*Good morning/afternoon everyone!*

I’m back in markets this morning but only trading #2 today and Thursday since we’ll be live trading non-farm payrolls on Friday. Although the U.S. dollar has been very strong over the past few weeks, its pulling back with EUR, NZD and AUD leading the gains. EUR is up thanks to back to back improvements in EZ data. German retail sales came in much stronger than expected, the unemployment rate dropped to 5.2% from 5.3% and EZ economic confidence increased in the month of May. Is this enough for EUR/USD to bottom? Probably not with confidence votes in Spain and Italy at the end of the week but it is experiencing its strongest rally in nearly 3 weeks today which could continue in the North American session. This is particularly impressive considering that US Treasury rates are up sharply this morning, providing support for the dollar. The main catalyst for AUD and NZD strength is USD weakness because Australian and New Zealand housing data fell short of expectations overnight. Looking ahead, the US and Canadian dollars are in play this morning with ADP, revisions to US GDP and the Bank of Canada’s monetary policy announcement on the calendar.

*The MAIN THEMES I see today are*

+EUR
-JPY
+NZD
+AUD
-GBP

*Trading Biases*

-USD (except vs. JPY)
+EUR, +NZD, +CHF, +AUD
-JPY, -GBP
Mildly +CAD in early NY trade

*Today’s Initial Trades*

Here’s the summary –

1. Buy EURJPY at 126.39, Stop at 126.11, Target 126.67
2. Buy AUDCHF at .7463, Stop at .7435, Target .7491
3. Sell EURNZD at 1.6713, Stop at 1.6741, Target 1.6685

Close ALL open day trades by 10:20AM NY / 15:20 GMT