Pulse of the Market
· Greenback sees a very early bounce on stalled risk recovery and from weakness in the Euro
· Euro fundamental waves to pick up as a critical Portugal budget vote is due
· British Pound rallies after inflation accelerates and rate watchers countdown to BoE Minutes
· Loonie fell sharply after disappointing retail sales and looming budget impasse
The Greenback ended the yesterday’s trading session on a mixed note as it traded lower against the Cable, Japanese Yen, Swiss Franc, Australian Dollars and higher against the Euro and Canadian Dollar. After the wild swings in the financial market last week, the decline in volatility is likely to be welcomed by both investors and central bankers. The focus will be on the economic docket today with the Parliament voting in Portugal, the minutes from the most recent U.K monetary policy meeting being released along with the U.K budget for the coming financial year. Any major surprises could drive up volatility. U.S New home sales are also scheduled for release today and a mild rebound is expected after a 13 percent decline in January. The Single Currency traded lower against the U.S Dollar yesterday. With Portugal gearing up to vote on budget cuts today, Euro investors have been very cautious with taking the currency pair higher. Portuguese and Irish Credit Default Swap Spreads which measure the cost of insuring against the default have increased, reflecting the growing risk that a bailout may be needed. The Portuguese Parliament is scheduled to discuss the stability and growth program today. There is widespread belief that the austerity measures will not be approved which would be catastrophic for the Portuguese government. No major economic reports were released from the Euro Zone yesterday but industrial new orders will be released today. The Swiss Franc strengthened against the U.S Dollar and Euro following strong trade numbers. The British Pound rose to its highest level in more than a year against the Greenback following stronger than expected inflation pressures. Consumer prices rose 0.7 percent in the month of February, driving the year over year rate of CPI growth up to 4.4 from 4.0 percent. This was the strongest pace of annualized CPI growth in more than 2 years, adding pressure on the Bank of England to raise interest rates. Japanese Yen traded marginally lower against the Cable and Aussie, but gained slightly against the Swiss Franc. Japanese Finance Minister Yoshihiko Noda stated yesterday that the intervention by the G7 nations last week was “significant” in stabilizing the financial markets, which were spooked by the catastrophic earthquake, resulting tsunami, and the potential for a nuclear disaster in Japan.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 09:30 | GBP Bank of England Minutes | High | | | |
| 11:00 | USD MBA Mortgage Applications (MAR 18) | High | | | -0.7% |
| 14:00 | USD New Home Sales (FEB) | Medium | | 290K | 284K |
| 15:00 | EUR Euro-Zone Consumer Confidence (MAR) | Medium | | -11.0 | -10.0 |
| 21:45 | NZD Gross Domestic Product (QoQ) (4Q) | High | | | -0.2% |
| 23:00 | AUD Conference Board Leading Index (JAN) | Medium | | | 0.7% |
| 23:50 | JPY Merchandise Trade Balance Total (Yen) (FEB) | Medium | | ¥897.3B | -¥471.4B |
Euro
The Single Currency reached fresh highs in European session and reversed on concerns that the Portugal Politics will get in the way of austerity measures required for the small EU country to avoid a bailout. Debt costs increasing may reignite the Debt Crisis with Germany a focal critic and close to elections. The ECB moving to raise rates is supporting the EUR/USD although if the Debt crisis reignites they may have to delay action. Overall the EUR/USD traded with a low of 1.4178 and a high of 1.4247 before closing the day around 1.4193 in the New York session.
Yen
The Japanese Yen kept to a 40 pip range around 81.00 Yen in the yesterday’s trading session as the market waited for more Bank of Japan intervention and information from the nuclear plant crisis. AUD/JPY and GBP/JPY continued to track higher and are well supported at highs. Overall the USD/JPY traded with a low of 80.83 and a high of 81.27 before closing the day around 80.95 in the New York session.
British Pound
The British Pound had a good day across the board in the yesterday’s trading session as economic data supported the Cable. February CPI gained 0.7% m/m to bring the y/y to 4.4% which was well above the target rate. March CBI Industrial Orders were strong at +5 in March. Overall the GBP/USD traded with a low of 1.6291 and a high of 1.6400 before closing the day at 1.6362 in the New York session.
Canadian Dollar
The Canadian Dollar weakened against the Greenback in the yesterday’s trading session. A contraction in retail sales in the month of January sent the Canadian Dollar plunging against the U.S Dollar. Consumer spending fell 0.3 percent in the beginning of the year due to a surprise decline in automobile purchases. Overall the USD/CAD traded with a low of 0.9745 and a high of 0.9811 before closing the day at 0.9806 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 55 and lies above the neutral zone. Overall the cross has lost 0.29%.
Sterling-Yen
Currently GBPJPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 52 reading and lies above the neutral zone. The pair has gained 0.23%.
Aussie-Yen
Currently, the cross is trading above 14 and below 50, 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 48 reading and lies below the neutral region. The cross has gained 0.33%.
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 56 reading and lies above the neutral region. The pair has lost 0.54%.
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 42 and lies below the neutral region. The pair has gained 0.22%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4096 | 1.4137 | 1.4165 | 1.4206 | 1.4234 | 1.4275 | 1.4303 |
| USD/JPY | 80.32 | 80.58 | 80.76 | 81.02 | 81.20 | 81.46 | 81.64 |
| GBP/USD | 1.6193 | 1.6242 | 1.6302 | 1.6351 | 1.6411 | 1.6460 | 1.6520 |
| USD/CHF | 0.8968 | 0.8990 | 0.9012 | 0.9034 | 0.9056 | 0.9078 | 0.9100 |
| USD/CAD | 0.9698 | 0.9721 | 0.9764 | 0.9787 | 0.9830 | 0.9853 | 0.9896 |
| EUR/JPY | 113.92 | 114.37 | 114.63 | 115.08 | 115.34 | 115.79 | 116.05 |
| GBP/JPY | 130.61 | 131.18 | 131.82 | 132.39 | 133.03 | 133.60 | 134.24 |
| CHF/JPY | 88.90 | 89.17 | 89.37 | 89.64 | 89.84 | 90.11 | 90.31 |
| AUD/JPY | 80.45 | 80.84 | 81.31 | 81.70 | 82.17 | 82.56 | 83.03 |
| EUR/GBP | 0.8576 | 0.8617 | 0.8645 | 0.8686 | 0.8714 | 0.8755 | 0.8783 |
| EUR/CHF | 1.2723 | 1.2768 | 1.2796 | 1.2841 | 1.2869 | 1.2914 | 1.2942 |
| GBP/CHF | 1.4575 | 1.4633 | 1.4708 | 1.4766 | 1.4841 | 1.4899 | 1.4974 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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