FOREX Newsletter
Pulse of the Market
· Dollar ended the week by hitting a fresh 17 month low as rate expectations halted
· Euro surged against the Greenback and Yen but its progress is limited in another places
· Cable was one of the few currencies that struggled to make headway against the Dollar
· Yen tuned into capital markets and risk appetite trends as the only threat to trend
The U.S Dollar has performed appallingly since the beginning of the year and in Friday’s trading session it has fallen to fresh lows against many of major currencies. The Greenback is currently at its weakest level against the Euro and British Pound in more than a year and its weakest level against the Loonie in more than 3 years. The Aussie on the other hand continues to be pushed to fresh record highs as a result of the Greenback’s weakness. Aside from driving up the value of other currencies, the recent sell-off in the U.S Dollar has also pushed commodity prices higher across the globe. The historically low level of U.S interest rates and extremely accommodative monetary policy combined with growing deficits has made the Greenback one of the most unattractive currencies to invest in. There are a lot of important U.S economic data on the calendar this week which includes inflation, consumer spending and trade numbers along with the Empire State, industrial production and University of Michigan Consumer Confidence reports. Euro ended Friday’s trading session sharply higher against the U.S Dollar. The recent interest rate hike by the European Central Bank has proven to be extremely positive for the Single Currency. The 25bp rate hike by the ECB on Thursday widened the distance between U.S and European yields. Sovereign debt troubles remain in the background but for the time being it matters little to the Euro. Portugal has officially requested aid from the IMF who responded by assurance to move quickly on holding discussions with the Portuguese government. According to the EU the bailout program for Portugal should be approximately 80 billion Euros which is the same amount provided to Ireland. Numbers of economic reports are scheduled for release from the Euro Zone this week. This includes the ZEW survey of economic sentiment, Euro Zone industrial production, consumer prices and the trade balance. The Cable ended the day higher against the U.S Dollar. The problem for the U.K is that unlike the Euro Zone, there is not enough fundamental strength to support the rally in the currency. Service sector activity has improved, but this is one of the few pieces of stronger data reported by the U.K in recent weeks, giving investors cause for skepticism. The Japanese Yen traded lower against all of the major currencies. The BoJ released its monthly economic report where it discussed the supply chain effects of the March 11 disaster and its own positive outlook going forward. The report outlines that “financial markets have been stable as a whole, as the BoJ has continued to provide ample funds.”
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
06:45 | France Industrial Production (MoM) (FEB) | Low | 0.5% | 1.0% | |
06:45 | France Manufacturing Production (MoM) (FEB) | Low | 0.7% | 1.8% | |
08:00 | Italy Industrial Production n.s.a (YoY) (FEB) | Low | 3.9% | 3.8% | |
23:01 | U.K RICS House Price Balance (MAR) | Medium | -24% | -26% | |
23:50 | Japan Bank Lending Banks Adjustments (YoY) (MAR) | Low | -1.7% |
Euro
The Single Currency reached a 14 month high against the U.S Dollar on Friday, extending its gains to nearly 12% since the beginning of the year. The ECB hiked rates on Thursday for the first time since 2008, boosted the benchmark rate by 0.25% to 1.25%. The move was widely expected, but still marks an important shift in policy as the ECB now leads the other major central banks in raising the benchmark rate. Strength was broad based with EUR/GBP breaking above 0.8800. Overall the EUR/USD traded with a low of 1.4290 and a high of 1.4465 before closing the day around 1.4453 in the New York session.
Yen
The Japanese Yen was the only currency which fell against the U.S Dollar as the BoJ is expected to keep rates near 0% for even longer than the Fed. An improvement in global economic data has also seen investors move capital out of safe haven investments, like the Yen, and into higher yielding currencies like the Aussie. Most crosses were strong with movement in the majors counteracting the USD/JPY move lower. Overall the USD/JPY traded with a low of 84.66 and a high of 85.38 before closing the day around 84.84 in the New York session.
British Pound
The British Pound also gained against the Greenback, touching its strongest levels since January 2010 as data showed that U.K inflation continues to grow at a faster pace than expected. U.K PPI expanded at a 0.9%, beating the expected 0.6% gain, and higher than the 0.5% registered last month. Cable tested resistance above 1.6400 but failed to close above the figure coming under profit taking pressure. Overall the GBP/USD traded with a low of 1.6314 and a high of 1.6427 before closing the day at 1.6360 in the New York session.
Canadian Dollar
Canadian Dollar climbed to fresh highs against the Greenback for the fourth consecutive trading session. Higher commodity prices, a weaker Dollar and healthy economic data helped to stoke further gains in the commodity currencies. Canadian Dollar rose to a fresh 3 year high against the U.S Dollar after Canada released its latest labor market numbers. Overall, the USD/CAD traded with a low of 0.9525 and a high of 0.9592 before closing the day at 0.9566 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is issuing a bullish stance. The RSI is above 74 and lies above the neutral zone. Overall, the cross has gained 0.92%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is indicating a bullish stance. The RSI is above 68 reading and lies above the neutral zone. The pair has gained 0.14%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is indicating a bullish stance. The RSI is above 75 reading and lies above the neutral region. The cross has gained 0.52%.
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 bearish signal. The RSI is above 63 reading and lies above the neutral region. The pair has gained 0.78%.
Sterling-Swiss
This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The RSI is above 48 and lies below the neutral region. The pair has lost 0.54%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.4165 | 1.4228 | 1.4340 | 1.4403 | 1.4515 | 1.4578 | 1.4690 |
USD/JPY | 83.82 | 84.24 | 84.54 | 84.96 | 85.26 | 85.68 | 85.98 |
GBP/USD | 1.6194 | 1.6254 | 1.6307 | 1.6367 | 1.6420 | 1.6480 | 1.6533 |
USD/CHF | 0.8986 | 0.9038 | 0.9064 | 0.9116 | 0.9142 | 0.9194 | 0.9220 |
USD/CAD | 0.9463 | 0.9494 | 0.9530 | 0.9561 | 0.9597 | 0.9628 | 0.9664 |
EUR/JPY | 119.87 | 120.60 | 121.61 | 122.34 | 123.35 | 124.08 | 125.09 |
GBP/JPY | 136.56 | 137.48 | 138.15 | 139.07 | 139.74 | 140.66 | 141.33 |
CHF/JPY | 91.76 | 92.15 | 92.73 | 93.12 | 93.70 | 94.09 | 94.67 |
AUD/JPY | 87.53 | 88.12 | 88.74 | 89.33 | 89.95 | 90.54 | 91.16 |
EUR/GBP | 0.8699 | 0.8728 | 0.8780 | 0.8809 | 0.8861 | 0.8890 | 0.8942 |
EUR/CHF | 1.3000 | 1.3046 | 1.3093 | 1.3139 | 1.3186 | 1.3232 | 1.3279 |
GBP/CHF | 1.4654 | 1.4758 | 1.4816 | 1.4920 | 1.4978 | 1.5082 | 1.5140 |
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