Pulse of the Market
· Greenback won’t rally except the S&P 500 finally collapses with certainty
· EU summit concessions might change the market’s view of the Euro Zone
· British Pound’s interest in inflation indicators already tempered BOE’s post
· Franc investors will keep the focus on sentiment and overlook the SNB decision
The U.S Dollar started the Friday’s trading session higher against all of the major currencies as risk aversion drove investors towards the Greenback. However in the final hours of the session, the Greenback gave up all of its gains. The reversal in the foreign exchange market has left many investors confused because the earthquake and tsunami damage grew with each passing hour. By the end of the Friday’s trading session, waves of water were still sweeping through Japan and tsunami warnings remained in place for much of the Pacific Coastline. Euro rebounded sharply against the Greenback and ended the day near at its highs. Hawkish comments from European Central Bank officials and some sign of cooperation by German Chancellor Merkel has renewed the rally in the Euro. Sovereign debt troubles have dominated the headlines in recent days but cherished that ECB President Trichet is in rate hike mode. Ireland has rejected Germany’s call to lower the corporate tax rate but investors are hopeful that a comprehensive package can be agreed upon at the end of the month. The German ZEW survey is scheduled for release this week and it will be appealing to see how investors have reacted to the rise in commodity prices and the recent downgrades by rating agencies. British Pound also ended the day higher against the U.S Dollar, like all of the other major currencies. However the rally in the Cable was the most insignificant which is not surprising considering that U.K economic data surprised to the downside. Japanese Yen soared against all of the major currencies following earthquake in Japan as repatriation flows created strong demand for Japanese Yen. A number of countries have pledged aid to Japan which could mean an influx of demand for Japanese Yen. As the world’s third largest economy, Japan has the means to handle this crisis but it could take some time for them to do so. The Japanese economy was weak even before the earthquake hit and in the very short term, the natural disaster will add pressure on Japanese growth. Thankfully large population centers such as Tokyo was only minimally affected which means that the heart of the economy should be able to snap back quickly. The Canadian Dollar rose strongly against the U.S Dollar regardless of a decline in oil prices and weaker Canadian employment numbers. Job growth in Canada fell short of expectations in the month of February with 15k people finding new work last month compared to a forecast of 25k. The unemployment rate was expected to decline but instead it remained unchanged at 7.8 percent.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
BOJ to Hold Regular Policy Setting Board Meeting in Tokyo | Medium | ||||
04:30 | Japan Consumer Confidence (FEB) | Medium | 40.6 | 41.1 | |
04:30 | Japan Industrial Production (MoM) (JAN) | Medium | 1.3% | 2.4% | |
05:50 | Bank of Japan Target Rate | High | 0.10% | 0.10% | 0.10% |
10:00 | Euro Zone Industrial Production s.a (MoM) (JAN) | Medium | 0.3% | 0.2% |
Euro
The Single Currency surged higher in the Friday’s trading session. On the start of the Week today there is news that the Euro group meeting had agreed to increase the size of the bailout fund and allow new forms of market intervention. This allowed the Euro to rally across the board and help lift most pairs against the Dollar. Overall the EUR/USD traded with a low of 1.3751 and a high of 1.3901 before closing the day around 1.3901 in the New York session.
Yen
The Japanese Yen was extremely volatile in the Friday’s trading session gaining sharply as the safe haven Yen was bought on news of a major earthquake. Japanese Investors caused the Yen to gain as they repatriated overseas money in the times of uncertainty. Overall the USD/JPY traded with a low of 81.64 and a high of 83.28 before closing the day around 81.88 in the New York session.
British Pound
The British Pound tested 1.6000 on Friday before reversing and gaining with the Euro and U.S stocks. February PPI rose 1.1% vs. 1.4%. EUR/GBP pushed higher breaking to 4 month highs above 0.8670 and could be poised to break out higher. Overall the GBP/USD traded with a low of 1.5976 and a high of 1.6079 before closing the day at 1.6078 in the New York session.
Australian Dollar
The Australian Dollar broke below 1.0000 briefly before surging higher on the EU Bailout agreement and a jump in U.S stocks. The outlook is mixed with the 1.000 to 1.0200 range holding for the last few weeks with risk to upside and downside balanced. Overall the AUD/USD traded with a low of 0.9967 and a high of 1.0157 before closing the day at 1.0149 in the New York session.
Euro-Yen
EURJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 57 and lies above the neutral zone. Overall the cross has lost 0.57%.
Sterling-Yen
Currently GBPJPY is trading below 14, 50 and above 100 days moving average. Fast stochastic is issuing bearish and MACD is also indicating a bearish stance. The RSI is above 43 reading and lies below the neutral zone. The pair has lost 1.20%.
Aussie-Yen
Currently, the cross is trading below 14 and above 50, 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 44 reading and lies below the neutral region. The cross has gained 0.07%.
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 65 reading and lies above the neutral region. The pair has gained 0.64%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The RSI is above 39 and lies below the neutral region. The pair has lost 0.17%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.3651 | 1.3701 | 1.3801 | 1.3851 | 1.3951 | 1.4001 | 1.4101 |
USD/JPY | 79.61 | 80.63 | 81.25 | 82.27 | 82.89 | 83.91 | 84.53 |
GBP/USD | 1.5907 | 1.5941 | 1.6010 | 1.6044 | 1.6113 | 1.6147 | 1.6216 |
USD/CHF | 0.9163 | 0.9215 | 0.9254 | 0.9306 | 0.9345 | 0.9397 | 0.9436 |
USD/CAD | 0.9590 | 0.9650 | 0.9680 | 0.9740 | 0.9770 | 0.9830 | 0.9860 |
EUR/JPY | 110.80 | 111.87 | 112.85 | 113.92 | 114.90 | 115.97 | 116.95 |
GBP/JPY | 127.56 | 129.20 | 130.43 | 132.07 | 133.30 | 134.94 | 136.17 |
CHF/JPY | 85.91 | 86.83 | 87.46 | 88.38 | 89.01 | 89.93 | 90.56 |
AUD/JPY | 82.25 | 82.10 | 82.59 | 82.44 | 82.93 | 82.78 | 83.27 |
EUR/GBP | 0.8538 | 0.8563 | 0.8604 | 0.8629 | 0.8670 | 0.8695 | 0.8736 |
EUR/CHF | 1.2753 | 1.2789 | 1.2854 | 1.2890 | 1.2955 | 1.2991 | 1.3056 |
GBP/CHF | 1.4720 | 1.4786 | 1.4864 | 1.4930 | 1.5008 | 1.5074 | 1.5152 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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