europe on a track for jobs, growth and the future.” Hollande has long been an opponent of deep austerity cuts amid concerns over economic growth with the former Mayor calling for changes to the EU fiscal compact, which could have significant implications for the region. In Greece, voters rejected both of the incumbent parities and with no victor, investors will have to wait for further clarity on who exactly will lead the debt laden country amid the ongoing recession facing the region. European headlines have continued to weigh risk appetite with US equity markets trading in the red early in the session.

The sterling has remained well supported despite the draw-down in risk as the pound continues to gain haven status with the GBPUSD now eyeing the 78.6% Fibonacci extension taken from the January 13th and March 12th troughs at the 1.62-figure. The pair remains within the confines of a broad ascending channel formation dating back to the January lows with the sterling snapping a 5-day losing streak after posting 10-days of consecutive advances in late April. The correction may have run its course with a daily close above the 1.62-figure likely to alleviate further downside pressure. While our medium-term bias on the pound remains to the topside we await further confirmation that the downside correction is in fact complete with favorable entries eyed at the 61.8% extension at 1.6070 and channel support.

The scalp chart shows the GBPUSD holding within the confines of a descending channel formation dating back to the 2012 high at the 1.63-handle with the pair testing the confluence of the 78.6% Fibonacci extension taken from the March 12th and April 5th troughs at 1.6165 and channel resistance. A breach above this mark eyes topside targets at the 1.62-figure backed by 1.6235, the 100% extension at 1.6265 and the 1.63-handle. Interim support rests at 1.6130 backed by the 61.8% extension at 1.6090. Look for the pair to remain well supported in North American trade with a close above the 1.62-handle offering further conviction on our directional bias.

Key Levels/Indicators

The euro is the weakest performer against the greenback with a loss of 0.34% on the session after moving a nearly 110% of its daily average true range. The pair remains at risk on the back of the elections with the single currency struggling to pare losses after gaping lower by nearly 100pips at the Sunday open. Our primary medium-term objective is eyed at the 38.2% Fibonacci extension taken from the October 27th and February 29th crests at 1.2865. The single currency may look to fill the gap and as such we remain on the sidelines here with rally’s offering favorable entries above the 1.30-figure. Note that daily RSI has broken below trendline support dating back to January with the oscillator at its lowest levels since January 17th. Only a break above channel resistance, currently at 1.3280, invalidates our bias on the euro.

The scalp chart shows the pair rebounding sharply off the 78.6% Fibonacci extension taken from the March 27th and May 1st crests at 1.2975 before encountering soft resistance at 1.3060. A breach above this mark eyes subsequent ceilings at the 50% extension at 1.3085, 1.3110, and the 1.3165 with a breach above the 23.6% extension at 1.3190 risking further dollar losses. Interim support rests at the 1.30-handle backed by the 1.2975 (February Low), 1.2955, and 1.2930. A break below the 100% extension at 1.2890 offers further conviction on our directional bias with such a scenario exposing our objective at 1.2865.

Key Levels/Indicators.

||| Sterling Strong: highlights of data housing good Continental weakness

02 May 2012 08: 21 GMT  THE TAKEAWAY: Better than expected UK housing data props Sterling against the Euro, with less than ideal numbers from the continent slowing down the single currencyMortgage approvals in the United Kingdom rose during March, sparking a bout of strength in the Pound against the Euro and US Dollar. 49,900 mortgages were approved versus the 48,000 approvals forecasted by a team of economists.
Sterling strengthened against the beleaguered Euro as positive the UK data contrasted with less than ideal numbers from the continent. EUR/GBP fell to fresh yearly intraday lows.
Although the data encouraged some market participants, especially since in coincided with a better than expected PMI manufacturing out of the UK, the outlook for policymakers remains bleak.A GDP contraction in 2012's first quarter has pushed the UK into its first double-dip recession since the 1970s, and pressure on UK officials is expected to increase. UK PM David Cameron has faced criticism for promoting austerity instead of stimulus andthe Bank of England recently said growth could contract because of weak construction during the Jubilee holiday season.

€ Swale Euro training In Focus, Sterling, support research

Discussion points
Euro: ECB to knock your dove in the Middle risk for prolonged recession pound sterling: current Correction, the prospects remain optimistic on the Dollar of BoE: Index of 9 900, Lacker Fed on tap Euro tests: ECB to knock your Dove the medium risk for prolonged recession
The Euro slipped to a weekly minimum fee of 1.3120 as the weakening of the market of work associated with the decline in manufacturing of increased the risk of a prolonged recession, and the EURUSD can continue to rebound from the previous month, as the sovereign debt crisis continues to drag on the real economy. Indeed, the Portugal auction EUR 1 b 12 months good performance 3.908 percent, which compares the % 3.652 offered in March, and there could be a little more moderate the European Central Bank, this time as fundamental for the region perspectives more dark.
Although the ECB should largely to maintain its current position of the policy in may, Central Bank Chairman Mario Draghi may seek to target the reference interest rate as the non-standard measures have limited impact with regard to the risks to the region, and we could attend the Board of Governors to carry its relaxation cycle in the second half of the year : the Governments under the single currency become more and more dependent on monetary support. The EURUSD resumed a series of senior lower in April, we will paste by our forecasts down for the pair, and that we are still a strong bond of the exchange rate as price action continues to approach the apex of the triangle down. In return, we need a significant break and a fence below 1.3000 to see bearish formation pan, and we should see the entering fall to Fibonacci 23.6% of the top 2009-2010 allows low around 1. 2630-50 as European policy makers trying to reduce the risks surrounding the area.
Pound sterling: Correction underway, Outlook remains optimistic on the BoE
The pound extended the decline of the previous day as participants in the market reduced their appetite for risk, and the correction in the short term in the GBPUSD may gather pace for the rest of the week, then that index of upcoming continuing relative strength in the territory of surachat. However, as the economic recovery in the United Kingdom brings together progressively the pace, we should see the Bank of England continue to move away from its relaxation cycle, and we are looking for charges annual highs in the GBPUSD as the pair maintains the trend since the beginning of this year. As Governor of the BoE Mervyn King is expected to speak later today, bellicose comments of the head of the Central Bank should support the sterling, but the GBPUSD may continue to fall back to the old resistance around 1.6000 he is seeking for support.
US dollar: Index 9 900, Lacker Fed on tap test
The greenback has continued to return on the decline of the previous month, with the Dow Jones - FXCM U.S. Dollar Index (Ticker: USDOLLAR) advancing to a maximum of 9 902 and the reserve currency may appreciate more during trade in North America, as the flight to safety is the pace. As the economic record is still light enough for the rest of the day, we should see trends risk dictate the action price through the major currencies, but the fresh batch of comments from the Fed Chairman of Richmond Jeffery Lacker can trigger a bullish reaction in the greenback as the FOMC Member adopted a bellicose tone of monetary policy. As the US Federal Reserve increased its Outlook for growth and inflation, we should see the Central Bank to discuss a preliminary exit strategy, and the Committee can see scope start to normalize monetary policy toward the end of the year, as the recovery gathers pace.

Currency	GMT	EDT	Release	Expected	Prior
USD	14:00	10:00	Factory Orders	-1.70%	1.30%
USD	14:30	10:30	DOE U.S. Crude Oil Inventories		3978K
USD	14:30	10:30	DOE Cushing OK Crude Inventory		574K
USD	14:30	10:30	DOE U.S. Distillate Inventory		-3052K
USD	14:30	10:30	DOE U.S. Gasoline Inventories		-2235K
USD	16:30	12:30	Fed's Lacker Speaks on Economy in Norfolk
EUR	17:00	13:00	Italian Budget Balance (euros) (YTD)		-28.2B
EUR	17:00	13:00	Italian Budget Balance (euros)		-17.5B
NZD	22:45	18:45	Unemployment Rate	6.20%	6.30%
NZD	22:45	18:45	Employment Change (QoQ)	0.50%	0.10%
NZD	22:45	18:45	Employment Change (YoY)	0.90%	1.60%
NZD	22:45	18:45	Participation Rate (QoQ)	68.30%	68.20%

Currency	GMT	Release	Expected	Actual	Comments
NZD	01:00	ANZ Commodity Price (APR)	--	-4.5%	Falls for second month.
JPY	01:30	Labor Cash Earnings (YoY) (MAR)	0.2%	1.3%	Largest advance since July 2010.
CNY	02:30	HSBC Manufacturing PMI (APR)	--	49.3	Contracts for the sixth month.
CHF	07:30	SVME-Purchasing Managers Index (APR)	51.0	46.9	Lowest print since November.
EUR	07:45	Italian Purchasing Manager Index Manufacturing (APR)	47.1	43.8	Contracts for the second month.
EUR	07:50	French Purchasing Manager Index Manufacturing (APR F)	47.3	46.9
EUR	07:55	German Purchasing Manager Index Manufacturing	46.3	46.2
EUR	07:55	German Unemployment Change (APR)	-10K	19K	Rises for the second time this year.
EUR	07:55	German Unemployment Rate s.a. (APR)	6.7%	6.8%
EUR	08:00	Italy Unemployment Rate (SA) (MAR P)	9.4%	9.8%	Highest since 2000.
EUR	08:00	Euro-Zone Purchasing Manager Index Manufacturing (APR)	46.0	45.9	Lowest since June 2009.
GBP	08:30	Purchasing Manager Index Construction (APR)	54.0	55.8	Slows for the first time since January.
GBP	08:30	Mortgage Approvals (MAR)	48.0K	49.9K	Holds below 50K for the second month.
GBP	08:30	Net Consumer Credit (MAR)	0.3B	0.4B
GBP	08:30	Net Lending Sec. on Dwellings (MAR)	1.0B	1.0B
GBP	08:30	M4 Money Supply (MoM) (MAR)	--	-0.8%	Contracts for the second straight month.
GBP	08:30	M4 Money Supply (YoY) (MAR)	--	-5.0%
GBP	08:30	M4 Ex IOFCs 3M Annualised (MAR)	--	6.4%
EUR	09:00	Euro-Zone Unemployment Rate (MAR)	10.9%	10.9%	Rises to a 15-year high.
EUR	09:00	Italy Producer Price Index (MoM) (MAR)	0.6%	0.3%	Slowest pace of growth since March 2010.
EUR	09:00	Italy Producer Price Index (YoY) (MAR)	3.0%	2.7%
USD	11:00	MBA Mortgage Applications (APR 27)	--	0.1%	Rises for the second time in April.
USD	12:15	ADP Employment Change (APR)	170K	119K	Smallest advance since September.