Forex Bulletin, April 29, 2011

FOREX Newsletter

Pulse of the Market

·      U.S economy expanded by 1.8 percent in the first quarter, which was less than the market had anticipated

·      The latest Euro Zone economic reports showed continued strength in the Germany but weakness in France

·      U.K Consumer Confidence printed a two year low of -31 for the month of April

·      Canadian Dollar held steady against the U.S Dollar while the Australian Dollar climbed to a fresh record high

The U.S Dollar ended yesterday’s trading session lower against most of the major currencies. All of the speculation in recent weeks was aimed at FOMC meeting. Now that the meeting is over and Ben Bernanke has let the world be acquainted with the level of stimulus will remain unchanged when the asset purchase program is completed in June. The Federal Reserve will keep monetary policy easy into the third quarter and possibly even the fourth quarter, which means that from the perception of interest rate gap, the Dollar will bid very little. Personal income, personal spending, Chicago PMI and the Personal Consumption Expenditure numbers are scheduled for release today. Yesterday's weaker U.S economic reports added additional pressure on the Dollar. The U.S economy expanded by 1.8 percent in the first quarter, which was less than the market had anticipated and significantly weaker than the fourth quarter. The big surprise came from jobless claims which rose to 429k from an upwardly revised 404k. The Euro traded slightly higher against the U.S Dollar. Initially the Single Currency rose to a fresh one year high during the Asian trading session but trended lower for the rest of the day. By the end of the session, the Euro had given up nearly two thirds of its earlier gains. The latest Euro Zone economic reports showed continued strength in the Germany but weakness in France. The number of people claiming unemployment benefits declined by 37k in April, leaving the jobless rate at a record low of 7.1 percent. Cable traded as high as 1.6745 during the Asian trading session but ended the day just a few pips off its lows. Yesterday’s the Gfk Consumer Confidence report came out much worse than expected. The monthly consumer confidence survey was expected to fall in line with the previous month’s -28 level, but instead printed a two year low of -31 for the month of April. U.K markets are closed today for the Royal Wedding, so investors should expect less liquidity in the foreign exchange market today. The Japanese Yen traded higher against all of the major currencies despite weak economic data. Industrial production and household spending contracted at record pace. The only economic statistic that showed no deterioration was the unemployment rate which remained at 4.6% against expectations of a rise to 4.8%.

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
06:00	EUR Germany Retail Sales MoM (MAR)	Medium		0.2%	-0.4%
09:00	EUR Euro-Zone Consumer Confidence (APR)	Medium		-11.4	-11.4
09:00	EUR Euro-Zone Unemployment Rate (MAR)	Medium		9.9%	9.9%
09:30	CHF KOF Swiss Leading Indicator (APR)	Medium		2.20	2.24
12:30	CAD Gross Domestic Product (MoM) (FEB)	High		0.0%	0.5%
12:30	USD Personal Spending (MAR)	Medium		0.5%	0.7%
13:55	USD U. of Michigan Confidence (APR)	High		70.0	69.6

Euro

The Single Currency extended gains against the U.S Dollar after the Fed's interest rate announcement and Bernanke's press conference. Domestically, The Euro stat reported industrial new orders in the Euro Zone rose 0.9% m/m to a 21.3% y/y gain. Meanwhile, the Federal Labor Office showed the number of unemployed in Germany fell by 37,000, more than expected in April, its lowest point since 1992. Overall, the EUR/USD traded with a low of 1.4768 and a high of 1.4881 before closing the day around 1.4822 in the New York session.

Yen

The Japanese Yen gained on the dollar as the BOJ kept its monetary policy steady. As widely expected, the central bank kept its interest rates unchanged at a range of 0-0.1% by unanimous vote and pushed off on any further loosening policy. Domestically, construction orders year over year dropped to -11.0% from the previous month at +19.5%. In addition, Japan's housing starts year over year plummeted to -2.4% from the previous month at +10.1%. Overall, the USD/JPY traded with a low of 81.39 and a high of 82.26 before closing the day around 81.51 in the New York session.

British Pound

The British Pound stood at near a 17 month high against the U.S Dollar in yesterday’s trading session as investors took a more bearish stance on the Greenback after the Fed's announcement. U.K consumer confidence unexpectedly sank as the people bared the pressure of public spending cuts. The GfK consumer confidence index fell to -31 in April from -29 in March, the lowest reading since January 2009. Overall, the GBP/USD traded with a low of 1.6620 and a high of 1.6745 before closing the day at 1.6630 in the New York session.

Australian Dollar

The Australian Dollar climbed to a fresh record high. No major economic data was released from the country yesterday but the Aussie has performed extremely well thanks in large part to the persistent rise in Gold prices and the weakness of the U.S Dollar. Although Australian interest rates are among the highest in the developed world and rising commodity prices provide a further boost to the economy, the RBA is in no position to raise interest rates with the AUD/USD trading at such a high level. Overall, the AUD/USD traded with a low of 1.0851 and a high of 1.0947 before closing the day at 1.0927 in the New York session.

Euro-Yen

EUR/JPY 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 59 and lies above the neutral zone. Overall, the cross has lost 0.53%.

Sterling-Yen

Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 53 reading and lies above the neutral zone. The pair has lost 0.75%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 61 reading and lies above the neutral region. The cross has lost 0.25%.

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 61 reading and lies above the neutral region. The pair has gained 0.21%.

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 0.10%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.4164	1.4246	1.4383	1.4465	1.4602	1.4684	1.4821
USD/JPY	81.32	81.78	82.17	82.63	83.02	83.48	83.87
GBP/USD	1.6212	1.6259	1.6331	1.6378	1.6450	1.6497	1.6569
USD/CHF	0.8707	0.8791	0.8834	0.8918	0.8961	0.9045	0.9088
USD/CAD	0.9424	0.9460	0.9491	0.9527	0.9558	0.9594	0.9625
EUR/JPY	116.52	117.38	118.64	119.50	120.76	121.62	122.88
GBP/JPY	133.64	134.15	134.79	135.30	135.94	136.45	137.09
CHF/JPY	90.87	91.29	92.13	92.55	93.39	93.81	94.65
AUD/JPY	85.68	86.24	87.34	87.90	89.00	89.56	90.66
EUR/GBP	0.8696	0.8737	0.8794	0.8835	0.8892	0.8933	0.8990
EUR/CHF	1.2776	1.2831	1.2862	1.2917	1.2948	1.3003	1.3034
GBP/CHF	1.4386	1.4472	1.4518	1.4604	1.4650	1.4736	1.4782

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)

Forex Bulletin, April 28, 2011

FOREX Newsletter

Pulse of the Market

·      Greenback tumbled after Bernanke curbs speculation of a timely stimulus withdrawal

·      Euro climbed on Dollar’s weakness, though data and Bank of Portugal credit outlook deteriorate

·      British Pound rallied after an in line first quarter GDP reading

·      Bank of Japan left rates unchanged and holds its policy completely unchanged

 

The U.S Dollar ended yesterday’s trading session lower against the basket of major currencies. Ben Bernanke achieved his goal of providing greater transparency to the market and preparing everyone for an end to asset purchases in June. Fed plans to continue easy monetary policy confirms that the doves remain in control and explains why the Greenback has weakened on the heels of Bernanke’s comments. Anyone hoping for the Fed to end their asset purchases early was very much disappointed because the central bank plans to complete their $600 billion purchases of Treasury Securities on schedule at the end of June. The main takeaway from Bernanke’s comments yesterday was that the Federal Reserve believes there isn’t much they can do at this point to reduce inflationary pressures and promote growth and so they will continue to maintain stimulus. First quarter GDP numbers are scheduled for release today and Bernanke said in the press conference that he believes GDP growth will be less than 2 percent. The Euro rose to a fresh one year high against the U.S Dollar after Ben Bernanke confirmed that the U.S central bank will continue to reinvest payments from maturing securities once the $600 billion asset purchase program is completed in June. Economic data from the Euro Zone was mixed with weakening consumer confidence in Germany offset by rising inflationary pressures. German unemployment numbers are scheduled for release today and based upon the PMI reports, workforce numbers continue to increase at record levels which signal further improvement in the labor market. Cable traded at fresh yearly highs against the Greenback following growth in the U.K economy in the first quarter and U.S Dollar weakness. U.K GDP grew at 0.5% in the first quarter of 2011 recovering from the contraction in Q4 of 2010. Yen traded lower against all of the major currencies after S&P’s downgraded the outlook for Japan’s sovereign debt rating from stable to negative. In the beginning of the year, S&P was worried about political troubles in Japan and slow growth but the earthquake in March has created new problems for the country.

 

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
	JPY BOJ Target Rate (APR 28)	High		0.10%	0.10%
05:00	JPY Annualized Housing Starts (MAR)	Medium		0.814M	0.872M
06:45	EUR French Consumer Spending (MoM) (MAR)	Low		0.2%	0.9%
07:55	EUR German Unemployment Change (APR)	High		-37K	-55K
12:30	USD Gross Domestic Product (Annualized) (1Q)	High		2.0%	3.1%
12:30	USD Gross Domestic Product Price Index (1Q)	High		2.3%	0.4%
12:30	USD Personal Consumption (1Q)	Medium		2.0%	4.0%
12:30	USD Initial Jobless Claims (APR 23)	Low		395K	403K
14:00	USD Pending Home Sales (MoM) (MAR)	Medium		1.5%	2.1%

 Euro

The Single Currency tested 1.4800 in yesterday’s trading session after Ben Bernanke's speech with the market jumping out on the differing monetary policy outlook. February Industrial Orders gained 0.9% vs. 1.0% forecast. The trend is quite strong and now has little resistance up to the medium term 1.5000 target. Until the Fed signals that it too will begin to raise rates, the Euro will remain well supported. Overall, the EUR/USD traded with a low of 1.4632 and a high of 1.4794 before closing the day around 1.4786 in the New York session.

Yen

The Japanese Yen was well supported in yesterday’s European trading session on heavy cross buying with GBP/JPY leading the market higher. U.S Dollar weakness in the U.S session reversed the pair back to 82.00 Yen. The Japanese Yen dropped by more than a percent against the Dollar after S&P lowered its debt rating outlook from "stable" to "negative", citing costs for rebuilding from the country's natural disasters last month. Overall, the USD/JPY traded with a low of 81.25 and a high of 82.78 before closing the day around 82.14 in the New York session.

British Pound

The British Pound was the strongest currency in the market yesterday as the recent underperformance was corrected on strong first quarter GDP and Mortgage data. Mortgages increased 31k in March. The economy grew by 0.5% in the first quarter, erasing a decline of equal size in the last quarter of 2010 as the U.K service industry surged by the most in four years. Overall, the GBP/USD traded with a low of 1.6434 and a high of 1.6636 before closing the day at 1.6627 in the New York session.

Australian Dollar

The Australian Dollar reached yet another all time high in yesterday’s Asian trading session over 1.0878 before pulling back to the 1.0874 level as the Aussie expected to maintain its yield advantage over most other G10 currencies for the projected future. Australian CPI also beat forecast, registering 3.3% versus the 3.0% expected, suggesting that the RBA may consider more interest rate hikes in the near term. Overall, the AUD/USD traded with a low of 1.0774 and a high of 1.0878 before closing the day at 1.0874 in the New York session.

Euro-Yen

EUR/JPY 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 62 and lies above the neutral zone. Overall, the cross has gained 1.72%.

Sterling-Yen

Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 57 reading and lies above the neutral zone. The pair has gained 1.64%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 65 reading and lies above the neutral region. The cross has gained 1.49%.

Euro-Sterling

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is issuing a bearish signal. The RSI is above 60 reading and lies above the neutral region. The pair has gained 0.08%.

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 0.83%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.4164	1.4246	1.4383	1.4465	1.4602	1.4684	1.4821
USD/JPY	81.32	81.78	82.17	82.63	83.02	83.48	83.87
GBP/USD	1.6212	1.6259	1.6331	1.6378	1.6450	1.6497	1.6569
USD/CHF	0.8707	0.8791	0.8834	0.8918	0.8961	0.9045	0.9088
USD/CAD	0.9424	0.9460	0.9491	0.9527	0.9558	0.9594	0.9625
EUR/JPY	116.52	117.38	118.64	119.50	120.76	121.62	122.88
GBP/JPY	133.64	134.15	134.79	135.30	135.94	136.45	137.09
CHF/JPY	90.87	91.29	92.13	92.55	93.39	93.81	94.65
AUD/JPY	85.68	86.24	87.34	87.90	89.00	89.56	90.66
EUR/GBP	0.8696	0.8737	0.8794	0.8835	0.8892	0.8933	0.8990
EUR/CHF	1.2776	1.2831	1.2862	1.2917	1.2948	1.3003	1.3034
GBP/CHF	1.4386	1.4472	1.4518	1.4604	1.4650	1.4736	1.4782

 

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)