Breakfast Blog

Good Morning and Top of the Risk ON morning!
                                                                           We got 1576, in fact we got 1588! The S&P 500 broke the 2007 high. It feels like the start of one of those cycles where every second sentence will be "fresh high, record high, highest since". In an up and down day with a few comical errors including the release of the FOMC minutes early at 2 GMT instead of 2 eastern. The FOMC were a negative for the U.S. Dollar and for stocks- they sounded like a big part of the FOMC was ready to pull the trigger on tapering but they hardly caused a blip. The USD/JPY reversed immediately higher after a 50 pip droop and continued higher immediately after the meeting, making it to within a few pips of the magical 100 once the 99.75 barrier had been taken out. Once the U.S. Market opened the S&P blasted through the 2007 highs finally erasing the Credit Crisis.
EUR/USD was bid early in the European session having broken as high as 1.3122 but huge sell offers capped anymore upsided and it drifted lower and was playing defence during the afternoon, But after 5 days of gains this short pullback be a breath of fresh air for the pair.
European Stocks had one of their best days in years with the outperformer being the Spanish Ibex, up over 3% and the German DAX up over 2%. This seems to be a flow dynamic, with money flowing out of Japan and into the better yielding European Debt Markets, these lower yields have given the European Stocks a boost. However, A strong Euro is exactly what Europe doesn't need at the moment and it is only a matter of time until the Equity markets will start to react negatively to the Strong Euro and start crying out for some Central Bank policy changes to make them more competitive.
The May meeting is too soon to see a cut from Draghi unless we get some terrible European Data next week  but Potentially in June if the Euro continues to appreciate at this rate he may have no other choice even though rates are virtually as low as they can go.
Another sparse Economic Calendar today, we just saw French and German CPI's which came in slightly better then expected. The Only Tier 1 Data we have from the States is in the Form of the weekly Initial Jobless claims. Another soft Reading may give the Euro a slight boost but any reaction from these numbers is normally faded and comes back to where it was prior to the announcement.
Some good levels to look out for today on the EURUSD are 1.3040 downside, this was the Asian Low, Topside we have offers at 1.31 and much bigger ones at 1.3113-3120. Remember 1.3113 is the 38.2% retracement of the 2013 drop from 37.10 to 27.50 and is an important technical level. The EURUSD is in a strong uptrend and if it can get through these offers, there is not much in the form of strong resistance until 1.32.
Good Luck in The Markets