Pulse of the Market
· Dollar bounced back as uncertainties surrounding the world economy dragged on market sentiment
· Heightening fears surrounding the sovereign debt crisis continued to bear down on the Euro
· The Bank of England voted 6-3 earlier this month to keep the benchmark interest rate at 0.50%
· Japanese Yen narrowly outperformed in quiet trade as stocks declined for the first in four days
The Greenback ended yesterday’s trading session higher against most of the major currencies. The U.S Dollar was supported by ongoing uncertainty about radiation exposure in Japan, the conflicts in Libya, the explosion at a bus stop in Jerusalem and the risk of the Portuguese government collapsing. However the gains in the U.S Dollar were not completely steady as the Greenback continued to lose value against the commodity currencies. Housing market data out of the U.S remained weak with new home sales plunged 16.9 percent in the month of Feb. The number of units sold was the lowest ever and unsurprisingly, prices also fell sharply. The housing market continues to be one of the weakest parts of the U.S economy. Durable goods orders and jobless claims are due for release in today’s trading session. The Single Currency ended the session lower against the U.S Dollar pressured as the Portuguese Parliament rejected the government’s austerity plan. The Euro had been traded weak throughout yesterday’s session on concern that the Portuguese government could collapse if the Parliament fails to approve the deficit reduction plan. As that Parliament has voted no, the risk of a political crisis in Portugal is extremely high. If the government collapses and the Prime Minister resigns, the Euro could come under additional selling pressure. Euro Zone industrial new orders came out much softer than expected with orders hoist a mere 0.1 percent in January. Manufacturing and service sector PMI numbers are due for release today. Cable traded sharply lower following U.K Chancellor Osborne's budget speech. Aside from cutting the country's 2011 and 2012 growth forecast, he also announced that they will be purchasing a range of high quality assets which is essentially equivalent of additional Quantitative Easing. Osborne expects the economy to grow by only 1.7 percent in 2011 and 2.5 percent in 2012. On the economy, Osborne expects unemployment to peak this year and inflation to drop to 2.5 percent next year, which would be well below its current 4.4 percent rate of growth. The Japanese Yen traded higher against all of the major currencies except for the Australian Dollar. The Japanese government estimated the damage from the earthquake to be as much as 25 trillion Yen. This is the first official estimate provided by the government and includes the damage to the nuclear facilities.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| | EU Summit in Brussels | High | | | |
| 08:30 | German Purchasing Manager Index Manufacturing (MAR) | Medium | | 62.0 | 62.7 |
| 09:00 | Euro Zone Purchasing Manager Index Manufacturing (MAR) | Medium | | 58.3 | 59.0 |
| 09:30 | U.K Retail Sales w/Auto Fuel (MoM) | Medium | | -0.6% | 1.9% |
| 12:30 | U.S Durable Goods Orders (FEB) | Medium | | 1.2% | 3.2% |
| 12:30 | U.S Initial Jobless Claims (MAR 19) | Medium | | 383K | 385K |
| 23:30 | Tokyo Consumer Price Index (YoY) (MAR) | High | | -0.1% | -0.1% |
Euro
The Single Currency was under selling pressure throughout yesterday’s trading session as the market watched Portugal Debt yields spike higher on concerns that austerity measures would be delayed after a vote in parliament failed. The Prime Minister resigned and could prompt a spontaneous election. Overall the EUR/USD traded with a low of 1.4086 and a high of 1.4213 before closing the day around 1.4088 in the New York session.
Yen
The Japanese Yen kept in tight range in a very quiet trading session for another day with the market moving further on the crosses. The EUR/JPY fell following the Portugal news but the AUD/JPY remained strong and edged higher with stocks. Overall the USD/JPY traded with a low of 80.69 and a high of 81.06 before closing the day around 80.90 in the New York session.
British Pound
The British Pound traded lower following the bearish UK budget with downgrades to the economic outlook hurting the GBP/USD. EUR/GBP was able to fall though with the Euro outpacing to the downside and many market players are happy to buy Pound on weakness. Overall the GBP/USD traded with a low of 1.6217 and a high of 1.6382 before closing the day at 1.6235 in the New York session.
Canadian Dollar
The Canadian Dollar held steady against the Greenback yesterday. The Canadian Dollar failed to benefit from the rise in oil prices due in part to the big downward surprise in Canadian retail sales data released on Tuesday. No economic data is scheduled for release from the commodity producing country in today’s trading session. Overall the USD/CAD traded with a low of 0.9790 and a high of 0.9841 before closing the day at 0.9814 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 issuing a bearish stance. The RSI is above 52 and lies above the neutral zone. Overall the cross has lost 0.80%.
Sterling-Yen
Currently GBPJPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 48 reading and lies below the neutral zone. The pair has lost 0.84%.
Aussie-Yen
Currently, the cross is trading above 14 and below 50, 100 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 50 reading and lies above the neutral region. The cross has gained 0.23%.
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 58 reading and lies above the neutral region. The pair has gained 0.05%.
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 lost 0.24%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3918 | 1.4002 | 1.4045 | 1.4129 | 1.4172 | 1.4256 | 1.4299 |
| USD/JPY | 80.34 | 80.51 | 80.71 | 80.88 | 81.08 | 81.25 | 81.45 |
| GBP/USD | 1.6009 | 1.6113 | 1.6174 | 1.6278 | 1.6339 | 1.6443 | 1.6504 |
| USD/CHF | 0.8901 | 0.8939 | 0.9011 | 0.9049 | 0.9121 | 0.9159 | 0.9231 |
| USD/CAD | 0.9738 | 0.9764 | 0.9789 | 0.9815 | 0.9840 | 0.9866 | 0.9891 |
| EUR/JPY | 112.35 | 113.09 | 113.54 | 114.28 | 114.73 | 115.47 | 115.92 |
| GBP/JPY | 129.20 | 130.17 | 130.75 | 131.72 | 132.30 | 133.27 | 133.85 |
| CHF/JPY | 87.58 | 88.25 | 88.65 | 89.32 | 89.72 | 90.39 | 90.79 |
| AUD/JPY | 80.64 | 80.97 | 81.47 | 81.80 | 82.30 | 82.63 | 83.13 |
| EUR/GBP | 0.8574 | 0.8613 | 0.8645 | 0.8684 | 0.8716 | 0.8755 | 0.8787 |
| EUR/CHF | 1.2645 | 1.2690 | 1.2744 | 1.2789 | 1.2843 | 1.2888 | 1.2942 |
| GBP/CHF | 1.4473 | 1.4551 | 1.4649 | 1.4727 | 1.4825 | 1.4903 | 1.5001 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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