Thursday, May 10, 2007

FX Sideways, USD Softer

At 6:00 AM Germany March Industrial Production (exp 0.0%, prev 0.9%)
At 8:15 AM Canada April Housing Starts (exp 215k units, prev 210.9k units)
At 10:00 AM US March Wholesale Inventories (exp 0.4%, prev 0.5%)

The major currency pairs continue to consolidate amid a dearth of fresh news and traders taking to the sidelines ahead of several key central banks monetary policy decisions this week. We expect the dollar to remain pressured, particularly versus the euro and sterling given this week's likely divergence in policy outlooks.

The FOMC is largely expected to stand pat while the ECB is forecasted to signal a rate hike in June and the BoE is seen tightening policy by 50-bp to 5.75%. The primary focus continues to be the state of the US economy, with recent data revealing further deterioration in fundamentals.

Economic reports from North America in the coming session will see Canada April housing starts and US March wholesale inventories. Canada’s housing starts

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