FOREX Newsletter
Pulse of the Market
· Dollar finds a lack of support for the early shift in rate speculation from the FOMC
· Euro endures yet another downgrade for Portugal, more pressure for a post ECB
· British Pound rallied after a strong reading from usually overlooked economic data
· Japanese Yen extended its plunge the market prepares for further BoJ stimulus
The U.S Dollar ended yesterday’s trading session lower against most of the major currencies. Currencies and equities ended the session in positive territory, a sign of continued optimism amongst investors who shrugged off all of the bad news to focus only on stronger earnings. This included a softer non-manufacturing ISM report, a rate hike by China and another sovereign debt downgrade in Europe. According to the minutes from the March FOMC meeting, the Federal Reserve has grown more comfortable and optimistic about the outlook for the U.S economy. The unemployment rate has declined but there is still substantial slack in the labor market, the housing market remains depressed and consumer spending growth is modest. For the first time in 7 months, service sector activity slowed with the ISM non-manufacturing index falling to 57.3 from 59.7. The Single Currency recovered its earlier losses to end the session unchanged against the Greenback. For the second time in less than a month, Moody’s downgraded Portugal’s sovereign debt rating. The downgrade combined with weaker Euro Zone retail sales initially weighed on the Euro but the prospect of a rate hike from the European Central Bank this week has helped to keep the currency pair afloat. The action by Moody’s was not particularly surprising because the rating agency previously warned that political troubles could lead to further downgrades. Euro Zone PMI numbers were revised higher for the month of March. German factory orders and the final Euro Zone GDP numbers are due for release today. The British Pound was yesterday’s best performing currency, rising approximately 1 percent against Euro and the U.S Dollar. The currency’s rally against the Euro was the strongest since the beginning of the year. Service sector activity grew at the fastest pace in more than the year. The PMI index jumped from 52.6 to 57.1 on the heels of higher sales. For the first time in 9 months, the employment component of the report also increased, although only slightly. The Japanese Yen weakened against all of the major currencies yesterday, falling to 11 month lows against the Euro, Pound, Aussie and Loonie. Speculation that the Japanese central bank is lagging behind in monetary policy normalization, as other central banks look to raise rates in the near future, is causing the Yen to weaken.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| | U.K NIESR Gross Domestic Product Estimate (MAR) | High | | | 0.2% |
| 07:15 | Switzerland Consumer Price Index MoM (MAR) | Medium | | 0.2% | 0.4% |
| 08:30 | U.K Industrial Production (MoM) (FEB) | Medium | | 0.4% | 0.5% |
| 08:30 | U.K Manufacturing Production (MoM) (FEB) | Medium | | 0.6% | 1.0% |
| 09:00 | Euro Zone Gross Domestic Product s.a. (QoQ) (4Q) | High | | 0.3% | 0.3% |
| 11:00 | U.S MBA Mortgage Applications (APR 1) | Low | | | -7.5% |
| 14:00 | Canada Ivey Purchasing Managers Index (MAR) | Medium | | 65.0 | 69.3 |
Euro
The Single Currency fell to 1.4150 in yesterday’s European trading session but reversed aggressively after U.S stocks rose and Euro managed to close above 1.4200. The Dovish FOMC Minutes should continue to support the Euro ahead of the ECB meeting tomorrow where a raise is now consensus. Overall, the EUR/USD traded with a low of 1.4151 and a high of 1.4245 before closing the day around 1.4222 in the New York session.
Yen
The Japanese Yen broke above 85.00 Yen in a strong move higher lifting all the crosses with the market beginning a new trend. The close above 85.00 Yen is going to help bolster the move higher and if crosses continue to rally then the major may test 87.00 Yen in coming weeks. Overall, the USD/JPY traded with a low of 84.02 and a high of 85.86 before closing the day around 84.85 in the New York session.
British Pound
The British Pound traded higher in yesterday’s trading session with the rest of the market soaring across the board. GBP/JPY surged over 300 pips above 139.00 Yen after hitting lows below 125.00 Yen in recent weeks. The market reversed on the EUR/GBP and pushed GBP/USD near to 1.6300. Overall, the GBP/USD traded with a low of 1.6090 and a high of 1.6296 before closing the day at 1.6295 in the New York session.
Canadian Dollar
The Canadian Dollar extended its gains against the U.S Dollar. Canada’s IVEY PMI report is due for release today and a pullback is expected after the sharp rise in February. However even if the IVEY report shows slower manufacturing activity, the Canadian economy is still performing very well with wholesale sales and leading indicators growing more than the previous month. Overall, the USD/CAD traded with a low of 0.9625 and a high of 0.9691 before closing the day at 0.9635 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 76 and lies above the neutral zone. Overall, the cross has gained 0.98%.
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 72 reading and lies above the neutral zone. The pair has gained 1.99%.
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 74 reading and lies above the neutral region. The cross has gained 0.62%.
Euro-Sterling
This cross is trading below 14 and above 50, 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 53 reading and lies above the neutral region. The pair has lost 1.00%.
Sterling-Swiss
This cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 60 and lies above the neutral region. The pair has gained 1.27%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4073 | 1.4112 | 1.4167 | 1.4206 | 1.4261 | 1.4300 | 1.4355 |
| USD/JPY | 83.45 | 83.74 | 84.29 | 84.58 | 85.13 | 85.42 | 85.97 |
| GBP/USD | 1.5952 | 1.6021 | 1.6158 | 1.6227 | 1.6364 | 1.6433 | 1.6570 |
| USD/CHF | 0.9145 | 0.9174 | 0.9213 | 0.9242 | 0.9281 | 0.9310 | 0.9349 |
| USD/CAD | 0.9544 | 0.9584 | 0.9610 | 0.9650 | 0.9676 | 0.9716 | 0.9742 |
| EUR/JPY | 118.35 | 118.83 | 119.75 | 120.23 | 121.15 | 121.63 | 122.55 |
| GBP/JPY | 133.64 | 134.58 | 136.42 | 137.36 | 139.20 | 140.14 | 141.98 |
| CHF/JPY | 90.51 | 90.76 | 91.22 | 91.47 | 91.93 | 92.18 | 92.64 |
| AUD/JPY | 86.01 | 86.38 | 87.01 | 87.38 | 88.01 | 88.38 | 89.01 |
| EUR/GBP | 0.8582 | 0.8647 | 0.8687 | 0.8752 | 0.8792 | 0.8857 | 0.8897 |
| EUR/CHF | 1.2973 | 1.3012 | 1.3086 | 1.3125 | 1.3199 | 1.3238 | 1.3312 |
| GBP/CHF | 1.4693 | 1.4771 | 1.4924 | 1.5002 | 1.5155 | 1.5233 | 1.5386 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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