The USD/JPY is making another move to break out of February highs on Wednesday as the Tankan Manufacturing Index came in below analyst expectations. However, we have not seen as severe of a reaction to the upside as we expected.

Perhaps investors are tempered by the news the U. S. government will likely opt for the bankruptcy of GM and Chrysler. Regardless, the deterioration of the Japanese economy is outpacing even reduced analyst expectations while U. S. economic data has shown signs of stabilization.

Therefore, with the Carry Trade unwound, the U. S. is clearly winning the battle between the two economies. Hence, a retest of 100 seems all but inevitable.

The Cable is showing considerable strength against both the Dollar and the Euro. The GBP/USD continues its impressive rally from our near-term downtrend line and is approaching our 2nd tier uptrend line.

The relative strength of the Pound comes on the heels of an encouraging improvement in Britain's Manufacturing PMI data. The rally taking place in the S&P futures is only helping considering the positive correlation between U. S. equities and the GBP/USD.

However, it will be interesting to see if the Cable can maintain its upward momentum if U. S. equities head south. The two economies are so intertwined that the correlation should ultimately take control of the trend.

The EUR/USD is picking itself up after yesterday's losses, preventing a close on the 4-hour below 3/30 lows. Strength in the EUR/USD comes despite a higher than expected Unemployment Rate for the EU region.

We notice a tight positive correlation between the EUR/USD and the S&P futures as we've seen throughout the economic crisis. Investors expect a recovery in the EU region to follow stabilization in America's economy, improving the outlook for German and French manufacturing.

Gold is rallying Wednesday, following the appreciation of the Euro and the Pound. The correlation between Gold and the EUR/USD and GBP/USD is becoming clearer by the day.

However, the correlation is odd since these two currency pairs are positively correlated with the S&P futures when Gold is normally negatively correlated with U. S. equities.

As a result, Gold is opting to exhibit a positive correlation with U. S. equities, a strange occurrence we've witnessed periodically throughout the economic crisis.

Gold has normally shown a positive correlation with the S&P futures during large legs down in the past, which could be foreboding for U. S. equities.