Pulse of the Market
· Greenback gave up a recovery opportunity on NFPs and the Fed’s steady policy shift
· Euro investors’ anxiety with rate potential guarantees a volatile ECB decision
· British Pound could collapse without hawkish concerns from the BoE this week
· Australian Dollar rally will face reality after the RBA announces its pass on rates
The U.S Dollar ended Friday’s trading session lower against the basket of major currencies pressured by dovish comments from FED Dudley. The better than expected U.S non-farm payrolls report sparked a risk rally across the financial markets that drove the Aussie to a fresh record high and the Loonie to a 3 year high. Recent comments from Fed officials suggest growing motivation within the central bank to normalize monetary policy and the latest payrolls report reinforces that need. A steady recovery, weak Dollar and high commodity prices has made central bank officials more optimistic about the outlook for U.S growth while also raising concerns about inflation and asset bubbles. On the economic docket Friday, the March non-farm payrolls report showed U.S companies added 216k jobs and the unemployment rate fell to the lowest level in 2 years. The manufacturing sector actually saw slower job growth with only 17k jobs added compared to 32k the previous month. Euro staged a remarkable rally on Friday after dipping as low as 1.4056 following the U.S non-farm payrolls release. The resilience of the Euro was exceptionally impressive considering that Standard & Poor’s downgraded Ireland’s sovereign debt rating and Fitch warned about the possibility of their own downgrade in the near future. Both rating agencies currently have Ireland at the same level but a downgrade by Fitch would move Irish debt one step closer to junk. However none of these rating actions have discouraged investors from buying Euros in anticipation of the first rate change in nearly two years. At the last monetary policy meeting in March, ECB President Trichet said interest rates could be increased as early as April. Since then, the central bank’s message has been very consistent with a number of ECB officials restating the need for tighter monetary policy. Cable strengthened against all of its major counterparts in Friday’s session. Sterling pared Thursday’s losses against the U.S Dollar, and continued its rally against the Yen. Aside from the BoE rate decision, service sector PMI, industrial production and producer prices are the numbers to watch this week. The Japanese yen continued to weaken against all the majors, as risk in the markets led the lower yielding currency to slip to a 6 month low against the Greenback. Tankan Manufacturing Index report, based on surveys of large manufacturers’ business sentiments came in line with the forecast of 6 while the Non-manufacturing Index printed a higher than expected 3 against the expected 2. If Yen continues its current trend, it’s likely that no further intervention efforts will be necessary.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 08:30 | U.K PMI Construction (MAR) | Medium | | 54.8 | 56.5 |
| 08:30 | Euro Zone Sentix Investor Confidence (APR) | Low | | 16.0 | 17.1 |
| 09:00 | Euro Zone Producer Price Index (MoM) (FEB) | Low | | 0.8% | 1.5% |
| 14:30 | Canada Business Outlook Future Sales (1Q) | Low | | 26.5 | 22.0 |
| 23:30 | Australia AiG Performance of Service Index (MAR) | Medium | | | 48.7 |
Euro
The Single Currency was extremely volatile in Friday’s trading session plummeting after the U.S data to the lower 1.4000 region before reversing above 1.4200 on strong EUR/JPY and risk appetite. On the economic docket, February Unemployment rate fell to 9.9% vs. 10.0%. Overall the EUR/USD traded with a low of 1.4056 and a high of 1.4244 before closing the day around 1.4222 in the New York session.
Yen
The Japanese Yen was under heavy selling pressure with the strong U.S jobs data sending the USD/JPY soaring above 84.00 Yen and EUR/JPY to 120.00 Yen. The return of the carry trade is on everyone's minds with the markets still thousands of pips off 2007 levels. Overall the USD/JPY traded with a low of 83.11 and a high of 84.72 before closing the day around 84.09 in the New York session.
British Pound
The British Pound challenged the Euro in volatility risks plunging through 1.6000 before reversing and soaring above 1.6100 in late U.S session. The market is still mixed on the British Pound’s outlook and this is best highlighted in the EUR/GBP which continues to grind higher on Pound underperformance. Overall the GBP/USD traded with a low of 1.5969 and a high of 1.6131 before closing the day at 1.6113 in the New York session.
Australian Dollar
The Australian Dollar was able to record fresh post float all time highs near 1.0400 on the back of very strong AUD/JPY flows and positive global investor risk appetite. Gold fell but Oil was able to soar once again to $108 a barrel and is a better indication of commodities strength. Overall the AUD/USD traded with a low of 1.0313 and a high of 1.0389 before closing the day at 1.0384 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 also issuing a bullish stance. The RSI is above 72 and lies above the neutral zone. Overall, the cross has gained 1.65%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 64 reading and lies above the neutral zone. The pair has gained 1.72%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 71 reading and lies above the neutral region. The cross has gained 1.61%.
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 65 reading and lies above the neutral region. The pair has lost 0.07%.
Sterling-Swiss
This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 52 and lies above the neutral region. The pair has gained 1.13%.
Appendix
Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3916 | 1.3986 | 1.4104 | 1.4174 | 1.4292 | 1.4362 | 1.4480 |
| USD/JPY | 81.62 | 82.36 | 83.23 | 83.97 | 84.84 | 85.58 | 86.45 |
| GBP/USD | 1.5849 | 1.5909 | 1.6011 | 1.6071 | 1.6173 | 1.6233 | 1.6335 |
| USD/CHF | 0.9012 | 0.9096 | 0.9171 | 0.9255 | 0.9330 | 0.9414 | 0.9489 |
| USD/CAD | 0.9532 | 0.9578 | 0.9611 | 0.9657 | 0.9690 | 0.9736 | 0.9769 |
| EUR/JPY | 116.21 | 116.96 | 118.28 | 119.03 | 120.35 | 121.10 | 122.42 |
| GBP/JPY | 131.34 | 132.29 | 133.90 | 134.85 | 136.46 | 137.41 | 139.02 |
| CHF/JPY | 89.90 | 90.17 | 90.54 | 90.81 | 91.18 | 91.45 | 91.82 |
| AUD/JPY | 84.39 | 85.10 | 86.16 | 86.87 | 87.93 | 88.64 | 89.70 |
| EUR/GBP | 0.8746 | 0.8769 | 0.8797 | 0.8820 | 0.8848 | 0.8871 | 0.8899 |
| EUR/CHF | 1.2890 | 1.2949 | 1.3050 | 1.3109 | 1.3210 | 1.3269 | 1.3370 |
| GBP/CHF | 1.4542 | 1.4632 | 1.4766 | 1.4856 | 1.4990 | 1.5080 | 1.5214 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
No comments:
Post a Comment