The greenback is trading higher ahead of the release of the earning reports of the first quarter of GE and Citigroup after yesterday releases of the building permits and the US housing starts have declined surprisingly in March. The housing starts slumped to .51m and the building permits have fallen to .513m which put doubts about the stability in the housing sector in US after the credit crisis as the down side risks are still existing negatively impacted by the current low level of consuming and business spending which lead to further losing jobs.

The market is still waiting cautiously for the release of citigroup quarterly earning by the end of the week after the recent modifications of the accounting system to lower the loses in the banks balance sheets because of their holding of toxic assets. On the 10th of March Citigroup CEO Vikram Pandit has mentioned profitability in the first 2 months of 2009.

this announcement has triggered a positive sentiment towards the future performance of the banking sector in US after the credit crisis and derived the stock of the bank up from below 1$ to about 4$ after 5 quarters of loses amid the recent recovery of the stocks market after reaching its lows a day after these announcement. This announcement is looking serious to the recent rally and can put it in a serious check which caused this mixed trading this week until now and god willing it is to be by the US session.

As we have mentioned earlier, the single currency has suffered from the benign inflation levels currently as it can smooth the way for the ECB to take further easing steps to stimulate growth with no potential upside inflation risks over the medium term as it cares. March HICP came as expected and as the same of Feb at .4% m/m and .6% y/y and it could break 1.31 level today amid wider than expected deficit release of the EU reached 12.8B m/m in Feb and the market was waiting for just 5B from 10.9B in Jan.

The cable also came of its high above 1.5 yesterday. The cable was well-supported after breaking out above 1.48 earlier in the beginning of the week after thin trading between 1.479 and 1.458 by the Easter holidays but it was meeting  profit taken directly after crossing 1.5 with no major change of the current market sentiment to support it further.

The gold was undermined this week by these benign inflation releases from US and EU and the break of 888$ could trigger stop loss orders pushed the gold below 970$ today on accumulating selling on these worries about the dovish inflation outlook. March US CPI figures excluding the food and energy came higher than expected at .2% m/m and 1.8% y/y and the market was waiting for .1% m/m and 1.7% y/y but the broad figures came down by .1% monthly and .4% yearly ensuring the deflation pressure in US following yesterday PPI release of the same month which came lower than the market expectations of -2.2% yearly and 0% m/m at -3.5%y/y and 1.2% monthly. We wait later today for the release of the US Michigan consuming sentiment preliminary release which is expected to be 58.5.  

Best wishes

FX Consultant

Walid Salah El Din

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