Pulse of the Market
· Greenback set in a bullish reversal after a three week decline but fundamental support is lenient
· Balance between yield expectations and financial uncertainty tipping Euro steadily towards selling
· British Pound will shore through event risk as speculation over tomorrow’s BoE decision heats up
· Japanese Yen’s fall against the Greenback may reverse and risk trend could become more volatile
The U.S Dollar ended the yesterday’s trading session higher against the basket of major currencies ahead of its monetary policy announcement. The only piece of U.S economic data that was released yesterday was the Economic Optimism index which showed consumer confidence plunging in the month of March. The index fell more than 7 points from 50.9 to 43.0, which happened to be the single biggest monthly decline in 10 years. The rise in the Greenback can be partially attributed to a report by an influential think tank that raised the possibility that someone within the FOMC could disagree to the extended talking time in the next statement. Based upon recent comments from FOMC officials, members of the central bank are still undecided about whether they should extend QE beyond June. Euro continued to fell against the Greenback regardless of stronger than expected German factory orders. On March 11th, leaders from Euro Zone countries will be meeting to discuss and work out a “comprehensive package” that would address and ideally resolve the region’s debt crisis. This meeting is aimed at planning an agreement for the March 24-25 EU Summit that would finally put an end to the ongoing crisis. Meanwhile, arriving economic data continues to show the core providing support to the peripheral. The German manufacturing sector has been performing very well with the latest PMI numbers showing manufacturing activity growing at record levels. Swiss Franc traded lower against the Euro and U.S Dollar regardless of stronger than expected employment numbers. The unemployment rate in Switzerland dropped from 3.5 to 3.4 percent to its lowest level in 2 years. British Pound sold off against the U.S Dollar for the fourth consecutive trading session. Retail sales were the weakest in nearly 2 years. The RICS house price index in contrast increased for the fourth straight month, reflecting gradual stability in the housing market. The Japanese Yen traded lower against all of the major currencies except for the Swiss Franc. Economic data released by Japan’s Ministry of Finance showed the nation’s current account surplus narrowed by 47.6 percent, to 461.9 billion Yen in January.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
00:30 | AUD Home Loans (JAN) | Medium | -4.5% | -1.0% | 2.1% |
08:15 | CHF Consumer Price Index (MoM) (FEB) | Medium | 0.3% | -0.4% | |
09:30 | GBP Visible Trade Balance (Pounds) (JAN) | Medium | -£8500 | -£9247 | |
12:00 | EUR German Industrial Production s.a (MoM) (JAN) | Medium | 1.7% | -1.5% | |
12:00 | USD MBA Mortgage Applications (MAR 4) | Low | |||
13:30 | CAD New Housing Price Index (MoM) (JAN) | Low | 0.1% | 0.1% | |
20:00 | NZD Reserve Bank of New Zealand Rate Decision (MAR) | High | 2.88% | 3.00% | |
23:50 | JPY Gross Domestic Product (QoQ) (4Q) | Medium | -0.3% | -0.3% |
Euro
The Single Currency was under spotlight yesterday as investors sold the Euro on fresh EU debt fears and comments from S&P that a Greek default was possible. On the economic docket, January German Industrial Orders were up 2.9% vs. -3.6% previously. Overall the EUR/USD traded with a low of 1.3861 and a high of 1.3988 before closing the day around 1.3903 in the New York session.
Yen
The Japanese Yen was weaker on the general U.S Dollar strength and on strong demand for Yen crosses. AUD/JPY is the usual hold trade and was well supported above 83.00 Yen. Also helping the USD/JPY to move higher is the increase in U.S Bond Yields, closely watched for an indication of medium term interest rate expectations. Overall the USD/JPY traded with a low of 82.19 and a high of 82.84 before closing the day around 82.65 in the New York session.
British Pound
The British Pound traded lower all day as the market waited for the BoE rate announcement tomorrow with plenty of commentary from analysts on the speed of rate hikes this year. Given the hawkish ECB last week more talk exists that the MPC may have to raise rates sooner than later. Overall the GBP/USD traded with a low of 1.6124 and a high of 1.6207 before closing the day at 1.6159 in the New York session.
Australian Dollar
The Australian Dollar was unable to gain yesterday despite the U.S stocks rallied with the Euro and Cable on the back foot. The market is keenly waiting the New Zealand Rate Announcement today with a chance of a rate hike given the major upheaval. Overall the AUD/USD traded with a low of 1.0053 and a high of 1.0133 before closing the day at 1.0097 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 64 and lies above the neutral zone. Overall the cross has gained 0.06%.
Sterling-Yen
Currently GBPJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 54 reading and lies above the neutral zone. The pair has gained 0.27%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 53 reading and lies above the neutral region. The cross has gained 0.31%.
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 59 reading and lies above the neutral region. The pair has lost 0.22%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The RSI is above 46 and lies below the neutral region. The pair has gained 0.67%
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.3720 | 1.3790 | 1.3847 | 1.3917 | 1.3974 | 1.4044 | 1.4101 |
USD/JPY | 81.63 | 81.91 | 82.28 | 82.56 | 82.93 | 83.21 | 83.58 |
GBP/USD | 1.6037 | 1.6080 | 1.6120 | 1.6163 | 1.6203 | 1.6246 | 1.6286 |
USD/CHF | 0.9184 | 0.9223 | 0.9286 | 0.9325 | 0.9388 | 0.9427 | 0.9490 |
USD/CAD | 0.9655 | 0.9681 | 0.9695 | 0.9721 | 0.9735 | 0.9761 | 0.9775 |
EUR/JPY | 113.90 | 114.22 | 114.57 | 114.89 | 115.24 | 115.56 | 115.91 |
GBP/JPY | 132.52 | 132.81 | 133.19 | 133.48 | 133.86 | 134.15 | 134.53 |
CHF/JPY | 87.34 | 87.74 | 88.06 | 88.46 | 88.78 | 89.18 | 89.50 |
AUD/JPY | 82.61 | 82.85 | 83.15 | 83.39 | 83.69 | 83.93 | 84.23 |
EUR/GBP | 0.8535 | 0.8561 | 0.8582 | 0.8608 | 0.8629 | 0.8655 | 0.8676 |
EUR/CHF | 1.2835 | 1.2883 | 1.2942 | 1.2990 | 1.3049 | 1.3097 | 1.3156 |
GBP/CHF | 1.4886 | 1.4942 | 1.5026 | 1.5082 | 1.5166 | 1.5222 | 1.5306 |
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