FOREX Newsletter
Pulse of the Market
· Greenback slow to react to tentative risk aversion move while Yen rallies
· British Pound pullback could stall on rate expectations and upcoming CPI data
· Yen temporarily buoyed by another earthquake but sustains run on risk aversion
· Canadian Dollar loses ground before a highly speculative BoC decision
The U.S Dollar ended the first trading day of the week higher against the basket of major currencies yesterday. Low yielding currencies benefited from a much needed relief rally that temporarily put a halt to the persistent moves in high yielding currencies. The Japanese Yen was the session’s best performer followed by the Swiss Franc and U.S Dollar. The U.S government avoided a shutdown in the eleventh hour but raising the debt ceiling is still an open issue that they need to resolve within the next month because the Treasury warned that the debt ceiling will be reached on May 16th. No major U.S economic reports were released yesterday but today the U.S trade balance and import prices are scheduled to be release. The Single Currency traded lower against the Greenback yesterday. After a sharp rally on Friday, a pullback in the Euro is natural especially when economic data surprised to the downside. French Industrial Production and Manufacturing production for the month of February both missed their estimates and printed slightly lower than forecast. Industrial Production came in at 0.4% on a month over month basis while manufacturing production rose only 0.7% versus 0.9% eyed. The German ZEW is due for release today and the level of investor confidence could determine whether the Euro experiences a deeper sell-off or holds onto its gains. The British Pound also retreated against the U.S Dollar, like other major currencies. The lack of U.K economic data yesterday explains the lackluster price action in the currency. Consumer prices are due for release today and there is a good chance that the CPI report could show a continued increase in price pressures. The Japanese Yen traded higher against all of the major currencies after another strong aftershock shivered Japan. A month has passed since the first earthquake hit and Japan is still struggling to recover and the aftershocks make it even harder for ordinary Japanese citizens and businesses to get back on track.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 06:00 | JPY Machine Tool Orders (YoY) | Medium | | | 73.9% |
| 06:00 | EUR German Consumer Price Index (MoM) (MAR) | Low | | 0.5% | 0.5% |
| 08:30 | GBP Consumer Price Index (YoY) (MAR) | High | | 4.4% | 4.4% |
| 08:30 | GBP Retail Price Index (MAR) | Medium | | 232.8 | 231.3 |
| 08:30 | GBP Visible Trade Balance (Pounds) (FEB) | Medium | | -£8000 | -£7057 |
| 09:00 | EUR German ZEW Survey (Economic Sentiment) | High | | 11.3 | 14.1 |
| 09:00 | EUR Euro-Zone ZEW Survey (Economic Sentiment) | Medium | | | 31 |
| 12:30 | USD Trade Balance (FEB) | Medium | | -$44.0B | -$46.3B |
| 13:00 | CAD Bank of Canada Rate Decision (APR 12) | High | | 1.00% | 1.00% |
Euro
The Single Currency found heavy resistance towards 1.4500 and fell back on EUR/JPY selling and EUR/GBP selling. Consolidation and moves higher are likely but the market was overbought after strong moves higher recently and it is healthy for the uptrend to have pull backs. Given the current focus on inflation and prospects for further rate hikes, the Euro is likely to remain supported in the near term. Overall, the EUR/USD traded with a low of 1.4420 and a high of 1.4483 before closing the day around 1.4435 in the New York session.
Yen
The Japanese Yen gained strength on most pairs as news of fresh aftershocks spooked the market and encourage profit taking. USD/JPY fell back towards 84.00 Yen searching for support while EUR/JPY and AUD/JPY fell heavily. Sentiment has shifted against Yen with expectations of an earthquake induced repatriation flows subside. Investors have been scrambling to close out long positions and add to shorts to cover for the shift. Overall, the USD/JPY traded with a low of 84.50 and a high of 85.14 before closing the day around 84.61 in the New York session.
British Pound
The British Pound once again stayed inside familiar level unable to break out of the range set out in recent sessions. Cable tested above 1.6400 in European session and this occurred at the same time EUR/GBP fell below 0.8800 but the gains were unable to be sustained and eased back to opening levels on both pairs. Overall, the GBP/USD traded with a low of 1.6312 and a high of 1.6425 before closing the day at 1.6342 in the New York session.
Canadian Dollar
Canadian Dollar ended the session lower after a recovery in the U.S Dollar. The Bank of Canada slated to make a monetary policy announcement today. Interest rates are expected to remain unchanged but given the recent strength of Canadian data, the BoC could sound hawkish. The Canadian Dollar is trading at a 3 year high not far from its record high. Overall, the USD/CAD traded with a low of 0.9541 and a high of 0.9575 before closing the day at 0.9561 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 62 and lies above the neutral zone. Overall, the cross has lost 0.40%.
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 57 reading and lies above the neutral zone. The pair has lost 0.39%.
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 59 reading and lies above the neutral region. The cross has lost 0.64%.
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 62 reading and lies above the neutral region. The pair has lost 0.01%.
Sterling-Swiss
This cross is trading above below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The RSI is above 42 and lies below the neutral region. The pair has lost 0.40%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4346 | 1.4383 | 1.4409 | 1.4446 | 1.4472 | 1.4509 | 1.4535 |
| USD/JPY | 83.72 | 84.11 | 84.36 | 84.75 | 85.00 | 85.39 | 85.64 |
| GBP/USD | 1.6181 | 1.6247 | 1.6294 | 1.6360 | 1.6407 | 1.6473 | 1.6520 |
| USD/CHF | 0.8982 | 0.9014 | 0.9039 | 0.9071 | 0.9096 | 0.9128 | 0.9153 |
| USD/CAD | 0.9509 | 0.9525 | 0.9543 | 0.9559 | 0.9577 | 0.9593 | 0.9611 |
| EUR/JPY | 120.35 | 121.17 | 121.66 | 122.48 | 122.97 | 123.79 | 124.28 |
| GBP/JPY | 136.11 | 137.05 | 137.66 | 138.60 | 139.21 | 140.15 | 140.76 |
| CHF/JPY | 92.30 | 92.64 | 92.98 | 93.32 | 93.66 | 94.00 | 94.34 |
| AUD/JPY | 87.02 | 87.85 | 88.33 | 89.16 | 89.64 | 90.47 | 90.95 |
| EUR/GBP | 0.8728 | 0.8760 | 0.8795 | 0.8827 | 0.8862 | 0.8894 | 0.8929 |
| EUR/CHF | 1.2948 | 1.3007 | 1.3046 | 1.3105 | 1.3144 | 1.3203 | 1.3242 |
| GBP/CHF | 1.4607 | 1.4703 | 1.4758 | 1.4854 | 1.4909 | 1.5005 | 1.5060 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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