Thursday 6th May….It’s all about Greece and the possible spread of their fiscal problems to the economies of Portugal and Spain. The Euro zone desperately needs decisive leadership and so far nobody has ’stepped up’ to the plate. This Greek tragedy has much further to run…follow the Trends but with acute discipline please!

Euro remains under much pressure after ECB left rates unchanged at 1.00% as widely expected. No special announcement is made today and Trichet said that Governing Council didn’t discuss today whether it should purchase government bonds as the euro region’s fiscal crisis spreads. Nevertheless, Euro continues to feel the weight of debt crisis fear as Spain paid the highest yield since 2008 to sell their five year bonds today. Also, EUR/CHF drops sharply and breaks recent low of 1.4143 as markets circulate talks that SNB is finally giving up on intervention to restrict CHF’s gain against Euro. SNB has repeatedly declined to comment. On the other hand, Euro is also weak broadly and drops to new record low against Aussie.

Elsewhere, markets are still in an risk averse mode as ECB did nothing to calm market sentiments. Major European stock indices fail to sustain earlier gains and turned red as ECB press conference goes. US stock futures are also pointing to lower opens. Crude oil extends this week’s fall and is back below 79. Dollar index benefits and rose above 84.5 level.

On the data front, US non-farm productivity rose more than expected by 3.6% in Q1. Jobless claims came in at 444k. Germany factory orders rose 5.0% mom, 26.1% yoy in March. Swiss CPI rose 0.9% mom, 1.4% yoy in April. Sterling dips earlier today after release of disappointing PMI services which dropped to 55.3 in April. New Zealand dollar remains resilient as supported by much stronger than expected employment data overnight, which showed impressive 1% qoq rise in Q1 and with unemployment rate dropped sharply from 7.3% to 6.0%.

Looking at the dollar index, note again that the current rally is possibly accelerating after taking out the upper channel resistance. Now with 61.8% retracement of 89.62 to 74.19 at 83.72 firmly taken out, we’d expect a test on 86.87/89.62 resistance zone next. We’d stay near term bullish as long as 83.37 support holds.