Forex Bulletin, March 31, 2011

Pulse of the Market

·      The Greenback fell yesterday in spite of encouraging economic data

·      Euro traded higher as inflation cools, encouraging ECB to delay the exit strategy further

·      British Pound rally could be short lived as household confidence deteriorates further

·      Aussie rallied against Japanese Yen for 9th consecutive trading day

The Greenback ended yesterday’s trading session lower against the basket of major currencies. The persistent rise in equities combined with the decline in Treasury yields and the gains in high yielding currencies indicate that investors are more optimistic and less worried about the risks in the global economy. Safe haven flows have continued to ease out of the U.S Dollar, Japanese Yen and Swiss franc, driving the Aussie to a fresh record high against the U.S Dollar and a 10 month high against the Japanese Yen. Chicago Purchasing Manager Index, weekly jobless claims and factory orders are scheduled for in today’s trading session. Yesterday, ADP reported private sector payroll growth of 201k, which was approximately the same pace of growth as the previous month. The Single Currency held steady against the Greenback ahead of Ireland’s stress test results. Today, the Irish Central Bank will publish the third round of its stress test results. The current estimate is for the results to show that Irish banks need approximately 25 billion Euros out of the 35 billion Euros set aside under the EU-IMF deal. If the amount is larger than this estimate, it will be bearish for the Euro, particularly if the banks require more than 35 billion Euros and if the amount needed is less, it could actually help the Euro. Confidence in the Euro Zone has deteriorated slightly according to the latest reports. German retail sales and the country’s unemployment report are due for release today. The British Pound extended its gains against the Greenback following better than expected economic data. In the service sector, more bearable weather conditions in January helped to promote the strongest recovery in economic activity for the sector in nearly 9 years. The index of services rose 1.3 percent in January after declining by 1.1 percent at the end of the year. The Japanese Yen weakened against all of the major currencies ahead of the fiscal year end in Japan. The latest Japanese economic reports showed industrial production rose 0.4 percent in February which was much better than expected but on an annualized basis, industrial production growth slowed from 3.5 to 2.8 percent. 

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
00:30	Australia Private Sector Credit (MoM) (FEB)	Medium	0.5%	0.3%	0.3%
02:00	New Zealand NBNZ Business Confidence (MAR)	Medium	-8.7		34.5
05:00	Japan Housing Starts (YoY) (FEB)	Medium		7.4%	2.7%
06:00	U.K Nationwide House Prices s.a. (MoM) (MAR)	Medium		0.0%	0.3%
07:55	German Unemployment Change (MAR)	High		-25K	-52K
09:00	Euro Zone Consumer Price Index Estimate (YoY) (MAR)	Medium		2.4%	2.4%
12:30	Canada Gross Domestic Product (YoY) (JAN)	High			3.2%
12:30	U.S Chicago Purchasing Manager (MAR)	Low		69	71.2
12:30	U.S Initial Jobless Claims (Mar-26)	Low		380K	382K

Euro

The Single Currency fell in European trading session but reversed once again on strong EUR/JPY buying which tracked stock markets higher in the U.S trading Session. Resistance was found at 1.4150 for the second consecutive day and the market may wait until Friday’s U.S jobs report for fresh direction. Overall the EUR/USD traded with a low of 1.4051 and a high of 1.4146 before closing the day around 1.4126 in the New York session.

Yen

The Japanese Yen remained strong in yesterday’s trading session supported by the strong ADP Employment report at 201k vs. 208k previously. Crosses also enjoyed solid gains with AUD/JPY year highs above 85.00 Yen and EUR/JPY now above 117.00 Yen in exceptionally one sided moves. Overall the USD/JPY traded with a low of 82.36 and a high of 83.17 before closing the day around 82.88 in the New York session.

British Pound

The British Pound was able to finally rally in yesterday’s trading session on the back of strong data and positive markets. On the economic docket, CBI Distributive trades jumped to 15 vs. 6 previously in March. EUR/GBP slipped to 0.8750 but losses were limited and most of the moves were seen on GBP/JPY. Overall the GBP/USD traded with a low of 1.5978 and a high of 1.6082 before closing the day at 1.6072 in the New York session.

Australian Dollar

The Australian Dollar remained strong on the back of investor demand for AUD/JPY with the major closing above the key 1.0300 level ahead of Economic data today. The Market is starting to look higher now as investors become more comfortable with levels above parity. Overall the AUD/USD traded with a low of 1.0269 and a high of 1.0336 before closing the day at 1.0328 in the New York session.

Euro-Yen

EURJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The RSI is above 63 and lies above the neutral zone. Overall, the cross has gained 0.62%.

Sterling-Yen

Currently GBPJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 55 reading and lies above the neutral zone. The pair has gained 0.90%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 63 reading and lies above the neutral region. The cross has gained 0.86%.

Euro-Sterling

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish and MACD is issuing a bullish signal. The RSI is above 64 reading and lies above the neutral region. The pair has lost 0.28%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 44 and lies below the neutral region. The pair has gained 0.20%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.3974	1.4013	1.4069	1.4108	1.4164	1.4203	1.4259
USD/JPY	81.63	81.99	82.44	82.80	83.25	83.61	84.06
GBP/USD	1.5902	1.5940	1.6006	1.6044	1.6110	1.6148	1.6214
USD/CHF	0.9048	0.9111	0.9147	0.9210	0.9246	0.9309	0.9345
USD/CAD	0.9616	0.9650	0.9682	0.9716	0.9748	0.9782	0.9814
EUR/JPY	115.37	115.79	116.43	116.85	117.49	117.91	118.55
GBP/JPY	130.33	131.07	132.14	132.88	133.95	134.69	135.76
CHF/JPY	88.87	89.16	89.69	89.98	90.51	90.80	91.33
AUD/JPY	83.86	84.28	84.93	85.35	86.00	86.42	87.07
EUR/GBP	0.8687	0.8719	0.8753	0.8785	0.8819	0.8851	0.8885
EUR/CHF	1.2862	1.2910	1.2941	1.2989	1.3020	1.3068	1.3099
GBP/CHF	1.4553	1.4640	1.4700	1.4787	1.4847	1.4934	1.4994

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)

Forex Bulletin, March 30, 2011

Pulse of the Market

·      The Greenback regained some of its footing yesterday following the rebound in risk aversion

·      European Central Bank board member Jozef Makuch said a rate hike in April is highly probable

·      U.K final fourth quarter GDP report showed a 0.5% contraction in the growth rate

·      Loonie has encountered stiff resistance as investors trim their bets that the BoC will raise rates

The Greenback ended yesterday’s trading session on a mixed note. Regardless of disappointing economic reports, investors' appear to have a modest appetite for riskier assets yesterday. The S&P Case/Shiller Home Price Index was released slightly better than expected, but the measure still dropped by the most since December 2009. A separate report showed that consumer confidence dropped in March to 63.4, down from last month's 72 and short of the expected reading of 65. This Friday's Non Farm Payrolls report will be closely watched by global markets as investors gauge the health of the U.S economy. The U.S Dollar has however avoided a potentially steep selloff yesterday after the disappointing economic data as commodity prices ease. The Single Currency was relatively flat yesterday in spite of a further downgrade in Greece's credit rating. S&P knocked the rating on Greek sovereign debt down two steps to BB and kept a negative outlook. However, after rapid downgrades from all three of the major credit ratings agencies, investors appear to be largely invulnerable to the news at this point. The Euro does however continue to struggle to sustain any significant gains after failing to break key support last week. For the time being, the Single Currency seems to remain within its recent ranges as investors await the ECB's April 7th monetary policy meeting. The British Pound slipped below key support levels yesterday, extending its losing streak against both the U.S Dollar and Euro. The Cable was the worst performing currency this month against its G10 counterparts as U.K GDP contracted 0.5%. Investors are far more confident in the outlook for monetary policy from both the ECB and Fed than they are from the BoE. With such uncertainty over both the direction of the U.K economy and monetary policy, Cable will struggle to maintain its recent levels. The Japanese Yen was lower yesterday against all of its major counterparts as most investors expect the gap between Japanese borrowing costs and those of other major economies to widen significantly in the coming months. The Yen fell to the lowest level in ten months against the Euro as most investors expect the ECB to hike interest rates as soon as at their next meeting in April. With the final economic impact of the worst natural disaster in Japanese history still unknown. 

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
00:30	Australia Job Vacancies (FEB)	Low	-1.7%		6.6%
09:00	Euro Zone Business Climate Indicator (MAR)	Medium		1.42	1.45
09:00	Euro Zone Consumer Confidence (MAR)	Medium		-10.6	-9.9
09:30	Switzerland KOF Swiss Leading Indicator (MAR)	Medium		2.17	2.18
11:00	U.S MBA Mortgage Applications (Mar 25)	Low
12:15	U.S ADP Employment Change (MAR)	Medium		205K	217K
23:01	U.K GfK Consumer Confidence Survey (MAR)	Medium		-30	-28

Euro

The Single Currency was able to extend its rally in yesterday’s trading session above 1.4100 before reversing on FED speaker Bullard hawkish comments the Quantitative Easing 2 program maybe be cut short by 100 billion. Standard & Poor’s knocked the rating on Greek sovereign debt down two steps to BB. Overall the EUR/USD traded with a low of 1.4046 and a high of 1.4147 before closing the day around 1.4110 in the New York session.

Yen

The Japanese Yen was strong pushing to pre earthquake levels above 82.00 Yen on the hawkish comments from a Fed member that they may close the Quantitative Easing 2 program early. AUD/JPY moved above 84.00 Yen and EUR/JPY above 116.00 Yen. The Yen is under pressure technically with many pairs breaking higher altogether. Overall the USD/JPY traded with a low of 81.53 and a high of 82.46 before closing the day around 82.46 in the New York session.

British Pound

The British Pound continued to underperform and was reproved against the Single Currency which hit year highs above 0.8830 on EUR/GBP before paring back some gains. Cable continued to pivot 1.6000 with range where investors enjoying some stability since Monday. Overall the GBP/USD traded with a low of 1.5942 and a high of 1.6041 before closing the day at 1.6009 in the New York session.

Australian Dollar

The Australian Dollar was very strong bouncing off its lows from the European trading session to resume its rally back to the 1.0300 resistance. 1.0300 is forming as a key resistance to the march higher and the AUD/USD will need to close above the figure to open up higher levels. Overall the AUD/USD traded with a low of 1.0203 and a high of 1.0295 before closing the day at 1.0290 in the New York session.

Euro-Yen

EURJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The RSI is above 63 and lies above the neutral zone. Overall, the cross has gained 1.13%.

Sterling-Yen

Currently GBPJPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 54 reading and lies above the neutral zone. The pair has gained 1.08%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 65 reading and lies above the neutral region. The cross has gained 1.43%.

Euro-Sterling

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is also issuing a bullish signal. The RSI is above 68 reading and lies above the neutral region. The pair has gained 0.06%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 44 and lies below the neutral region. The pair has gained 0.46%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.3954	1.4000	1.4055	1.4101	1.4156	1.4202	1.4257
USD/JPY	80.91	81.22	81.84	82.15	82.77	83.08	83.70
GBP/USD	1.5855	1.5898	1.5954	1.5997	1.6053	1.6096	1.6152
USD/CHF	0.9068	0.9103	0.9152	0.9187	0.9236	0.9271	0.9320
USD/CAD	0.9678	0.9708	0.9724	0.9754	0.9770	0.9800	0.9816
EUR/JPY	113.74	114.27	115.31	115.84	116.88	117.41	118.45
GBP/JPY	129.13	129.72	130.87	131.46	132.61	133.20	134.35
CHF/JPY	88.56	88.78	89.19	89.41	89.82	90.04	90.45
AUD/JPY	82.38	82.88	83.87	84.37	85.36	85.86	86.85
EUR/GBP	0.8758	0.8777	0.8795	0.8814	0.8832	0.8851	0.8869
EUR/CHF	1.2812	1.2849	1.2916	1.2953	1.3020	1.3057	1.3124
GBP/CHF	1.4546	1.4589	1.4660	1.4703	1.4774	1.4817	1.4888

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)