Pulse of the Market
· The slew of event risk scheduled for the U.S trade is likely to spark increased volatility in the Dollar
· Moody’s Investor Services cut Portugal’s long term credit rating to A3 from A1
· U.K Jobless claims slipped 10.2K in February and the BoE may raise fundamental assessment
· Yen appreciated a massive figure from the 79.50 region to post a record high just below 76.50
The U.S Dollar traded sharply higher against all of the major currencies in the yesterday’s trading session, except for the Japanese Yen and the Swiss Franc which surged as a result of risk aversion and repatriation. With the situation in Japan still surfacing and the tensions in the Middle East escalating, the financial markets are unusually volatile. U.S and European stocks plunged for the third straight trading session, sending investors back towards the Greenback. The sharp moves in the financial markets have made everyone nervous and the natural inclination of many investors is to liquidate and move to the sidelines until the situation in Japan stabilizes. U.S economic data has taken a back seat to global macro developments. Today’s consumer price index, jobless claims, leading indicators and Philly Fed survey are important numbers but the focus will remain on Japan and the Middle East. Housing starts plunged 22.5 percent, the largest one month decline ever. A leading indicator for future construction activity fell 8.2 percent to a record low. Meanwhile producer prices rose 1.6 percent in the month of February, two times more than the prior month. Euro weakened against the Greenback following risk aversion and Moody’s decision to cut Portugal’s sovereign debt rating two notches from A3 to A1 on concerns about growth and high borrowing costs. Earlier this month, the rating agency also downgraded Spain’s sovereign debt rating, elevating fresh concerns about the region’s debt troubles. Although the downgrade has brought Moody’s rating in line with Standard & Poor’s, both agencies now have the country on watch for a further downgrade. The stress tests could also pose a risk for the Euro if the results show a number of banks needing further capitalization. Euro Zone consumer prices were right in line with expectations, rising 0.4 percent in the month of February. No major Euro Zone economic reports are due for release today. Cable sold off against the U.S Dollar for the second day in a row regardless of a better than expected labor market report. The number of people claiming unemployment benefits in the U.K fell 10.2k in the month of February, against the market’s expectations for a 1.3K rise. The Japanese Yen rose soared against all of major currencies, driving USD/JPY to a fresh record low of 76.46.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
08:15 | CHF Industrial Production (QoQ) (4Q) | Medium | 4.6% | 1.8% | |
08:30 | CHF Swiss National Bank Rate Decision (MAR 17) | High | 0.25% | 0.25% | |
12:30 | USD Consumer Price Index (YoY) (FEB) | Medium | 2.0% | 1.6% | |
12:30 | USD Initial Jobless Claims (MAR 12) | Low | |||
13:15 | USD Industrial Production (FEB) | Medium | 0.6% | -0.1% | |
14:00 | USD Philadelphia Fed. (MAR) | Medium | 30.0 | 35.9 | |
14:00 | USD Leading Indicators (FEB) | Low | 0.9% | 0.1% |
Euro
The Single Currency struggled under risk aversion in the yesterday’s trading session but was calm against the U.S Dollar finding support under 1.3900. EUR/JPY was much more volatile crashing to 106.50 Yen in late trading. Overall the EUR/USD traded with a low of 1.3866 and a high of 1.4001 before closing the day around 1.3896 in the New York session.
Yen
The Japanese Yen once again stole the attention with the market punching through 80 Yen to hit large stops and plummet under 77 Yen before reversing on fears of Government intervention. The whole market is focused on the nuclear incident near Tokyo with fear and uncertainty running the market in wild swings. Overall the USD/JPY traded with a low of 79.55 and a high of 81.16 before closing the day around 79.61 in the New York session.
British Pound
The British Pound was under heavy selling pressure in the yesterday’s session and is struggling to hold on the 1.6000 level but has held so far. A break down would send the Cable lower and EUR/GBP into new highs with the European Single Currency much safer than the risk sensitive British Pound. Overall the GBP/USD traded with a low of 1.5985 and a high of 1.6130 before closing the day at 1.6024 in the New York session.
Canadian Dollar
The Canadian Dollar extended its losses against the U.S Dollar and the Japanese Yen in spite of the rise in commodity prices. On the economic docket, Canadian manufacturing sales rose 4.5 percent but the stronger number was lost in overall risk aversion of the day. Overall the USD/CAD traded with a low of 0.9805 and a high of 0.9965 before closing the day at 0.9909 in the New York session.
Euro-Yen
EURJPY is trading below 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 32 and lies below the neutral zone. Overall the cross has lost 2.06%.
Sterling-Yen
Currently GBPJPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is also indicating a bearish stance. The RSI is above 26 reading and lies below the neutral zone. The pair has lost 1.66%.
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 18 reading and lies below the neutral region. The cross has lost 2.05%.
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 lost 0.40%.
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 24 and lies below the neutral region. The pair has lost 1.21%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.3706 | 1.3786 | 1.3841 | 1.3921 | 1.3976 | 1.4056 | 1.4111 |
USD/JPY | 77.44 | 78.50 | 79.05 | 80.11 | 80.66 | 81.72 | 82.27 |
GBP/USD | 1.5818 | 1.5901 | 1.5963 | 1.6046 | 1.6108 | 1.6191 | 1.6253 |
USD/CHF | 0.8909 | 0.8990 | 0.9035 | 0.9116 | 0.9161 | 0.9242 | 0.9287 |
USD/CAD | 0.9661 | 0.9733 | 0.9821 | 0.9893 | 0.9981 | 1.0053 | 1.0141 |
EUR/JPY | 106.74 | 108.65 | 109.65 | 111.56 | 112.56 | 114.47 | 115.47 |
GBP/JPY | 123.45 | 125.45 | 126.52 | 128.52 | 129.59 | 131.59 | 132.66 |
CHF/JPY | 86.58 | 87.08 | 87.36 | 87.86 | 88.14 | 88.64 | 88.92 |
AUD/JPY | 74.53 | 76.25 | 77.28 | 79.00 | 80.03 | 81.75 | 82.78 |
EUR/GBP | 0.8599 | 0.8629 | 0.8649 | 0.8679 | 0.8699 | 0.8729 | 0.8749 |
EUR/CHF | 1.2252 | 1.2419 | 1.2519 | 1.2686 | 1.2786 | 1.2953 | 1.3053 |
GBP/CHF | 1.4146 | 1.4329 | 1.4441 | 1.4624 | 1.4736 | 1.4919 | 1.5031 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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