A new trading week begins without a fundamental trigger to put the US dollar on the move. However, the quiet on the economic front wont last for very long; and price action across the majors look suspiciously ripe for big moves.
Relieving some of its overbought pressure, EURUSD dropped 60 points for the pairs biggest correction in over two weeks. The dollar bid proved strong against the low yielding currencies in the morning hours. From 1.2055 lows in the Asian session, USDCHF rallied 80 points before pulling back to a rising trendline recently seen around 1.2080. Tracing out the opposite path, USDJPY dropped from solid 119 resistance to 118.25 on exogenous news, before returning right back to the key ceiling. Finally, GBPUSD is holding a broad congestion range centered on 2.0, waiting for a key event from either side of the pair to ultimately signal the beginning of the next trend.
Fundamental traders had little to go off of Monday since the US economic calendar was clear until the following day. On the other hand, in the absence of actual data there is always speculation. Traders are looking ahead to a very busy week for economic indicators; and depending on how things hit the wires, the greenback may open itself to new lows or otherwise take advantage of technical levels and reverse higher. Tomorrows docket presents a strong, unofficial open to the week. Indicators of existing home sales, consumer confidence and Richmond-area manufacturing activity all hit the wires at the same time (14:00 GMT). Each indicator has the potential to put the dollar in motion. Of the three, the Richmond Fed Index for April is the lowest on that market-moving list. Though the modest changes in the previously released Empire and Philly surveys opens the market to surprises, its meaning would be muted until the nationwide ISM manufacturing report could confirm a bias either way. One step up the ladder, the Conference Boards consumer confidence indicator for the current month is expected to ease to eight-month lows. As a leading indicator of consumer spending, the report holds considerable meaning for the economic outlook. Should consumers willingness to spend wane in the months ahead, the economys biggest pillar of growth may give way. Everything considered though, March existing home sales will most likely be the markets top short-term mover. In the past few months, housing indicators have stalled their descent, leading many to project a bottom for the sector. However, a turn has not yet been signaled and sub-prime defaults have yet to fully show their impact. Should the sales gauge slip as expected, it would certainly revive fears of a housing-led slow down in GDP.
Equity traders were eagerly eying the Dows 13,000 milestone with a mixture of anxiety and enthusiasm that was further fueled by Mondays earnings and M&A announcements. By 16:05 GMT, the NASDAQ Composite was leading the pack with a minor advance totaling 0.07 percent to 2,528.22. At the same time, the S&P 500 was up marginally at 1,484.75 while the Dow was unchanged at 12,962.14. Though the benchmark indices were little moved by mid-day, there were certainly a number of individual big movers from the ranks. Topping the financial headlines, Barclays put a figure on its purchase of ABN Amro to the tune of $91 billion what will be the largest bank buyout on record. Shares of Barclays were trading $1.22 or 2.0 percent higher at $58.78 while shares of ABN slipped 1.7 percent to $48.42. Another, cross-boarder deal was Astrazeneca PCLs $15.6 billion offer for American-based MedImmune. Shares of MedImmune surged 17.9 percent or $8.59 to $56.60 on the announcement.
Treasuries were gaining ground ahead of what is expected to be a disappointing day for economic releases. The ten-year note was trading 7/32nds above the open at 99-27 by 16:05 GMT with a yield 3 basis points lower at 4.64. Thirty-year bonds rose 11/32nds to 98-27 as yields dipped 2 basis points to 4.822.