FOREX Newsletter
Pulse of the Market
· Greenback sees inflation rally, Fed comments break out and stayed close just off 15 month lows
· Euro retraced across the board as the consistency in the region’s financial troubles started to seep in
· British Pound will be spurred to rate speculation by Fed, ECB forecasts and BoE minutes
· Despite a lack of major economic releases on Friday, commodity currencies edged higher
The U.S Dollar ended Friday’s trading session higher against the basket of major currencies following little fundamental reason for investors to buy Dollars. U.S consumer prices rose 0.5 percent in March, which was right in line with expectations. Manufacturing activity on the other hand remains strong with the Empire State manufacturing survey rising to its highest level in a year. Industrial production also increased 0.8 percent with capacity utilization rising from 76.9 to 77.4 percent. Since the beginning of the year, the Greenback has weakened significantly. It lost more than 7 percent of its value against the Euro, more than 4 percent against the Swiss Franc and British Pound and more than 3 percent against the Australian Dollar. Over the past week however, the sell-off in the Greenback lost its momentum. The Single Currency traded lower against the U.S Dollar in spite of stronger than expected economic data. Sovereign debt troubles have come to trouble the Euro. The latest economic reports from the Euro Zone showed consumer prices rose 1.4 percent in the month of March, more than 3 times the growth experienced in February. This drove the annualized pace of CPI growth up to 2.7 from 2.6 percent. The trade deficit for the Euro Zone also narrowed. This week will be a big week for the Euro Zone with PMI numbers, producer prices and the German IFO report scheduled for release. The Cable was down against most of the major currencies with the exception of the Euro. With no major economic news released from the U.K on Friday, MPC member Andrew Sentance came to speak of the necessity of raising rates in a post-recession inflationary environment. The release of the minutes from the most recent monetary policy meeting this week will go a long way in showing just how concerned the central bank really is about inflation. Aside from the minutes, the U.K retail sales report is also scheduled for release. The Japanese Yen strengthened against all of the major currencies in Friday’s trading session. The Ministry of Economy, Trade and Industry reported revised Japanese Industrial Production growth figures from the previous 0.9 percent to 1.8 percent in the month of February on a monthly basis and showed a healthy 2.9 percent increase on a yearly basis. Meanwhile, the Capacity Utilization rate rose 2.9% although the pace of increase fell from the previous month.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
09:00 | Italian Current Account (Euros) (FEB) | Low | -8129M | ||
14:00 | Euro Zone Consumer Confidence (APR) | Medium | -11.0 | -10.6 | |
14:00 | U.S NAHB Housing Market Index (APR) | Low | 17.0 | 17.0 | |
14:30 | U.S Fed's Fisher, Lockhart to Discuss Globalization in Atlanta | Low | |||
16:00 | U.S Fed's Bullard to Speak on Banking Rules in Kentucky | Low | |||
16:30 | U.S Fed's Fisher to Speak on U.S. Economic Outlook in Atlanta | Low |
Euro
The Single Currency was lower against U.S Dollar, Japanese Yen and British Pound on concerns that the region's debt crisis is worsening. After a number of stories suggesting that Greece will likely need to restructure its debt in the coming months, Ireland has now also been added to short list of likely for default after a further credit downgrade by Moody's. Overall, the EUR/USD traded with a low of 1.4390 and a high of 1.4503 before closing the day around 1.4423 in the New York session.
Yen
The Japanese Yen gained against all of its major counterparts, but for various reasons. The Yen gained against the U.S Dollar as slower than expected inflation data suggests that the yield gap between the BoJ and Fed may not widen as quickly as previously thought. It gained against the Euro as investors sought its safety on renewed fears of debt default in Europe's periphery economies. Overall, the USD/JPY traded with a low of 82.94 and a high of 83.77 before closing the day around 83.10 in the New York session.
British Pound
The British Pound was lower against the U.S Dollar and Euro in Friday’s trading session regardless of hawkish BoE commentary. Andrew Sentance said that the recent slowdown in inflation may prove short-lived as the Pound's continued relative weakness threatens to push inflation above 5%, supporting his calls for an interest rate hike. Overall, the GBP/USD traded with a low of 1.6291 and a high of 1.6372 before closing the day at 1.6293 in the New York session.
Australian Dollar
The Australian Dollar edged higher in the midst of various market sentiments affecting the commodity market. The Aussie pared an early decline on speculation that the central bank of China, Australia's primary trade partner, will hike interest rates, damping demand for Australian assets. Overall, the AUD/USD traded with a low of 1.0510 and a high of 1.0577 before closing the day at 1.0560 in the New York session. Euro-Yen
EUR/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 55 and lies above the neutral zone. Overall, the cross has lost 0.89%.
Sterling-Yen
Currently GBP/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is issuing bearish and MACD is also indicating a bearish stance. The RSI is above 51 reading and lies above the neutral zone. The pair has lost 0.79%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 60 reading and lies above the neutral region. The cross has lost 0.30%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 57 reading and lies above the neutral region. The pair has lost 0.10%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The RSI is above 38 and lies below the neutral region. The pair has lost 0.34%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.4261 | 1.4326 | 1.4374 | 1.4439 | 1.4487 | 1.4552 | 1.4600 |
USD/JPY | 81.94 | 82.44 | 82.77 | 83.27 | 83.60 | 84.10 | 84.43 |
GBP/USD | 1.6184 | 1.6238 | 1.6265 | 1.6319 | 1.6346 | 1.6400 | 1.6427 |
USD/CHF | 0.8862 | 0.8888 | 0.8906 | 0.8932 | 0.8950 | 0.8976 | 0.8994 |
USD/CAD | 0.9524 | 0.9557 | 0.9580 | 0.9613 | 0.9636 | 0.9669 | 0.9692 |
EUR/JPY | 117.42 | 118.54 | 119.21 | 120.33 | 121.00 | 122.12 | 122.79 |
GBP/JPY | 133.17 | 134.26 | 134.84 | 135.93 | 136.51 | 137.60 | 138.18 |
CHF/JPY | 91.61 | 92.22 | 92.66 | 93.27 | 93.71 | 94.32 | 94.76 |
AUD/JPY | 86.09 | 86.64 | 87.19 | 87.74 | 88.29 | 88.84 | 89.39 |
EUR/GBP | 0.8765 | 0.8788 | 0.8820 | 0.8843 | 0.8875 | 0.8898 | 0.8930 |
EUR/CHF | 1.2759 | 1.2811 | 1.2842 | 1.2894 | 1.2925 | 1.2977 | 1.3008 |
GBP/CHF | 1.4417 | 1.4477 | 1.4509 | 1.4569 | 1.4601 | 1.4661 | 1.4693 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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