Mid-Day Report: Dollar Extends Rebound

Dollar extends the rebound against commodity currencies today and the strength is spreading further to against Swissy and Euro. Aussie and Loonie were both pressured throughout the day, following liquidation in commodity long positions. Gold is set to have it's biggest weekly drop in 25 years, dropping by 12% from it's record high of over $1000/oz. Oil, also fell below $100/bl. Meanwhile, the Euro and Swissy also retreats further against the greenback as traders take profits from the long positions, following weaker than expected services PMI reading in Mar.

Data from US saw initial jobless climbed 22k to 378k, matching Post-Katrina high. Philadelphia Fed survey improved more than expected from -24 to -17.4 in Mar. Leading indicators dropped -0.3% in Feb meeting consensus. Canadian Leading indicator dropped -0.3%, worse than expectation of 0.1%. Released earlier , Swiss combined PPI rose 0.2% mom, 3.6% yoy in Feb. Swiss trade surplus widened to 1.06b.

The biggest surprise today was UK retail sales which grew 1.0% in Feb, much better than expectation of -0.2% fall and even stronger than prior month's 0.8% growth. YoY rate just slowed slightly from 5.6% to 5.5% versus consensus of 3.7%. Sterling is relatively steady today, supported by rebound in EUR/GBP and EUR/CHF crosses.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5407; (P) 1.5548; (R1) 1.5813; More

EUR/USD's fall from 1.5902 extends further to as low as 1.5401 in early US session. At this point, intraday bias remains on the downside as long as 1.5544 minor resistance holds and further fall could be seen to test 1.5277 support. However, downside is still expected to be contained there and bring at least another rise to 100% projection of 1.3360 to 1.4966 from 1.4438 at 1.6044, which is close to 1.6 psychological resistance before completing recent rally. Above 1.5544 minor resistance will turn intraday outlook neutral first and further break of 1.5768 resistance will suggest recent rally has resumed. However, firm break of 1.5277 support will dampened this view and indicate that the 1.5902 top could be more important that originally thought.

In the bigger picture, medium term up trend from 1.1639 is still in progress. Regardless of internal structure, it is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high). Further medium term rally could be seen towards 100% projection of 0.8223 to 1.3668 from 1.1639 at 1.7084. Break of 1.4591 resistance turned support is needed to indicate that a medium term top is in place. Otherwise, medium term outlook remains bullish.

Forex News Digest

Dollar Advances Against Commodity Currencies as Oil, Gold Extend Declines

Canada's Dollar Falls to Two-Month Low as Prices of Commodities Decline

Britain's Pound Rises, Gilts Fall as Retail Sales Beat Economist Forecasts

Euro-zone March PMI weaker than expected
Thu, 20 Mar 2008 09:24:00 GMT from MarketWatch

Euro slips against dollar to US$1.5585 in European trading
Thu, 20 Mar 2008 09:07:00 GMT from International Herald Tribune

Forex-Dollar edges up in pre-Easter profit taking
Thu, 20 Mar 2008 08:58:00 GMT from Reuters South Africa

New Zealand Dollar Gains Against Majors; Now At 0.8045 Versus Buck
Thu, 20 Mar 2008 08:54:00 GMT from Stockhouse Canada

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