FOREX Newsletter
Pulse of the Market
· Greenback made a feeble attempt at recovery on thin trading conditions and encouraging housing statistics
· Euro rose against the Greenback for the fourth trading day in a row, but the rally starts to lose momentum
· BoJ will release its semi‐annual outlook report along with its benchmark interest rate decision on April 28
· Australian Dollar balanced between risk aversion effort and extended holiday period
The U.S Dollar ended yesterday’s trading session on a mixed note as it has been another very quiet day in the foreign exchange market. The big event risk for the U.S this week is the FOMC rate announcement tomorrow. For the first time ever, Ben Bernanke will also be holding a press conference after the meeting. With almost two full months between the April and June meeting, Bernanke could take part in safe hands and see how the economy performs before committing to anything. Bernanke is not as confident as Trichet when comes to dealing with the press and any uncertainty by the Fed Chairman could add pressure on the Dollar. Meanwhile yesterday’s new home sales report provided little support for the U.S Dollar. In March, new home sales rebounded 11.1 percent after falling to a record low of 250k in February. Although the percentage increase was slightly less than expected, February numbers were revised higher and the number of units sold was greater than anticipated. Consumer confidence numbers are due for release today and rising prices could put a damper on sentiment. The Euro rose against the U.S Dollar for the fourth trading day in a row yesterday, but after rising strongly in the beginning of last week, the rally is beginning to lose momentum. This could be partially due to the fact European markets were closed on Friday and yesterday but the plenty of event risk on the calendar this week could also make investors cautious of taking on any new positioning. There are no major Euro Zone economic reports in the front of the week and no scheduled speeches by ECB officials, which suggest that the U.S Dollar will be the primary driver of the EUR/USD. Meanwhile the Swiss Franc continues to perform extremely well, rising to a fresh record high against the U.S Dollar. Inflation in Switzerland is heating up and economic data has shown enough strength in the economy that the Swiss National Bank could be provoked to raise interest rates. The British Pound ended the session slightly lower against the U.S Dollar. Holiday trading conditions make it difficult to determine whether the pull back in Cable is real, but the rally in the currency is certainly losing momentum. Like the Euro Zone, there were no major economic reports released from the U.K yesterday because of a bank holiday. The Japanese Yen traded higher against all of the major currencies regardless of weaker economic data and dovish comments from the Bank of Japan.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
06:00 | Switzerland Trade Balance (Swiss franc) (MAR) | Medium | 2.39B | ||
10:00 | U.K CBI Business Optimism (APR) | Medium | 10 | 7 | |
13:00 | U.S S&P/Case-Shiller Home Price Index (FEB) | Low | 140.86 | ||
14:00 | U.S Consumer Confidence (APR) | High | 64.5 | 63.4 | |
14:00 | U.S Richmond Fed Manufacturing Index (APR) | Low | 20.0 | 20.0 | |
23:50 | Japan Retail Trade (YoY) (MAR) | Medium | -6.1% | 0.1% |
Euro
The Single Currency continued its climb as to a great extent of Europe remains closed for Easter holidays. The Single Currency rose to highs of 1.4626 yesterday in the thin holiday trading. Markets will be attentive to several economic releases including the inflation report this week which will likely provide further clues on the instance of the ECB's next move. Overall, the EUR/USD traded with a low of 1.4524 and a high of 1.4626 before closing the day around 1.4579 in the New York session.
Yen
The Japanese Yen has opened weaker in yesterday’s Asian trading session, likely due to the risk-on environment and comments from the BoJ Governor acknowledging that the Japanese economy is likely to have contracted in the first half of 2011. The BoJ will be releasing its semi‐annual outlook report along with its benchmark interest rate decision on April 28, where rates are expected to remain at their current levels. Overall, the USD/JPY traded with a low of 81.65 and a high of 82.41 before closing the day around 81.81 in the New York session.
British Pound
The British Pound ended yesterday’s trading session slightly lower against the U.S Dollar, but remain well off session’s lows on signs that the British economy is recovering after a quarter of negative GDP growth to end 2010. Investors will get first affirmation tomorrow when the preliminary reading of first quarter GDP will be released. U.K GDP is forecast to show a 0.5% expansion. Overall the GBP/USD traded with a low of 1.6466 and a high of 1.6552 before closing the day at 1.6496 in the New York session.
Canadian Dollar
The Canadian Dollar oscillated against its U.S counterpart yesterday in the midst of strength in commodities as investors seek to protect their wealth from rising inflation and a weaker U.S Dollar. The Canadian Dollar pared gains as crude oil erased an advance today. Overall, the USD/CAD traded with a low of 0.9502 and a high of 0.9559 before closing the day at 0.9545 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 51 and lies above the neutral zone. Overall, the cross has gained 0.10%.
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 47 reading and lies below the neutral zone. The pair has lost 0.21%.
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 54 reading and lies above the neutral region. The cross has lost 0.33%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is issuing a bearish signal. The RSI is above 55 reading and lies above the neutral region. The pair has gained 0.32%.
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 40 and lies below the neutral region. The pair has lost 0.64%. Appendix
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