The U.S. dollar regained ground against most of its counterparts on Monday even though they printed weak economic data. The Empire State manufacturing index fell from 9.2 to 3.1 this month, worse than the estimated 7.2 reading, while the TIC long-term purchases report showed a surprise negative reading of -17.8 billion USD instead of the expected growth from 25.7 billion USD to 41.3 billion USD. Lastly, the NAHB housing market index also disappointed as it dropped from 44 to 42 instead of rising to 45. The U.S. is scheduled to print building permits and housing starts, along with CPI data, during today's U.S. session. Also on tap are the industrial production and capacity utilization numbers. It is unclear if it's still fundamentals or risk sentiment that's driving price action these days but the odds are that weaker than expected U.S. figures might drag the dollar lower again.
Only the euro zone trade balance was printed from the 17-nation bloc yesterday and the report came in stronger than expected with a 12.0 billion EUR surplus instead of the projected 9.9 billion EUR reading. This was enough to boost the euro in yesterday's trading but today's reports might erase those gains if the actual figures disappoint. Germany will print its ZEW economic expectations figure, which is slated to drop from 48.5 to 41.5 in April. Euro zone CPI is also on tap for today but this isn't likely to have a huge impact on euro price action as no changes are expected from the headline figure of 1.7% and the core figure of 1.3%. Keep close tabs on the debt and bailout situation in Cyprus as positive developments could provide support for the euro.
The pound lost ground to the yen and dollar in yesterday's trading despite the lack of data from the United Kingdom. For today only the CPI reports are due from the U.K. and this should provide an indication of whether the BOE has room to ease further or not. If the actual figure comes in below or beyond the government's target, which is unlikely, the BOE will have to submit an inflation letter to the Chancellor explaining why. Weaker than expected data could still trigger a pound selloff though.
No major reports due from Switzerland today as USD/CHF and EUR/CHF remain stuck in tight ranges. U.S. reports or euro zone updates could move these pairs a little more though but unless we see significantly worse or better data, these pairs could be in consolidation for a longer while.
The Japanese yen rallied against its counterparts on Monday as risk aversion popped back in the markets and traders started liquidating their recent yen shorts. USD/JPY eased back to the 96.00 area before rebounding but it remains to be seen whether the bounce would last or not. There are no major reports due from Japan for the rest of the day.
Commodity Currencies (AUD, CAD, NZD)
Commodity currencies continued to selloff on Monday as risk aversion started to take its toll on the higher-yielding assets. On top of that, prices of precious metals have slumped, with gold falling to its two-year lows. Canada will release manufacturing sales and foreign securities purchases data in today's New York session, as worse than expected data might trigger a Loonie selloff. No other reports are due from the comdoll economies for the rest of the day.