FOREX: US Dollar to take Cues from Jobless Claims, Housing Data following FOMC

Minutes from the latest FOMC meeting in April showed consensus among central bankers with regards to letting the Fed's massive balance sheet slowly dwindle.The Euro finished roughly unchanged on another choppy day of trading, showing relatively little sensitivity on continued speculation over a Greek debt restructuring.

• US Dollar to take Cues from Jobless Claims, Housing Data following FOMC
• Euro Risks to Downside Against Swiss Franc on Continued Greek Debt Troubles
• British Pound Tumbles Against US Dollar as Bank of England Rate Prospects Sink
• Japanese Yen Could See Major moves on Gross Domestic Product Data
• Canadian Dollar Rallies as Crude Oil Inventories Report Sparks Oil Strength
• New Zealand Dollar Rallies as Agricultural Commodity Prices Jump

US Dollar to take Cues from Jobless Claims, Housing Data following FOMC

Minutes from the latest FOMC meeting in April showed consensus among central bankers with regards to letting the Fed's massive balance sheet slowly dwindle as the first part of paring back the extraordinary measures implemented at the height of the crisis. Much of the minutes reflected Fed Chairman Ben Bernanke's remarks at the post decision press conference, highlighting increased concerns among members with regards to the “upside risk to the inflation outlook,” and the downside risk to growth. The greenback was marginally higher at the close of North American trade, having pared overnight losses earlier in the session. Looking ahead the dollar may be losing some steam as commodities and overall risk appetite pick up. Traders will be eying weekly jobless claims and existing home sales data tomorrow after new home sales figures earlier in the week grossly missed estimates to the downside. It's worth noting that the Dow Jones FXCM Dollar Index remains in the ascending channel that has held since late April, with support seen 9610 and 9550.

Related:Discuss the Dollar in the DailyFX Forum

Euro Risks to Downside Against Swiss Franc on Continued Greek Debt Troubles

The Euro finished roughly unchanged on another choppy day of trading, showing relatively little sensitivity on continued speculation over a Greek debt restructuring. European Central Bank officials once again stated that a Greek debt restructuring was effectively off the table, only available as a last resort in the most dire of circumstances. Of course, continued talk of “voluntary reprofiling” is a seemingly-innocuous euphemism for a Greek debt default, and 2-year government bonds continue to yield an almost-unbelievable 25 percent. The euro continues to underperform against the high-flying Swiss Franc as traders opt for the stability of the non-euro zone economy. Continued uncertainty favors EURCHF weakness, while the EURUSD will almost certainly take its cues from broader market sentiment as cross-asset correlations trade near record-highs.

British Pound Tumbles Against US Dollar as Bank of England Rate Prospects Sink

The sterling was the worst performer against the greenback at the close of New York trade after a slightly dovish BoE minutes release and a weaker than expected employment report saw rate -hike expectations diminish. The UK economy saw an uptick of 12.4k jobless claims in April, up from an upwardly revised previous print of 6.4K. And although the ILO unemployment rate fell to 7.7% from 7.8%, the claimant count rate increased by 0.1% to 4.6%. Coupled with last week's stronger than expected inflation report and poor industrial and manufacturing production figures, the data continues to suggest sluggish growth in the Isle-nations as inflationary pressures persist. The sterling plummeted on the release, with the pound closing out the session lower by 0.55%, albeit well off session lows. Overnight traders will be eyeing April consumer confidence and retail sales data, with confidence expected to rise to 46, up from 44 a month earlier. Retail sales figures are also expected to improve with the month on month print seen rising to 0.8%, up from 0.2% m/m

Japanese Yen Could See Major moves on Gross Domestic Product Data

The Japanese Yen traded slightly lower on strong rallies in ‘risk', but the true fireworks may wait for upcoming Gross Domestic Product figures due at 23:50 GMT. Analyst forecasts for Q1 Japanese GDP are unusually wide, ranging from a -4.3 to -0.4 percent annualized changes according to Bloomberg news. Natural disasters in March explain the wide range, and we suspect any especially large surprises could spark moves in the risk-sensitive currency. Said results could likewise shape expectations for the upcoming Bank of Japan monetary policy decision due Thursday night/Friday morning. Central bankers will almost certainly leave rates unchanged, but it will be important to watch whether the BoJ hints at expanding monetary policy accommodation amidst flagging growth.

Canadian Dollar Rallies as Crude Oil Inventories Report Sparks Oil Strength

The Canadian dollar advanced for the second consecutive day against the greenback on the back of stronger than expected April leading indicators and a rebound in commodities. The Loonie was 0.13% higher against the dollar as crude oil surged nearly 3% on its approach back to the $100 mark. Even risk for the USD/CAD pair mounts on Friday when the Bank of Canada releases April CPI figures and retail sales data. Notwithstanding sudden shocks to commodity prices, the pair should remain supported above the 50% Fibonacci retracement taken from the May 11th advance at 0.9650.

New Zealand Dollar Rallies as Agricultural Commodity Prices Jump

The New Zealand Dollar was the top-performing G10 currency on a strong day for financial markets, boosted by impressive gains in agricultural commodities and broader risk sentiment. An effectively empty economic calendar meant that the relatively high-yielding currency traded almost tick-for-tick with the S&P 500, and similarly limited event risk in days ahead point to similar moves.

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**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

ECONOMIC DATA

Next 24 Hours

GMT	Currency	Release	Survey	Previous	Comments
1:00	NZD	ANZ Consumer Confidence Index (MAY)		101.4	Dropping since post-recession high set January 2010
1:00	NZD	ANZ Consumer Confidence (MoM) (MAY)		0.0%
1:30	AUD	Average Weekly Wages (QoQ) (FEB)	1.2%	1.1%	February wages could show peaking in labor market recovery
1:30	AUD	Average Weekly Wages (YoY) (FEB)	3.8%	3.9%
4:30	JPY	Industrial Production (MoM) (MAR)		-15.3%	March data expected to fall sharply as Sendai earthquake damages production capabilities
4:30	JPY	Industrial Production (YoY) (MAR)		-12.9%
4:30	JPY	Capacity Utilization (MoM) (MAR)		2.9%
5:30	JPY	Nationwide Dept Store Sales (YoY) (APR)		-14.7%	Spending may increase as government reconstruction efforts in place
5:30	JPY	Tokyo Dept Store Sales (YoY) (APR)		-21.5%
8:30	GBP	Retail Sales ex Auto Fuel (MoM) (APR)	0.8%	0.2%	Higher retail sales may confirm demand-driven inflation; may prompt sooner BoE rate hike
8:30	GBP	Retail Sales inc Auto Fuel (MoM) (APR)	0.8%	0.2%
8:30	GBP	Retail Sales ex Auto Fuel (YoY) (APR)	2.2%	0.9%
8:30	GBP	Retail Sales inc Auto Fuel (YoY) (APR)	2.5%	1.3%
9:00	EUR	Italian Current Account (euros) (MAR)		-6337M	Has been in deficit since July 2010
9:00	CHF	ZEW Survey (Expectations) (MAY)		8.8	Upward trend since November 2010
10:00	GBP	CBI Trends Selling Prices (MAY)		36	Industrial trends expected to pick up despite government tightening
10:00	GBP	CBI Trends Total Orders (MAY)	-9	-11
12:30	USD	Initial Jobless Claims (MAY 14)	420K	434K	Lower unemployment may be leading indicator economy recovering
12:30	USD	Continuing Claims (MAY 7)	3725K	3756K
13:45	USD	Bloomberg Economic Expectations (MAY)		-16	Both higher than recession lows, but upward trend slightly dampened
13:45	USD	Bloomberg Consumer Comfort Idx (MAY 15)		-46.9
14:00	USD	Existing Home Sales (APR)	5.2M	5.1M	Slower home sales rate expected as home market concerns resurface
14:00	USD	Existing Home Sales (MoM) (APR)	2.0%	3.7%
14:00	USD	USD MBA Mortgage Foreclosures (1Q)		4.63%	Foreclosure rate may decline from previous as interest rates still low
14:00	USD	USD Mortgage Delinquencies (1Q)		8.22%
14:00	USD	Leading Indicators (APR)	0.1%	0.4%	Overall indicators lower, although manufacturing expected to pick up
14:00	USD	Philadelphia Fed. (MAY)	20	18.5
22:45	NZD	Net Migration s.a. (APR)		-530	May recover after record out-migration

GMT	Currency	Upcoming Events & Speeches
12:30	USD	Fed's William Dudley Speaks on U.S. Economy
13:00	EUR	ECB's Trichet, Tumpel-Gugerell on European Economy
14:30	CAD	Bank of Canada Review Release
14:45	CAD	BoC Governor Mark Carney Speaks on Bretton Woods
17:40	USD	Fed's Charles Evans Speaks on U.S. Economy

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE - 18:00 GMT

Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist 2	1.5160	1.6750	89.00	0.9345	1.0275	1.1800	0.8400	116.80	146.05
Resist 1	1.5000	1.6600	86.00	0.8900	1.0000	1.1000	0.8215	116.90	140.00
Spot	1.4248	1.6167	81.68	0.8811	0.9698	1.0632	0.7894	116.38	132.05
Support 1	1.4000	1.6160	80.00	0.8600	0.9500	1.0400	0.7745	113.80	125.00
Support 2	1.3700	1.5750	75.00	0.8500	0.9055	1.0200	0.6850	105.50	119.00

CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency	USD/MXN	USD/TRY	USD/ZAR	USD/HKD	USD/SGD		Currency	USD/SEK	USD/DKK	USD/NOK
Resist 2	13.8500	1.6575	7.4025	7.8165	1.3650		Resist 2	7.5800	5.6625	6.1150
Resist 1	12.5000	1.6300	7.3500	7.8075	1.3250		Resist 1	6.5175	5.3100	5.7075
Spot	11.7176	1.5727	6.9062	7.7749	1.2403		Spot	6.2958	5.2343	5.5413
Support 1	11.5200	1.5040	6.5575	7.7490	1.2145		Support 1	6.0800	5.1050	5.3040
Support 2	11.4400	1.4725	6.4295	7.7450	1.2000		Support 2	5.8085	4.9115	4.9410

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist. 3	1.4435	1.6333	82.59	0.8920	0.9797	1.0781	0.8005	118.27	134.07
Resist. 2	1.4388	1.6291	82.37	0.8892	0.9772	1.0743	0.7978	117.80	133.56
Resist. 1	1.4342	1.6250	82.14	0.8865	0.9747	1.0706	0.7950	117.33	133.06
Spot	1.4248	1.6167	81.68	0.8811	0.9698	1.0632	0.7894	116.38	132.05
Support 1	1.4154	1.6084	81.22	0.8757	0.9649	1.0558	0.7838	115.43	131.04
Support 2	1.4108	1.6043	80.99	0.8730	0.9624	1.0521	0.7810	114.96	130.54
Support 3	1.4061	1.6001	80.77	0.8702	0.9599	1.0483	0.7783	114.49	130.04

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Written by: David Rodriguez, Quantitative Strategist and Michael Boutros, Currency Analyst for DailyFX.com

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