Soft US housing start data yesterday was the catalyst for another modest leg higher in risk assets and some gentle dollar weakness. It is not clear whether the early Easter played a role here, or it was a genuinely soft number and a harbinger of a US slow-down. For today, the highlight will be on US existing sales, where consensus is expecting a sharp bounce back after soft February data. While existing home sales data does not contribute much to GDP growth, failure to bounce back in March could help risk again. Today we will also see EIA crude inventory data, where a 2.3mn barrel build is expected (API data released yesterday showed a 3mn barrel build). Unless oil inventory growth surprises on the upside, a steady oil market should also remain slightly positive for risk. However, the money market curve barely prices one Fed rate hike over the next year and the recent softening in US financial conditions may make the Fed more, rather than less, likely to hike rates.Price action still favors USD selling, EUR and GBP have pushed higher and USDCAD has pushed lower along with the commodity rally. AUD and NZD have corrected in today's China equity selloff but commodities in general still seem strong except oil which lost some ground as Kuwait ended the strike. Almost all Asia Emerging Markets FX remains in strengthening mode. Despite the small correction EMEA remains well supported. USDJPY has entered a range phase where the pair expects further steps from the BoJ or MoF.
