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The USD made a strong start on Monday and then allowed the EUR and GBP to bounce back from their lows. Powering to new highs the USD started to find some resistance as the day developed and began to range trade. Wall Street began the day on a slightly positive note, but was not able to sustain its gains and market uncertainty took its toll by the end of the trading session as the major indexes suffered. There was no economic data from the U.S. yesterday, but Ben Bernanke did make an appearance in the evening and said he believes the American economy remains on the path of recovery, but he cautioned that it would not feel strong until the unemployment numbers improve. Bernanke went onto say that the U.S. has the capability of avoiding a double dip recession. Today will remain quiet for government data and it will only be on Thursday with the weekly Unemployment Claims and on Friday with the Retail statistics, that investors will have numbers to really bite into.

Until the U.S. releases formidable data, investors will be left to work off of existing sentiment and news which is being generated from the corporate front and the European Sovereign Debt saga. A bad start on Monday for Wall Street usually does not bode well for equities and certainly will not provide any level of comfort for investors going into today’s trading. The USD continues to find itself well within the strongest parts of its range against the EUR and GBP. The Greenback has also made a potent move against the AUD as of late. Commodity prices – excluding Gold – continue to show that they are under pressure and this highlights that demand for resources remains lackluster. In essence the broad market place continues to be a chess board that matches long term thinking versus short term strategic safe haven moves. Investors have serious questions about structural fiscal policy and how this will affect the prospects for a recovery. The USD is likely to find itself within a range trading mode today.

Consolidation greeted the Sterling on Thursday as it finished the day largely where it started as investors showed that they are quite tentative going into today’s jobless report from the States. The U.K. published the Services PMI and it came in with a reading of 55.4, which was below the estimate of 55.6. The Halifax HPI is on the calendar today and this will give insight into the housing market which remains under strain. The economic data from the U.K. continues to be a mixed bag and while politicians and officials try to ‘talk the market up’, the facts on the ground remain questionable and concerns abound about the ability to achieve a real economic recovery in this environment. Like the EUR, the Sterling faces possible headwinds coming from the shadows of the Sovereign Debt crisis and economic data which has been less than promising.

The USD experienced a wide trading pattern on Wednesday as it started the day in a weaker mode, but finished on the stronger side of its range. Caution was again the byword surrounding investors who clearly remain unconvinced about the waters they are attempting to swim. The EUR centric saga shows no willingness to vanish and the economic data that was released from the States yesterday was mixed. The Durable Goods figure turned in a rather perplexing bag of tricks, while it showed the broad number enjoyed an improvement, in fact the Core statistics proved disappointing. New Home Sales enjoyed a good jump to 504k, exceeding the estimate of 425k, but questions remain about the growth prospects for the housing sector. Today the Prelim GDP will be released from the U.S. and it is anticipated to produce a gain of 3.5%. Also on the agenda are weekly Unemployment Claims, which are expecting an improvement.

Taking into consideration that the previous GDP report was slightly more negative than forecasted and that the weekly Unemployment Claims gave investors a fright last week; today could produce volatility based on these publications if any cracks in the armor appear. And there will be additional concerns too because of the impending long weekend. Trading will be open tomorrow, but the market will likely see less volume because of the upcoming Memorial Day holiday on Monday. There will be economic data on Friday with Consumer Sentiment readings, but traders should be ready for volatility today from both the currencies and the equity markets as investors perhaps try to square their books today. The European financial crisis continues to stagger sentiment globally, but the Revised GDP statistics could cause genuine movement with any surprises. The USD has experienced a solid trend versus the EUR and GBP, but this does not mean that the U.S. economy has no warts. The next two days of trading should prove noteworthy.

This may be a week where we see some powerful moves occur in the currencies. A dip in the dollar could be the boost that the markets need to solidify their road to recovery. However, keep in mind that traders may be reluctant to confidently choose a direction due to the importance of this week’s economic releases.

With the Euro trading back below 1.34 after the latest round of news coming out of Greece in reality it seems more than likely that we will be seeing a stronger US dollar. It is important be wary of any significant fluctuations in the economic data output of the following 5 trading days and to trade accordingly.

Perhaps the winds of change have truly arrived. Scouring through the latest data and market moves it seems that all signs are pointing towards economic optimism. While technically there are still many things wrong with the global economic situation, it always amazes me how effective optimism can be in healing the wounds that the market has suffered. US Treasuries have traded lower for the third day in a row, equities are up, and commodities are up. Risk appetite seems to be sneaking its way back into the marketplace. This will be a data intensive week with an additional one two punch of both an FOMC statement, and Trichet talking almost daily. As always, we recommend patience, caution and vigilance, when putting on your next trade.

The USD continued a divergent run on Wednesday as it gained versus the EUR, but lost ground versus the other major currencies. There was a lack of major economic data from the States yesterday with only Crude Oil Inventories being brought forth, showing that supply did in fact increase more than estimated. However, the crux of market sentiment certainly continued to focus on the upcoming speech today by President Obama that will be held in New York City and deal with financial reforms. The speech will be packed with rhetoric, and the question is how the Obama administration will push for new regulations, and what their implications will be on the investment world.  Besides Obama at Cooper Union today, the U.S. will release Unemployment Claims and Existing Home Sales figures. Both sets of numbers are anticipated to show improvement and after a week of rather thin economic publications investors will finally have something to sink their teeth into.

Wall Street has provided a good barometer of the markets this week because of quarterly earnings. Yesterday’s results from the major indexes produced mixed results perhaps mirroring the caution that permeates the air for investors who must decipher the manner in which the U.S. government actively seeks to become involved in the financial sector. The story surrounding Goldman Sachs continues to make news and is certain not to disappear anytime soon. Tomorrow the States will release New Home Sales data. The combination of the Obama speech today with unemployment statistics and housing figures over the next two days could be enough to cause widespread impact on the markets. Wednesday’s trading showed that most traders are taking a wait and see approach to the currencies, commodities, and equities. The USD trend against the EUR continues to be strong but its results against the other currencies have met some resistance. The final two days of trading this week may see a test of recent consolidation.

The EUR has continued to face pressure as the Greek situation does little to abate. The EUR has had a negative week against the USD and yesterday’s Final GDP outcome from the continent did nothing to stem the tide. The unchanged number from the European GDP was below the expected outcome of 0.1%. Although the statistic was not far off the estimate, it does highlight that the E.U. is still very much within the grasp of a challenging economic environment and one that will not improve suddenly. To make matters more interesting the ECB will hold its monetary policy meeting today and there can be no doubt that the Q&A session with President Trichet will focus on Greece. A report circulated last night that the German Bundesbank has expressed their lack of agreement with the current Greek aid package as it stands. The EUR has been nothing short of vulnerable as questions about Sovereign debt have roiled the marketplace and it will be upon Jean-Claude Trichet’s shoulders today to calm the storm.

The JPY picked up a bit of ground against the USD on Tuesday as bourses turned a bit more cautious. The JPY has lost value against the greenback as of late, but yesterday was a reminder that this currency pair is still within a well practiced range and that its dance routine may remain consistent. The Japanese government issued a statement yesterday that said it believes a recovery is underway, but like its major counterparts ‘hedged’ when they also added that conditions are still fragile.

The USD continued its drive against the EUR picking up additional value versus the single currency. The USD also strengthened against the GBP. The risk adverse crowd has swelled the past few trading sessions under an umbrella consisting of mixed to lackluster economic data and a EUR centric move. The U.S. released Existing Home Sales yesterday and although the figures were better than the estimate, the outcome was greeted poorly because the numbers were worse than the previous month and marked the third straight decline. Inventories for existing homes in the States remain high and as long as this continues it will keep downward pressure on the housing sector. Today New Home Sales figures will be released and the forecast is anticipated to be a result of 318K, which would be an improvement over the last month.
 
Wall Street also finished the day with gains on Tuesday and its results should be watched carefully. The Dow Jones is at an eighteen month high, but this has not been greeted by a celebratory group of investors in most cases. Traders continue to question the durability of the major indexes, having said that – there is no denying that the equity market is providing some with profitable positions. Besides the housing data being brought forth today, Durable Good numbers are on schedule too. On the horizon for tomorrow are the weekly Unemployment Claims. U.S. data is being watched and debated by investors loudly, but the EUR centric sentiment within the currency markets presently cannot be denied. The trend in the USD has been steady since December of 2009 against the EUR and GBP, but recent developments across the Atlantic have added force to the movement. Trading is seldom a one way avenue and traders must be weary of short term movements, but the crux of the matter is that the USD has found a wave of bull sentiment and the question is how long the ride will last.

Without any major economic data reported on Thursday the GBP enjoyed a better performance against the USD. The Sterling struggled much of this week under rather negative economic data. Today will also be very quiet for news from the U.K. and this will leave the GBP able to trade under the banner of risk sentiment. Yesterday proved to be a positive day across the international bourses and this result may have enhanced the Sterling’s ability to enjoy a day in the sun. The GBP has faced pressure much of this week, but going into the weekend may find that it has some wind in its sails and find some backers.

Retail Sales proved quite disappointing on Friday but the GBP had already suffered a decline because of the news coming from the States. The Sterling actually found enough strength to stabilize during the day before heading into the weekend. There will not be any major economic data on Monday from the U.K. Tomorrow the BBA Mortgage Approval numbers will be issued and Bank of England committee members will speak before Parliament. The economic data from the U.K. continues to be a mixed bag and statistics point to stability but the possibility that a genuinely strong recovery may prove hard to grasp. The Sterling has traded, like the EUR, within a declining trend since early December and appears that it may face more pressure if concerns continue to grow regarding government budgets and deficits.