Today on Tuesday, United States published its data on retail sales, consumer price index, business inventories, NAHB housing market index and net long term TIC flows while in United Kingdom, data on trade balance was released.

On Wednesday, United Kingdom is expected to report its data on claimant count rate, unemployment rate, average weekly earnings and jobless claims change while the Bank of England will release its inflation report. In United States, data on housing starts, building permits, manufacturing production, capacity utilization, industrial production, MBA mortgage foreclosures, mortgage delinquencies and inventories data for crude oil, gasoline and distillates by Energy Information Administration will be announced. US Fed will also release minutes of its latest monetary policy meeting which will be closely watched to assess direction of the monetary policy.

On Thursday, In United States, several reports will be published which include weekly data on initial jobless claims, continuing claims, index of leading indicators and natural gas inventories data by US Department of Energy.

On Friday, United States will release data on durable goods and factory orders while the American Petroleum Institute will publish its monthly report.

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The ICE dollar index DXY which tracks the US dollar’s movement against the basked of six major rival currencies gained to 79.468 on Friday as compared to 79.213 on Thursday’s North American trading session. The index touched its intraday low of 79.086 on Friday.

The single currency declined to 1.3095 versus the US dollar on Friday as compared to 1.3151 on Thursday’s late trading hours. It was the lowest for the pair EUR/USD since April 16^th.

The British Pound was down to 1.6150 against the US dollar on Friday as compared to 1.1685 in prior session. Against the Japanese yen the US dollar declined to 79.88 on Friday as compared to 80.21 on late Thursday.

The Australian dollar further took more beating and fell to 1.0187 against the greenback which also happens to be its lowest in the current year. The Reserve Bank of Australia reduced its growth forecast for the current year which created uncertainty among the traders.

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The Spanish economy has again contracted by 0.3% in real terms in the first quarter 2012 compared to the last of 2011, according to the National Statistics Institute, which confirms the country’s entry into recession.

‘Once again the Spanish ulcer is felt,” commented a London based trader, which also highlights the anti-austerity of this weekend. “In addition, Standard & Poor’s downgraded eleven among the largest banks of Spain, in the wake of his decision last week on sovereign debt of the country”, he added.

For the record, the agency downgraded its sovereign rating two notches on Thursday night, from ‘A’ to ‘BBB +’, with an always negative stance. Commenting that providing a deterioration of the trajectory of deficits for the period 2011-2015, while stressing the increasing likelihood of assistance towards the country’s banking sector.

The single currency also depreciated against the backdrop of growing money supply in the euro area, the mass M3 rose by 3.2% yoy in March, against 2.8% in February. In addition, higher consumer prices have slowed a little less than expected in April, to 2.6%.

The ICE dollar index DXY which measures the performance of greenback versus its six major rival currencies fell to 78.920 on Thursday as compared to 79.072 on Wednesday’s North American trading session.

The US dollar declined to 80.94 against the Japanese yen on Thursday as compared to 81.45 on Wednesday’s late trading hours. The euro also declined 0.4 percent to 107.27 against the Japanese yen.

The euro gained to 1.3243 versus the US dollar on Thursday as compared to 1.3220 on late Wednesday. Among other currencies, the British Pound gained 0.1 percent to 1.6192 against the greenback after a remain zig zag in the whole session as the latest UK’s economic data depicting that the Britain has again fell back into recession.

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‘We expect further depreciation of the euro due to weak economic growth and greater uncertainty than those imposed on the United States”, wrote analysts at Barclays Capital yesterday, especially after the first round of Presidential elections in France and disagreements on government budget in the Netherlands. On Saturday, the far-right party of Geert Wilders disassociated themselves from the coalition government specifically budgetary rigor, depriving the prime minister of his majority. A supplementary budget should still be presented this afternoon in Parliament.

Meanwhile, the interest rate differential (spread) between the ten year bonds in the Netherlands and those of Germany, opened this morning at 82 basis points, indicating a relatively deep concern for ‘Bund’ German. It is a bit tight this afternoon at 67 points against 59 points a month ago.

For its part, the “spread” of France / Germany moves away from 150 basis points. According to a North European trader, it is particularly worrying that the PMI in France and Germany fell sharply yesterday. If bad numbers of this kind were to increase, growth forecasts for the euro area would be negative.

“All things being equal,” added Aurel BGC this morning, “and subject to confirmation in the coming months, the decline in April PMI raises the risk of further deterioration of the euro area GDP in the second quarter.”

The euro gained 0.45% at midday and at 1.3195 dollar, a high point was scored 1.3207. Also higher against the yen (to 107.83 + 0.80%), symbolic progress against the Pound (+0.10% to 0.8190) and helvetic neutrality against the Swiss franc (- 0.03% to 1.2017) .

‘The European forex markets seem to reconnect with the sequences of stress that paralyzed investors in late 2011′, notes CMC Markets France this morning.

Sovereign crisis recalls the memory of investors who closely follow ‘barometers’ national platforms of government bonds to 10 years. And this afternoon, the tension is again put to the side of “10 years” Spanish, who reported 5.95% rose in the morning up 6.04% this morning. The “paper” Italian follows the same slope to 5.65%, as the German Bund (1.71%), while the French OAT declined slightly to 3.09%.

France is currently hosted by the various statements of the candidates of the presidential campaign, whose first round will be held Sunday. Note that the spread between the “10 years” French and German, which was still below 100 basis points (1 percentage point) in late March, reached a peak this morning up 149 points, before back to 137 points at this time.

But that’s not all: ‘the IMF estimates that 58 major European banks may have to reduce their assets 2,600 billion by the end of 2013 to comply with the requirements of the EBA in of capital ratios. Such a perspective would limit the ability of bank funding, particularly in countries where interest rates remain high, and further reduce loans to companies’, says CMC Markets

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Lots of negative factors surrounded the greenback. According to the US Labor Department, jobless claims increased to 386,000 for the last week as compared to expected figure of 374,000 for the week.

Moreover, Philadelphia Federal Reserve also reported slower growth in manufacturing activity in Philadelphia region. Business condition index declined to 8.5 as compared to prior reading of 12.5 while US home prices fell 2.6 percent in the month of March.

Director of currency research, Kathy Lien from GFT commented, “Despite weaker than expected U.S. economic data, most of the major currencies are trading higher against the U.S. dollar, the Federal Reserve won’t be happy with the latest reports which show evidence of deterioration in the labor market, the housing sector and manufacturing,” she further added, “The improvement in growth that we saw in the first quarter is fading quickly in the second, boosting expectations that the Fed will take action to prevent a deeper turn in growth.”

The dollar index DXY which measures the US dollar’s performance versus its six major rival currencies fell to 79.563 on Thursday as compared to 79.590 on Wednesday’s North American trading session. The index touched its intraday low of 79.392.

The euro gained to 1.3137 versus the greenback on Thursday as compared to 1.3115 on Wednesday’s late trading hours. The euro also advanced versus the yen to 107.22 as compared to 106.38. However, against the Japanese yen the US dollar gained to 81.61 on Thursday as compared to 81.21 on late Wednesday.

The British Pound advanced to 1.6054 on Thursday as compared to 1.6021 on Wednesday’s late trading hours.

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The IMF reviewed yesterday, downgrading its growth forecast for Spain in 2012, which shows a little less pessimistic for other countries in the euro area, and more confident than three the previous 3 months..

The research department considers however that significant downside risks remain, particularly in Europe where the case is far from being fully resolved. Not to mention the possible additional surge in oil prices.

While the performance of government bonds from Spain on 10 years displayed this afternoon a yield of 5.80%, or 11 points lower than the opening. The ’10 years’ Italian also slows to 5.45%, as the French equivalents (below 3%) and German (under 1.75%).

Note also that the European currency lost 0.59% against the Pound to 0.8193 with the prospect of further monetary dilution across the Channel. The “minutes” of the last meeting of the Monetary Policy for Bank of England dropped this morning. The plan of quantitative easing introduced by the UK in the wake of the Fed will end in May, said a trader based in Europe.

In contrast, the euro is recovering quite substantially against the Japanese yen (+ 0.36% to 106.5 yen). Another commenter echoed rumors that the Bank of Japan would soon announce measures of monetary support.

The only movement marked one of the great ‘pairs’ of currencies linked to the euro was up 0.50% against the Japanese yen to 107.14 yen.

Against the pound (- 0.09% to 0.8182) as the Swiss franc (0% to 1.2017), stability is required.

‘The market’s attention remains focused on Europe’, say traders of ScotiaFX, auctions of state funds continue to give ‘the’. ‘The Spanish award is unquestionably the event of the day’, said one trader. Its result: if the application has been well served by volume, the performance of 10-year paper issued this morning on the primary market in Madrid has increased compared to 5.403% of a previous issue, almost at the rate paid on market “for sale”.

Indeed, after the show on the secondary market, the rate used by the ‘paper’ 10-year Spanish relaxes symbolically from one point to 5.81%. His Italian counterpart tightens slightly to 5.52%, as France and Germany, the respective rates of 3.04% and 1.74%.

Investors are also worried about the increasing number of loans ‘not efficient’ for Spanish banks while house prices still falling.

Note that the yield spread between the OAT French German Bund, considered the state funds the safest euro area, this morning hit the 131 basis points (1.31 percentage point). This ‘spread’ tends to widen again, since it was close to 90 points in early March and was known in early April, a peak around 136 points.

This gap is a key measure of relative risk government bonds and French compared to those of Germany.

The result of the presidential election is also cited as factors of uncertainty, by ScotiaFX, indicating that ‘the victory of François Hollande seems the most likely’.

The German Bundesbank President, Jens Weidman said that the role of the ECB, was not to lower some interest rates of long-term in some states’, states still ScotiaFX, which argues against a new possible third ‘LTRO’, these refinancing long-term bank conducted twice by the ECB since Mario Draghi directs the Board of Governors.

From the other side of the North Atlantic, is expected this afternoon including the weekly unemployment, which had disappointed last Thursday, and the Conference Board’s leading indicators.

This afternoon, the Philly Fed index will be published. ‘This is an indicator of regional activity,’ says a North European trader: it will be interesting to follow closely: he could afford to whether the U.S. economy will experience a break this summer to spring as such was the case last year ‘.

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On Monday, April 16^th, in euro zone, data on Italian trade balance and government debt was released while the single currency region published its separate figures on trade balance. In United States, data on retail sales, long term TIC flows, business inventories and manufacturing was published. Moreover, US Federal Reserve’s official Bullard addressed at a public event.

Today on Tuesday, data on Germany’s economic sentiment survey by ZEW was published while the single currency region released its separate survey reports on economic sentiment and current situation along with data on consumer price index. In Spain, auction for 12 months and 18 months Treasury bills also took place. In United States, data on housing starts, building permits, manufacturing production, industrial production and capacity utilization was reported.

On Wednesday, April 18^th, euro zone will report its official figure on the region’s current account and data on construction output. In United States, data on mortgage applications and inventories data on crude oil, gasoline and distillates will be reported by US Department of Energy.

On Thursday, April 19^th, Italy will report its data on industrial sales and industrial orders in euro zone while in Spain auction on Treasury bonds will take place. The single currency region will report its separate data on consumer confidence.

United States will report several economic indicators including data on weekly jobless claims, continuing claims, economic expectations, consumer comfort, existing home sales, index of leading economic indicators and natural gas supplies by Energy Information Administration.

On Friday, April 20^th, in euro zone, data on German producer prices is expected while IFO institute will publish its report on consumer expectations, current assessment and business climate for Germany. In United States, meeting of G-20 finance ministers is to take place while the American Petroleum Institute will publish its monthly report.

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