FOREX: US Dollar unable to Hold Gains Amid Swings in Sentiment

The dollar was modestly higher early in North American trade as steep losses in equities and commodities saw traders seeking haven in the safety of the greenback. However a mid-day reversal saw the greenback surrendering all of the day's gains to close marginally lower on the session.

• US Dollar unable to Hold Gains Amid Swings in Sentiment
• Euro Threatened by Talk of Greek Debt Restructuring at EU/IMF Summit
• British Pound: Sterling Firms Ahead of BoE Minutes
• Australian Dollar Sees Support from Hawkish RBA Minutes
• Japanese Yen could See Sharp Moves on GDP Surprises
• Loonie Snaps 4-Day Losing Streak as Dollar Relinquishes Early Gains

US Dollar: Unable to Hold Gains Amid Swings in Sentiment

The dollar was modestly higher early in North American trade as steep losses in equities and commodities saw traders seeking haven in the safety of the greenback. The gains come on the heels of dismal housing data out of the US, with April housing starts plummeting 10.6% m/m, down from a previously upward revised gain of 12.9% m/m. Building permits, industrial production, and capacity utilization data also disappointed to the downside sparking risk aversion flows on concerns that the global growth may be stalling.

However a mid-day reversal saw the greenback surrendering all of the day's gains to close marginally lower on the session. Risk appetite picked up late in the day as equities and commodities advanced off session lows, putting pressure on the greenback. With higher-yielding, risk currencies stabilizing, the dollar will be subject to shifts in sentiment with the FOMC minutes tomorrow and existing home sales on tap.

Related:Discuss the Dollar in the DailyFX Forum,

Euro Threatened by Talk of Greek Debt Restructuring at EU/IMF Summit

The Euro saw sharp intraday price swings only to finish very modestly higher through the New York close. Official speculation over the possibility of Greek debt restructuring kept the euro on the back foot, but a late-day reversal in ‘risk' meant that the safe-haven Greenback finished lower against all major currencies except the Japanese Yen.

Greek bond yields hit further extremes as officials acknowledged the term “debt restructuring” for the first time at the EU/IMF summit. The benchmark 2-year Greek bond yield hit an incredible 25 percent despite assurances the European Commission's Olli Rehn that restructuring was “off the table”. There was a sense of irony in the fact that Rehn said a “voluntary Greek debt re-profiling could be examined”—essentially restructuring/default by another name. This was consistent with Eurogroup President Juncker's statement that a “soft restructuring” was necessary. Disappointing German ZEW business survey results further weighed on the euro. Yet the sharpest moves came on volatility out of the S&P 500 and broader financial market risk sentiment. A relatively empty economic calendar in the day ahead leaves the Euro at the whims of broader financial market trends.

British Pound: Sterling Firms Ahead of BoE Minutes

The pound seesawed throughout the session after CPI data released overnight showed inflation surging 1% m/m in April, while the year on year figure topped 4.5%. The data surpassed even the most modest estimates and had traders speculating that the BoE will move on interest rates. Comments made by the MPC's newest member Ben Broadbent saw the pound pare early gains after he cited that he would have followed in the BoE's footsteps to keep rates on hold at 0.5%. Broadbent will be replacing the Monetary Policy Committee's most vocal hawk Andrew Sentence who steps down this month. Tomorrow's release of the BoE's May 5th meeting will be closely eyed by traders as the vote tally will be very telling. With Mr. Sentence's departure, the hawkish camp may find it increasingly difficult to gain enough traction to move on interest rates. The minutes will be accompanied with an update on the jobs sector, with the claimant count rate expected to hold at 4.5%. A weaker than anticipated read on the employment sector will put more pressure on the BoE as the central bank weighs sluggish domestic growth against rising inflationary pressures.

Australian Dollar Sees Support from Hawkish RBA Minutes

The Australian Dollar saw modest support on a surprisingly hawkish Reserve Bank of Australia Meeting Minutes release, suggesting that rates could rise faster than markets had previously priced in. Overnight Index Swaps show that 12-month interest rate forecasts remained only slightly higher, but the real mover was a shift in timing of those interest rate moves. Traders now price in a 50 percent chance of an RBA move within three months—a notable pickup from yesterday. Attention now turns to upcoming Westpac Consumer Confidence data and later Wage Cost Index results. We suspect that any particularly noteworthy moves could further shift forecasts on the future of RBA policy.

Japanese Yen could See Sharp Moves on GDP Surprises

The Japanese Yen was the worst-performing G10 currency as equities and broader financial market risk sentiment recovered into late trade. A virtually empty economic calendar left the Yen at the whims of broader market moves, but tomorrow night's Gross Domestic Product growth figures could move markets on any noteworthy surprises. The range of analyst forecasts is unusually wide due to the destruction following the massive earthquake and tsunami in March. As such, watch for Japanese Yen reactions to any particularly above or below-forecast prints.

Loonie Snaps 4-Day Losing Streak as Dollar Relinquishes Early Gains

The Canadian dollar was firmer at the close of trading in New York, advancing 0.23% against the greenback. The Loonie pared early losses as a mid-day reversal saw equities and commodities move off session lows. Event risk for the CAD mounts tomorrow with the April leading indicators and March wholesale sales. Leading indicators are expected to print at 0.6% m/m, down from a previous read of 0.8%, while sales are expected to rise to 1.2% from a decline of 0.6% a month earlier.

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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
0:30	AUD	Westpac Consumer Confidence (MAY)		1.2%	Currently near post-recession lows
0:30	AUD	Westpac Consumer Conf Index (MAY)		105.3
1:00	AUD	DEWR Skilled Vacancies (MoM) (MAY)		1.7%	Lower vacancies suggests recovery
1:30	AUD	Wage Cost Index (YoY) (1Q)	4.0%	3.9%	Higher wage growth may point to rate hike in near future
1:30	AUD	Wage Cost Index (QoQ) (1Q)	1.1%	1.0%
4:00	JPY	Tokyo Condominium Sales (YoY) (APR)		0.0%	Expected to stay unchanged
8:30	GBP	Jobless Claims Change (APR)	0.0K	0.7K	Lower number of jobless claims suggests economy may grow faster than previously thought
8:30	GBP	Claimant Count Rate (APR)	4.5%	4.5%
8:30	GBP	ILO Unemployment Rate (3M) (MAR)	7.8%	7.8%
8:30	GBP	Avr Week Earning inc Bonus (3MoY)(MAR)	2.0%	2.0%	Wages expected to stay flat as UK economy still faces headwinds
8:30	GBP	Avr Week Earning ex Bonus (3MoY)(MAR)	2.2%	2.2%
9:00	EUR	EU Construction Output w.d.a. (YoY)(MAR)		3.5%	Previous MoM decline suggests EU economy slowing down
9:00	EUR	EU Construction Output s.a. (MoM)(MAR)		-0.7%
11:00	USD	MBA Mortgage Applications (MAY 13)		8.2%	More applications indicate better market
12:30	CAD	Leading Indicators (MoM) (APR)	0.6%	0.8%	Canadian manufacturing expected to pull wholesale higher
12:30	CAD	Wholesale Sales (MoM) (MAR)	1.2%	-0.6%
14:30	USD	DOE U.S. Refinery Utilization (MAY 13)	0.43%	-1.1%	Inventories gasoline and crude inventories expected to fall as prices rise
14:30	USD	DOE U.S. Crude Oil Inventories (MAY 13)	1500K	3781K
14:30	USD	DOE U.S. Gasoline Inventories (MAY 13)	1000K	1275K
14:30	USD	DOE U.S. Distillate Inventory (MAY 13)	500K	-843K
23:50	JPY	Gross Domestic Product (QoQ) (1Q)	-0.5%	-0.3%	First quarter GDP seen to be heavily hit by earthquake, falling sharply despite recovery signals in early January and February
23:50	JPY	Gross Domestic Product Annualized (1Q)	-1.9%	-1.3%
23:50	JPY	GDP Deflator (YoY) (1Q)	-1.8%	-1.6%
23:50	JPY	Nominal GDP (QoQ) (1Q)	-0.7%	-0.7%
23:50	JPY	Housing Loans (YoY) (1Q)		3.2%	Real estate loans may stop as prices fall

GMT	Currency	Upcoming Events & Speeches
7:00	EUR	ECB's Juergen Stark Speaks on Global Economy
7:00	EUR	ECB's Lorenzo Bini Smaghi Speaks on Global Imbalances
8:30	GBP	Bank of England Meeting Minutes
9:30	EUR	ECB's Vitor Constancio Speaks on European Economy
18:00	USD	Federal Open Market Committee Meeting Minutes
23:00	USD	Fed's James Bullard 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	116.00	140.00
Spot	1.4236	1.6252	81.35	0.8803	0.9723	1.0627	0.7841	115.82	132.21
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	11.7224	1.5851	6.9587	7.7752	1.2457		Spot	6.3260	5.2378	5.5668
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 PIVOT POINTS 18:00 GMT

Currency	EUR/USD	GBP/USD	USD/JPY	USD/CHF	USD/CAD	AUD/USD	NZD/USD	EUR/JPY	GBP/JPY
Resist 2	1.4314	1.6373	82.32	0.8910	0.9821	1.0709	0.7900	117.39	134.49
Resist 1	1.4275	1.6312	81.83	0.8857	0.9772	1.0668	0.7870	116.60	133.35
Pivot	1.4198	1.6244	81.29	0.8829	0.9745	1.0587	0.7818	115.45	132.05
Support 1	1.4159	1.6183	80.80	0.8776	0.9696	1.0546	0.7788	114.66	130.91
Support 2	1.4082	1.6115	80.26	0.8748	0.9669	1.0465	0.7736	113.51	129.61

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	1.4427	1.6417	82.27	0.8914	0.9823	1.0777	0.7953	117.71	134.25
Resist. 2	1.4379	1.6375	82.04	0.8886	0.9798	1.0740	0.7925	117.24	133.74
Resist. 1	1.4331	1.6334	81.81	0.8859	0.9773	1.0702	0.7897	116.77	133.23
Spot	1.4236	1.6252	81.35	0.8803	0.9723	1.0627	0.7841	115.82	132.21
Support 1	1.4141	1.6170	80.89	0.8747	0.9673	1.0552	0.7785	114.87	131.18
Support 2	1.4093	1.6129	80.66	0.8720	0.9648	1.0514	0.7757	114.40	130.67
Support 3	1.4045	1.6087	80.43	0.8692	0.9623	1.0477	0.7729	113.93	130.16

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

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