Commodity currencies are generally firm today but dollar is playing a catch up. Sentiments in the financial markets turned rather positive as DJIA followed global markets and closed up 187.03 pts, or 1.06%, overnight. S&P 500 also rose 20.7 pts, or 1.00%. The greenback benefited from positive sentiments and with dollar index now back pressing 95 hand after dipping to as low as 93.62 earlier this week. Yen and Swiss Franc are the weakest ones on risk appetite while Euro closely follows. The technical developments in the markets suggest that more rally in stocks would be seen and that could take the dollar up, with prospect of over powering commodity currencies.
The strong rally in stocks is worth a mention a DJIA took out last week's high to resume whole rise from 15460.56. The development, now with firm break of medium term falling trend line, swung favors back to the case that consolidation pattern from 18351.36 has completed at 15450.56 already. And, the long term up trend could be resuming. Outlook will stay bullish as long as 17484.23 support holds and retest of 18351.36 historical high should be seen in near term.
Dollar index's strong rebound suggests short term bottoming at 93.62. More importantly, the proximity to 92.26 support zone, and bullish convergence condition in daily MACD are raising the chance of near term reversal. Though, it's still early to confirm that yet. But overall, fall from 100.51 is viewed as the third leg of the consolidation pattern from 100.39. Even in case of another decline, strong support should be seen at 38.2% retracement of 78.90 to 100.39 at 92.18 to contain downside. Larger up trend is expected to resume for new high above 100.39.
Fed's Beige Book report showed that the economy continued to expand during the period from late February early April. "Most districts said that economic growth was in the modest to moderate range and that contacts expected growth would remain in that range going forward." And more importantly, assessment on prices was somewhat upgraded as "overall, prices increased modestly across the majority of districts, and input cost pressures continued to ease". Meanwhile, 11 of 12 regions reported wage growth. Also, there was a pickup in consumer spending.
Released today so far, Australia employment rose 26.k in March while unemployment rate dropped to 5.7%. New Zealand business NZ manufacturing index dropped to 54.7 in March. UK house price balance dropped to 42 in March. BoE rate decision is the main focus today and is expected to keep rate at 0.50% and asset purchase target at GBP 375b. Swiss will release PPI, Eurozone will release CPI final. US will release jobless claims and CPI core.