Yesterday the new home sales data reported a 16.2 percent rise from 844K to 981k, this better than expected figure caused the USD to rebound...

... against the Euro and the Yen.

Also releasing was U.S. durable goods, as well as, unemployment figures.
Durable goods came in softer-than-expected up 0.6 Today the Existing Home Sales data
is going to be announced, this data will be published mid-morning. The data will
show how many previously owned homes have been sold during the month of April and
give investors key insight into the state of the housing market, this data is the
second report to be published, concerning the US housing market this week.

At the moment as we can notice, the housing industry consists of mixed signals, with
new homes sales surging in April by the biggest amount in 14 years, The Commerce
Department reported yesterday that sales of new single-family homes jumped by 16.2
percent in April on a seasonally adjusted annual rate, while on the other hand, we
could easily see the weakness of the porches ability of the American dollar during
the last period. The main reason which supports this fact is according to a
significant price drop in which many housing industry investors are looking to
reduce a glut of unsold homes in the market, which reflects efforts by builders to
cut prices more aggressively to sell homes. Analysts predict that this situation
probably would continue for several more months and that any rebound would be
subdued, in part because mortgage rates have started to rise again. The housing
weakness has weighed on the entire economy, helping to slow overall growth to an
anemic 1.3 percent annual rate in the first three months of this year.

On a regional basis, only the Midwest saw a drop during the month, while the south
soared. Inventories were cut, as the month's supply of homes available fell to 6.5
percent from 8.1 percent in March, the lowest since December 2006. Builders are
trying to get rid of their inventories by slashing prices. The median sales price
took a 10.9 percent dive, the biggest plunge since the early 70's.

In yesterdays trading the new home sales data was announced and it reportedly rose
by 16.2 percent from 844K to 981K. This unexpected raise caused the greenback to
rebound against the EUR and the JPY. Also U.S. durable goods, as well as,
unemployment figures released yesterday. Durable goods came in softer-than-expected
up 0.6 percent, while unemployment claims rose by 15,000 to 311,000 last week.

Treasury Secretary Henry Paulson and Vice Premier Wu Yi announced agreements
including lifting a freeze on foreign firms entering into China's securities
industry, as well as, increasing the quota allotted for international investors to
purchase stocks usually reserved for domestic buyers. Look for the dollar to remain
fairly supported as the market is starting to shrug off any potential rate cut from
the Fed.



* EUR
Yesterday the EUR entered an upward trend against the USD moving from 1.3438 the
pair fetched 1.3412 before changing direction. Of late, the pair is moving sideways
between 1.3421 and 1.3431. Broadly speaking the pair has been moving down from late
April and we should see a breach of the 1.3400 level soon. The German IFO report
released yesterday more or less as forecast so it did not bring about any major
moves in the EUR as the market expected. Also the expectation of a further rate hike
by the ECB has helped prevent the EUR from going into freefall. The high levels of
the German business sentiment index and the ZEW analyst sentiment survey continue to
illustrate the region's economic resilience. Without any market moving news coming
out of the Eurozone today the EUR should continue to range trade.

Elsewhere the UK quarterly GDP will be released today at 09:30 GMT and is forecast
to remain unchanged at 0.7%. The UK economy has recorded positive quarterly GDP
figures for the last 10 years and an extreme figure remains highly unlikely for the
first quarter of 2007.The services sector should post firm growth while the
manufacturing contribution is likely to be limited. There will be some risk of an
erratic primary-sector figure on volatility in energy production which could distort
the headline figure while net exports will tend to weaken growth. Markets will also
look at inflation estimates within the data, although there have been several more
recent inflation reports and the reaction will be centered almost entirely on the
headline GDP reading. The sterling is likely to advance on a figure of 0.8% or
higher for the quarter, while the UK currency will be sold if growth is 0.6% or
lower. Given optimism over UK growth trends, there is likely to be a bigger reaction
to weaker than expected data rather than strong data. Indeed, a figure of 0.5% would
be likely to result in sharp Sterling selling. Overall, given that weather
conditions were generally favorable during the quarter, the underlying risk is for a
slightly stronger than expected initial reading.



* JPY
The yen was mostly choppy against its counterparts on Thursday afternoon, while
faltering against the dollar. The currency experienced some volatility as Japan
reacted to an economic report from the IMF. The IMF said yesterday that Japan's
economy will grow 2.3% in 2007.However Japanese economic growth for 2008 is
projected at 1.9%.

In trading with the sterling, the yen indicated uncertain movement on Thursday
afternoon. It moved between a low of 241.70 and a high of 240.79. In general, the
currency is moving to a four month low. Versus the Euro, the yen saw choppy action
as well and it bounced between a low of 163.60 and a high of 162.90. The Japanese
currency is now experiencing a multi-year low. While the yen was trading strongly
against the dollar on Thursday morning, the currency slipped in the afternoon. The
Japanese yen dropped to the 121.65 level as day's trading progressed. The currency
is at its lowest point since late February. Also the yen declined 18.8 percent
against the New Zealand dollar and 14.5 percent versus the Australian dollar in the
last 12 months.

Today at 0:30 GMT the Core CPI y/y, Tokyo CPI y/y, and the Core Tokyo CPI y/y data
were published. The Japanese Yen weakened against the greenback and pulled away from
a three-month low against the currency after Japan's core consumer prices data
decreased at a slower pace in April and kept the Bank of Japan on track to raise
rates in the following months.
Japan's broad TOPIX share index fell by 1.6 percent and other Asian markets lost
approximately 1 percent following a pull-back in Wall Street shares. This situation
implies that inflation may return in the short term and will allow the central bank
of Japan to raise its interest rates, which is now at 0.5 percent and the lowest
among industrialized economies, as the economy expands and inflation gathers pace.
The governor of the Bank of Japan, Toshihiko Fukui, said that the central bank
could raise rates even if inflation is still in negative territory as long as the
long-term outlook for prices to rise remains in place. Fukui has mentioned prices
will rise again once the effect of last year's gain in oil prices will fade. The
BoJ should to increase lending rate as long as the long-term outlook for prices to
rise remains in place. If a rate hike occurs the fledgling yen should pull back
some of it's recent extended losses.



Technical News
* EUR/USD
The 3 week downward channel, as seen on the 4H chart, is widening, causing us to
believe that the Bollinger Bands, which happen to be tightening, are about to break.
The likely direction is surprisingly down according to the Bollinger Bands, yet the
MACD recently recorded a BUY signal - thus confusing most traders as to the overall
direction. We will consider any break of the bands downward, as a solid sell signal,
whereas any significant move back up should be seen as a Buy signal, especially if
the 1.3440 local resistance is broken.



* GBP/USD
Hourly charts are reversing upwards but more interestingly, the daily chart is
showing strong evidence of a reversal upwards. This, along with indicators forcing
their way back up, provides us with an upward bias. Look for 1.9900 as a buy signal
at this point, however, only if the daily and intraday indicators support the move.


* USD/JPY
We are in the middle of a short term correction downward. All momentum is still
upward bound and indicators are still in OB territory. The only concern seems to be
the resent break of the Bollinger band (lower band) which forces many traders to
believe in a prolonged correction towards 120.80 at the minimum and 119.60 more
likely.


* USD/CHF
Intraday charts are a mess. Look for any up-tick to provide strong buy signals - but
be warned - any buy signal will need to be supported y indicators as we can see on
the hourlies, many buy signals are actually showing divergences. This is a pair we
would stay away form for the coming day and this despite a strong uptrend brewing.



The Wild Card
* Gold

Forex traders should note that the gold recently provided a strong and supported
SELL signal (via a divergence between momentum, RSI, and the MACD). We are looking
for further evidence of a downtrend via the EMA. Any cross of the 10,20 EMA may
provide a clear SELL signal. However, it should be noted that due to the volatility
of this instrument, caution is advised.


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