Pulse of the Market
· U.S Dollar price action was mixed on yesterday but the greenback may regain its footing
· EU laid out broad plans to increase the scope of the European Financial Stability Facility
· Sterling may face headwinds over the near-term as interest rate expectations deteriorate
· Australian Dollar underperformed yesterday as stocks plunged in Asian trading session
U.S Dollar ended the yesterday’s trading session lower against most of the major currencies. Today the Federal Reserve will be holding its next monetary policy meeting and Fed officials will have to start discussing whether asset purchases should continue or expire in June. There are only 3 more monetary policy meetings left before the central bank needs to make their decision. Recent comments from Fed officials show that there is a wide dissection of views within the central bank with some members of the Open Market Committee favoring a gradual slowing of asset purchases that would extend beyond June and others preferring to draw the program to a close by its original end date. Euro rose strongly against the Greenback yesterday thanks to the developments that led to a surprise agreement amongst EU leaders to expand the European Financial Stability Mechanism to 440 billion Euros and to allow the purchase of bonds directly from individual countries which effectively gives the region a stronger ability to handle future crises. More particulars will be decided on at the Summit at the end of the month, but the initial outline has been provided, giving investors hope that the sovereign debt crisis could finally come to an end. The German ZEW survey is scheduled for release today and it will be interesting to see how investors view the outlook for the Euro Zone economy. Sterling strengthened against the U.S Dollar yesterday, regardless of diminishing expectations for a rate increase from the Bank of England. The Institute for Public Policy Research put out a report yesterday which says the U.K could face a major housing crisis by 2025 as the gap between housing supply and demand widens at an alarming pace. The current shortage in the supply of homes for sale is driving home prices higher, even as banks are actively curbing credit. Japanese Yen ended the session higher against the U.S, Australian and Canadian Dollar and lower against the Euro. The Bank of Japan has wasted no time responding to the earthquake by increasing monetary stimulus. The BoJ boosted its asset purchase program by 5 Trillion to 40 trillion Yen or 1 percent of GDP.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 06:00 | JPY Machine Tool Orders (YoY) (FEB) | Medium | | | |
| 06:30 | EUR French Consumer Price Index (MoM) (FEB) | Low | | 0.5% | -0.2% |
| 09:30 | GBP Nationwide Consumer Confidence (FEB) | Medium | | | 47 |
| 09:30 | GBP DCLG UK House Prices (YoY) (JAN) | Low | | 2.3% | 3.8% |
| 10:00 | EUR Euro-Zone Employment (QoQ) (4Q) | Low | | | 0.0% |
| 10:00 | EUR German ZEW Survey (Economic Sentiment) (MAR) | High | | 16.0 | 15.7 |
| 13:00 | USD Net Long-term TIC Flows (JAN) | Medium | | | $65.9B |
| 18:15 | USD Federal Open Market Committee Rate Decision (MAR 15) | High | | 0.25% | 0.25% |
Euro
The Single Currency rally continued from the Friday’s trading session with the EUR/USD testing the significant 1.4000 level on optimism that the new bailout plan will ease the debt crisis. Also helping was hawkish comments from ECB members about raising rates as early as next meeting. February Industrial Production was at expectations of 0.3% m/m. Overall the EUR/USD traded with a low of 1.3903 and a high of 1.4002 before closing the day around 1.3992 in the New York session.
Yen
The Japanese Yen opened the week extremely volatile until the BOJ helped stabilize the market with some calming money injections into the market causing a sharp rebound from below 81 Yen to above 82 Yen. Concerns about nuclear meltdowns have added to uncertainty and volatility. The BOJ held at 0.1%. Overall the USD/JPY traded with a low of 81.21 and a high of 82.44 before closing the day around 81.61 in the New York session.
British Pound
The British Pound was strong with the Euro grinding higher to test 1.6200 before settling in quiet trade yesterday. Investors have been selling the British Pound in recent session as the weakness of the recovery overpowers the inflation risk or rate hikes risks. Overall the GBP/USD traded with a low of 1.6026 and a high of 1.6198 before closing the day at 1.6172 in the New York session.
Canadian Dollar
The Canadian Dollar weakened against the Greenback in the yesterday’s trading session, as strong risk aversion prevailed in the market following Japan’s worst ever earthquake. Loonie was also pressured as crude oil fell to a two week low due to rising concerns that the Japanese quake will significantly reduce the demand for fuel before rebounding. Overall the USD/CAD traded with a low of 0.9708 and a high of 0.9762 before closing the day at 0.9736 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 50 and lies above the neutral zone. Overall the cross has gained 0.33%.
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 41 reading and lies below the neutral zone. The pair has gained 0.26%.
Aussie-Yen
Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 31 reading and lies below the neutral region. The cross has lost 0.83%.
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 61 reading and lies above the neutral region. The pair has gained 0.06%.
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 37 and lies below the neutral region. The pair has gained 0.03%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3830 | 1.3867 | 1.3929 | 1.3966 | 1.4028 | 1.4065 | 1.4127 |
| USD/JPY | 79.84 | 80.52 | 81.07 | 81.75 | 82.30 | 82.98 | 83.53 |
| GBP/USD | 1.5894 | 1.5960 | 1.6066 | 1.6132 | 1.6238 | 1.6304 | 1.6410 |
| USD/CHF | 0.9121 | 0.9175 | 0.9208 | 0.9262 | 0.9295 | 0.9349 | 0.9382 |
| USD/CAD | 0.9655 | 0.9681 | 0.9709 | 0.9735 | 0.9763 | 0.9789 | 0.9817 |
| EUR/JPY | 111.76 | 112.49 | 113.35 | 114.08 | 114.94 | 115.67 | 116.53 |
| GBP/JPY | 128.98 | 129.74 | 130.86 | 131.62 | 132.74 | 133.50 | 134.62 |
| CHF/JPY | 86.36 | 86.90 | 87.59 | 88.13 | 88.82 | 89.36 | 90.05 |
| AUD/JPY | 80.71 | 81.36 | 81.88 | 82.53 | 83.05 | 83.70 | 84.22 |
| EUR/GBP | 0.8570 | 0.8603 | 0.8626 | 0.8659 | 0.8682 | 0.8715 | 0.8738 |
| EUR/CHF | 1.2847 | 1.2878 | 1.2906 | 1.2937 | 1.2965 | 1.2996 | 1.3024 |
| GBP/CHF | 1.4790 | 1.4833 | 1.4890 | 1.4933 | 1.4990 | 1.5033 | 1.5090 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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