USD Pares Gains Ahead of Manufacturing ISM
US dollar rally sparked by the uplifting announcement on Bin Laden's death has largely reversed itself to the benefit of precious metals. Following multiple attempts, USD/CHF retreated from CHF0.87 while USD/JPY was contained below Y81.70 and EUR/USD above 1.4770. Gold retested 1,560 after falling to 1,540 immediately following the Obama press conference.
A snapback rally in the euro comes on the heels of comments out of the ECB president Trichet ahead of the his Thursday rate decision from Europe, affirming the central bank commitment to price stability. Speaking at the formal introduction of the new Bundesbank president Weidmann, Trichet lauded the ECB "credibility" for its adherence to price stability during the challenging times in European markets. In turn, the new German Federal Bank chief echoed his predecessor's hawkish stance, calling for the ECB policy rates to return to more normal levels. In addition to return above 1.48 mark against the dollar, the euro rose to 0.89 against cable and as high as 1.2880 on the Swiss franc.
Turning to the US economic calendar, the 10amET release of manufacturing ISM marks the single most notable event of the session. April figure is expected to fall back below 60 level for the first time in 4 months, foreshadowing a poor start to Q2 following a tepid Q1 GDP report from last week. ISM employment component will be of particular importance ahead of the non-farm payrolls on Friday after March print saw a pullback to 63.0 from 64.5. Likewise, "prices paid" component will mark a key assessment of inflation in the manufacturing sector - last month, this figure rose to its highest level in nearly 3 years at 85.0.
By GG - AshrafLaidi.com Staff
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