Dollar recovers mildly today on news that Qaeda leader Osama Bin Laden was killed by a US led operation on Sunday in a firefight in Pakistan. The news was confirmed by US President Barack Obama. The demise of Bin Laden, who masterminded a series of attacks on US including the 911 attack, may hamper the coordination of terrorist organizations and reduce recruitment by his network and other groups. The news is seen lessening worries over terrorism and provides some support to the oversold dollar. Dollar index edged to new three year low of 72.81 but recovered as the Asian session went on. Nevertheless, overnight bearish outlook in the greenback remains unchanged and we'd still expect further decline ahead after some brief consolidations and recovery.
Australian dollar jumped to new record high above 1.1 against dollar earlier today before retreating mildly. The RBA will likely leave the cash rate unchanged at 4.75% on May 3 (Tuesday) despite accelerating inflationary pressures. Policymakers probably retain the view that the current monetary stance is 'mildly restrictive' and 'appropriate' given recent economic developments. Yet, rising inflation should trigger policymakers to resume tightening eventually. Another focus is the Monetary Policy Statement which will be released on Thursday. We expect to see modest downgrade on GDP growth forecasts but upward revision on inflation outlook.
On the data front, Australian TD securities inflation rose 0.3% mom in April, house price index dropped more than expected by -1.7% qoq in Q1. Swiss retail sales and SVME PMI will be released today and strong readings there could send the Swissy to new record high against dollar again. Eurozone PMI manufacturing is expected to be finalized at 57.7 in April. Canadian IPPI and RMPI will be released. From US, main focus will be on ISM manufacturing index which is expected to drop slightly to 59.5 in April.
NZD/USD was one of the strongest pair last month on strength in commodities and the pair has taken out 0.7973 resistance to resume the medium term up trend from 0.4890 (2009 low). We'll stay near term bullish in the pair as long as last week's low of 0.7969 holds and would expect current rise to extend through 0.8213 (2008 high). Though a break of 0.7969 will bring consolidations first.
USD/CAD Daily Outlook
Daily Pivots: (S1) 0.9469; (P) 0.9494; (R1) 0.9525;
USD/CAD recovers mildly today but after all, near term outlook in USD/CAD will remain bearish as long as 0.9757 resistance holds. Current decline is part of the larger down trend and should now target 100% projection of 1.0285 to 0.9666 from 0.9972 at 0.9353 first. Break there will pave the way to key support level at 0.9056, which is close to 0.9 psychological level.
In the bigger picture, medium term decline from 2009 high of 1.3063 is still in progress and is possibly building up momentum again. In any case, outlook will remain bearish as long as 0.9972 resistance holds and further fall would now be seen towards 0.9056 key support (2007 low). Though, we'd again start to look for reversal signal as USD/CAD approaches this key support level.
No comments:
Post a Comment