Data released yesterday morning showed that U.S. new home sales rose in March from the seven-year low set during the previous month. However, the rebound was not as large as the consensus forecast had anticipated. At best, the housing market seems to be treading water at present. Fortunately, the rebound in durable goods orders in March was stronger than expected. As we wrote yesterday, some investors are beginning to question the outlook for capital spending. The strong rise in non-defense capital goods orders in March will put some of those concerns to rest, at least for the time being.

The dataflow did not have a big impact on the dollar yesterday, although the euro did take a run at its all-time high versus the greenback. After failing to break through, the euro has pulled back somewhat and the dollar is also a bit stronger versus most other major currencies this morning. Further retracement in the euro and other major currencies could occur if the weekly series of initial jobless claims, which prints this morning at 8:30 EDT, is stronger than expected. In addition, market participants await tomorrow's release of U.S. first quarter GDP data. The market consensus forecast anticipates that real GDP rose at a lackluster pace of only 1.8 percent (annualized) during the first quarter.

The Bank of Canada releases its quarterly Monetary Policy Report this morning at 10:00 EDT, which could shed some light on the outlook for Canadian monetary policy. The loonie could strengthen further if the report is seen as hawkish. A slew of Japanese data tonight, including data on industrial production, unemployment, retail sales, and CPI inflation, could inject some volatility into the yen/dollar exchange rate.