Pulse of the Market
· Greenback closed its first advance in a week but fundamental drive is still missing
· Euro tested a five month high following this week’s ECB rate decision
· British Pound looks at building fundamental interests as rate expectations brighten
· Australian Dollar weathers the RBA’s decision to hold rates
U.S Dollar held steady against most of the major currencies in yesterday’s trading session. There has been little reason for recovery in the U.S Dollar with no U.S economic data on the calendar. Four central banks will be making monetary policy announcements this week and the minutes from the last Fed meeting should shed light on how far behind the Federal Reserve is from everyone else. However the market is still only charging in a 55 percent chance of a rate hike by the Fed this year compared to a 100 percent chance of a rate hike by the European Central Bank on Thursday. Aside from the FOMC minutes, the non-manufacturing ISM report will also be released in today’s session. The Single Currency rose to a fresh one year high against the U.S Dollar on intraday basis in anticipation of the first rate hike by the European Central Bank in more than 2 years. Central bank officials have made it very clear that the normalization of monetary policy needs to happen now. According to the latest report, Euro Zone producer price growth eased in the month of February. PPI rose 0.8 percent compared to 1.3 percent the previous month. In spite of continued downgrades by rating agencies and the earthquake in Japan, the ECB still believes that the normalization needs to begin now. Euro Zone retail sales are due for release today along with the final service sector PMI reports. Cable strengthened against the U.S Dollar and Euro following a better than expected construction sector PMI report. Activity in the sector stayed near an 8 month high thanks to a significant increase in residential construction and sharp rise in raw material costs. The Japanese Yen traded higher against the Euro, U.S, Australian and Canadian Dollars. With no major Japanese economic data released yesterday and little volatility in the equity markets, the main reason for the rally in the Yen could be repatriation. The Australian and Canadian Dollars finally took a break from their persistent rallies after rising for four straight trading sessions.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| | U.K Halifax House Price (3MoY) (MAR) | Low | | -2.8% | -2.8% |
| 01:30 | Australia Trade Balance (Australian dollar) (FEB) | High | -205M | 1200M | 1433M |
| 04:30 | Australia Reserve Bank of Australia Rate Decision (APR) | High | 4.75% | 4.75% | 4.75% |
| 07:55 | German Purchasing Manager Index Services (MAR) | Medium | | 60.1 | 60.1 |
| 08:00 | Euro Zone Purchasing Manager Index Services (MAR) | Medium | | 56.9 | 56.9 |
| 08:30 | U.K Purchasing Manager Index Services (MAR) | Medium | | 52.6 | 52.6 |
| 09:00 | Euro Zone Retail Sales (MoM) (FEB) | Medium | | 0.1% | 0.2% |
| 14:00 | U.S ISM Non-Manufacturing Composite (MAR) | Medium | | 59.5 | 59.7 |
| 18:00 | U.S FOMC Meeting Minutes | High | | | |
Euro
The Single Currency kept to a small range consolidating the gains on Friday ahead of the key European Central Bank meeting on Thursday. February Producer Price Index was still high at 6.6% y/y. Also of note was the drop in Euro Zone investor confidence to 14.2 vs. 17.1 previously. Overall the EUR/USD traded with a low of 1.4192 and a high of 1.4267 before closing the day around 1.4219 in the New York session.
Yen
The Japanese Yen found support under 84.00 Yen to finish just above the figure on a strong footing. The pullbacks have been very subdued and a test of 85.00 Yen is likely in the coming months. EUR/JPY and AUD/JPY experienced slight profit taking as well but are still supported on dips. Overall the USD/JPY traded with a low of 83.84 and a high of 84.29 before closing the day around 84.04 in the New York session.
British Pound
The British Pound managed two attempts higher but failed at 1.6180 resistance level and pulled back to opening levels yesterday. On the economic docket, March Construction Purchasing Manager Index was only slightly less at 56.5 vs. 56.4 previously. Overall the GBP/USD traded with a low of 1.6106 and a high of 1.6176 before closing the day at 1.6130 in the New York session.
Australian Dollar
The Australian Dollar suffered the most, profit taking from very lofty levels above 1.0400 earlier in yesterday’s session. The Market is still very bullish towards the Aussie. 1.0500 is the target of many local banks and could be strong resistance. Also adding to the profit taking was the upcoming RBA decision today. Overall the AUD/USD traded with a low of 1.0335 and a high of 1.0416 before closing the day at 1.0361 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 71 and lies above the neutral zone. Overall, the cross has lost 0.08%.
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 0.05%.
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 70 reading and lies above the neutral region. The cross has lost 0.16%.
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 64 reading and lies above the neutral region. The pair has lost 0.12%.
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 51 and lies above the neutral region. The pair has lost 0.08%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4110 | 1.4151 | 1.4185 | 1.4226 | 1.4260 | 1.4301 | 1.4335 |
| USD/JPY | 83.37 | 83.61 | 83.82 | 84.06 | 84.27 | 84.51 | 84.72 |
| GBP/USD | 1.6029 | 1.6067 | 1.6099 | 1.6137 | 1.6169 | 1.6207 | 1.6239 |
| USD/CHF | 0.9121 | 0.9156 | 0.9192 | 0.9227 | 0.9263 | 0.9298 | 0.9334 |
| USD/CAD | 0.9555 | 0.9585 | 0.9626 | 0.9656 | 0.9697 | 0.9727 | 0.9768 |
| EUR/JPY | 118.22 | 118.69 | 119.10 | 119.57 | 119.98 | 120.45 | 120.86 |
| GBP/JPY | 134.20 | 134.68 | 135.13 | 135.61 | 136.06 | 136.54 | 136.99 |
| CHF/JPY | 90.34 | 90.56 | 90.80 | 91.02 | 91.26 | 91.48 | 91.72 |
| AUD/JPY | 85.68 | 86.18 | 86.63 | 87.13 | 87.58 | 88.08 | 88.53 |
| EUR/GBP | 0.8742 | 0.8767 | 0.8790 | 0.8815 | 0.8838 | 0.8863 | 0.8886 |
| EUR/CHF | 1.2976 | 1.3030 | 1.3077 | 1.3131 | 1.3178 | 1.3232 | 1.3279 |
| GBP/CHF | 1.4730 | 1.4782 | 1.4835 | 1.4887 | 1.4940 | 1.4992 | 1.5045 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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