FOREX Newsletter
Pulse of the Market
· The ratings agency S&P lowered its outlook for the U.S’s benchmark rating from ‘stable’ to ‘negative’
· Euro tumbles as confidence falters and leverages region’s growing financial troubles
· British Pound holds its ground well regardless of yesterday’s blow to risk appetite
· Canadian Dollar stirs on U.S activity and rate watchers look forward to CPI data
The U.S Dollar traded higher against the basket of major currencies in yesterday’s trading session. The big story of the day was the announcement from Standard & Poor’s, who cut the outlook for the U.S sovereign debt rating from stable to negative. The U.S Dollar still managed to recover its initial losses to end the session higher against most of the major currencies except for the Japanese Yen. This resilience has confounded many investors who know that a downgrade of U.S debt cannot be good for the Greenback. But S&P did not downgrade the country’s sovereign debt rating, they only cut their outlook and affirmed the government’s AAA rating. Therefore the only explanation for the Greenback’s rally is that risk aversion which has overshadowed concerns about credit quality. U.S building permits and housing permits are due for release in today’s trading session and a rebound is expected after a particularly weak February. Euro was the worst performing currency in yesterday’s trading session which weakened significantly. Unfortunately with many smaller countries within the Euro Zone still struggling to meet their debt requirement and which can trouble the Euro Zone. For the past several months the Euro has been able to shrug off news of any fresh bailouts as the market assumed that the EFSF mechanism would provide the necessary financial support to deal with the issue. However, any mention of debt streamlining instantly triggered a selling in the Euro on fears that it would cause material damage to the EU financial system. Euro Zone PMI numbers are due for release today and stronger economic data will authenticate the term for more tightening and in turn, bring fresh life to Euro rally. The Cable ended the day lower against the Greenback. Economic data from the U.K was better than expected with house prices rising 1.7 percent in the month of April. There are no major U.K economic reports for release today which means that the Pound, will most likely trade on risk flows. Japanese Yen rose against all of the major currencies despite the lack of economic data.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
EUR Euro-Zone Consumer Confidence (APR) | Medium | -11.0 | -10.6 | ||
01:30 | AUD Reserve Bank's Board Minutes (APR) | High | |||
05:00 | JPY Consumer Confidence Households (MAR) | Medium | 40.6 | ||
06:00 | JPY Machine Tool Orders (YoY) (MAR) | Medium | 49.5% | ||
07:30 | EUR German Purchasing Manager Index Manufacturing (APR) | Medium | 60.0 | 60.9 | |
08:00 | EUR Euro-Zone Purchasing Manager Index Manufacturing (APR) | Medium | 57.0 | 57.5 | |
11:00 | CAD Consumer Price Index (YoY) (MAR) | High | 2.8% | 2.2% | |
12:30 | CAD Housing Starts (MoM) (MAR) | Medium | 8.6% | -22.5% | |
12:30 | USD Housing Starts (MAR) | Medium | 520K | 479K |
Euro
The Single Currency was under heavy selling pressure in yesterday trading session as the combination of U.S Dollar strength and the Euro weakness led to large moves. The markets are concerned that Greece debt may be restructured but the Greek Government has firmly deprived of this. EUR/USD broke under 1.4300 and continued to fall toward breaking under 1.4200 briefly in the U.S trading session. Overall, the EUR/USD traded with a low of 1.4156 and a high of 1.4419 before closing the day around 1.4231 in the New York session.
Yen
The Japanese Yen was the safe haven of choice in the market yesterday with the U.S downgrade sending investors to push USD/JPY below 83.00 Yen to 82.50 Yen supports. EUR/JPY was the biggest move falling over 3 big figures as risk aversion picked up. Japanese Yen was also supported by Risk aversion regardless of the lack of economic data. Overall, the USD/JPY traded with a low of 82.17 and a high of 83.25 before closing the day around 82.64 in the New York session.
British Pound
The British Pound was under pressure falling sharply in yesterday’s trading session following U.S downgrade and stock market weakness. The GBP/USD had bounced to 1.6300 on the back off EUR/GBP selling but reversed sharply at the big figure. EUR/GBP has fallen steeply yesterday, extending its slide for the fourth consecutive trading session. If the monetary policy committee ends up voting the same way in April as they did no March, it would be bearish for the Cable. Overall, the GBP/USD traded with a low of 1.6165 and a high of 1.6327 before closing the day at 1.6264 in the New York session.
Australian Dollar
The Australian Dollar reacted negatively to the risk aversion and broke below the key 1.0500 level threatening bigger pullbacks in coming days. AUD/JPY selling is beginning to weigh heavy after be a source of solid support in the recent run up to record highs. The RBA will release the minutes from their most recent monetary policy meeting and the tone from the meeting will determine whether the Aussie will be able to sustain its gains. Overall, the AUD/USD traded with a low of 1.0454 and a high of 1.0572 before closing the day at 1.0508 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 46 and lies below the neutral zone. Overall, the cross has lost 1.88%.
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 46 reading and lies below the neutral zone. The pair has lost 0.72%.
Aussie-Yen
Currently, the cross is trading below 14 and above 50, 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 51 reading and lies above the neutral region. The cross has lost 0.99%.
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 49 reading and lies below the neutral region. The pair has lost 1.18%.
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 gained 0.27%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.3855 | 1.4006 | 1.4118 | 1.4269 | 1.4381 | 1.4532 | 1.4644 |
USD/JPY | 81.04 | 81.61 | 82.12 | 82.69 | 83.20 | 83.77 | 84.28 |
GBP/USD | 1.6015 | 1.6090 | 1.6177 | 1.6252 | 1.6339 | 1.6414 | 1.6501 |
USD/CHF | 0.8817 | 0.8860 | 0.8912 | 0.8955 | 0.9007 | 0.9050 | 0.9102 |
USD/CAD | 0.9458 | 0.9526 | 0.9584 | 0.9652 | 0.9710 | 0.9778 | 0.9836 |
EUR/JPY | 112.46 | 114.46 | 116.04 | 118.04 | 119.62 | 121.62 | 123.20 |
GBP/JPY | 130.10 | 131.53 | 132.99 | 134.42 | 135.88 | 137.31 | 138.77 |
CHF/JPY | 89.38 | 90.39 | 91.28 | 92.29 | 93.18 | 94.19 | 95.08 |
AUD/JPY | 83.99 | 84.98 | 85.92 | 86.91 | 87.85 | 88.84 | 89.78 |
EUR/GBP | 0.8628 | 0.8687 | 0.8717 | 0.8776 | 0.8806 | 0.8865 | 0.8895 |
EUR/CHF | 1.2537 | 1.2633 | 1.2694 | 1.2790 | 1.2851 | 1.2947 | 1.3008 |
GBP/CHF | 1.4427 | 1.4471 | 1.4526 | 1.4570 | 1.4625 | 1.4669 | 1.4724 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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