FOREX Newsletter
Pulse of the Market
· The very top event risks are the FOMC’s rate decision and Ben Bernanke press conference
· Euro ignores failing debt-GDP ratios; the government debt reached a record 85.1 percent of GDP
· Cable investors watching first quarter GDP figures for rate potential as well as relative strength
· Yen receives a downgraded forecast but managed to post a different reaction than the Dollar
The U.S Dollar ended yesterday’s trading session lower against most of the major currencies with the exception of British Pound. Since the beginning of the year, the Greenback weakened significantly, falling to a record low against the Swiss Franc and Australian Dollar. The Dollar index, which is a trade weighted measure, lost more than 8 percent of its value since January. Today, the U.S central bank has an opportunity to turn the tables around and stop the Dollar from falling. For the first time ever, the Federal Reserve is holding a press conference today after their monetary policy announcement. The Euro traded higher against the U.S Dollar, supported by the weak Dollar which led the rally in the Single Currency. Investors are bidding up the Euro without any regard to sovereign debt troubles. ECB member Paramo warned yesterday that a Greek restructuring would be worse than the Lehman Collapse. Although he follows up by saying that Greek public debt is sustainable, the market is clearly not prepared for the trouble in Greece. Swiss Franc also traded higher against the U.S Dollar despite weaker than expected trade numbers. The country’s trade surplus shrank to 1.09B from 2.38B due to a sharp decline in exports; imports on the other hand rose strongly. Cable traded lower against the Greenback for the third consecutive trading session. According to the latest report from the CBI, manufacturing activity weakened significantly this month. The CBI industrial trends survey fell to -11 from 5 the previous month. First quarter GDP numbers are due for release from the U.K today. Growth is expected to rebound after contracting in the fourth quarter. Yen traded higher against the U.S Dollar but weakened against most of the other major currencies. Economic data was disappointing with the Japan Department Store Sales in the month of March fell nearly 15 percent, the second largest drop on record, from a year earlier.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| | EUR German Consumer Price Index (YoY) (APR) | High | | 2.4% | 2.1% |
| 01:30 | AUD Consumer Prices Index (YoY) (1Q) | High | 3.3% | 3.0% | 2.7% |
| 06:00 | EUR German GfK Consumer Confidence Survey (MAY) | Medium | | 5.8 | 5.9 |
| 08:30 | GBP Gross Domestic Product (QoQ) (1Q) | High | | 0.5% | -0.5% |
| 12:30 | USD Durable Goods Orders (MAR) | Medium | | 2.3% | -0.6% |
| 16:30 | USD Federal Open Market Committee Rate Decision (APR 27) | High | | 0.25% | 0.25% |
| 18:15 | USD Fed's Bernanke Speaks at Fed Press Conference | High | | | |
| 21:00 | NZD Reserve Bank of New Zealand Rate Decision (APR 28) | High | | 2.50% | 2.50% |
| 23:01 | GBP GfK Consumer Confidence Survey (APR) | Medium | | -27.0 | -28.0 |
| 23:30 | JPY Jobless Rate (MAR) | Medium | | 4.8% | 4.6% |
| 23:30 | JPY National Consumer Price Index (YoY) (MAR) | Medium | | 0.0% | 0.0% |
Euro
The Single Currency reached a fresh 16-month high against the dollar after Spain successfully sold 2B EUR worth of three and six-month treasury bills. After the recent collapse of Portugal, Spain has sought to reassure investors that it is on track to meet its budget targets after its short-term borrowing costs rose to 0.5% at the debt auction. With the Fed's two-day interest rate meeting getting under way today, the EUR has remained well supported as the ECB's hawkish stance is in contrast to the Fed's hands-off approach. Overall, the EUR/USD traded with a low of 1.4493 and a high of 1.4656 before closing the day around 1.4642 in the New York session.
Yen
The Japanese Yen was relatively flat yesterday, while its "safe-haven" counterpart, Franc strengthened to a new all-time high. While the Yen and Franc usually weaken when equity markets move higher and investors assume riskier positions, both have remained well supported against the U.S Dollar with the Fed's lenient monetary policy. USD/JPY traded at new lows after failing once again to get above 82.00 Yen resistance. Overall, the USD/JPY traded with a low of 81.47 and a high of 81.96 before closing the day around 81.54 in the New York session.
British Pound
The British Pound failed to push higher with the rest of the market sticking to the 1.6500 level. Cable was relatively flat this morning in spite of disappointing manufacturing data. Factory orders missed the mark, registering -11 in April from -5 the month before. However, with continued inflationary pressure, the BoE is still expected to hike interest rates before the Fed. The anticipated widening in the yield gap will provide significant support for the Pound in the near term. Overall the GBP/USD traded with a low of 1.6430 and a high of 1.6531 before closing the day at 1.6478 in the New York session.
Australian Dollar
The Australian Dollar broke above 1.0800 briefly as the market responded to buying in stock markets. The market is hitting fresh highs each day with little technical resistance and profit taking the only factor slowing the ascent. On the economic docket, Australian leading indicators edged higher in the month of February. Overall the AUD/USD traded with a low of 1.0676 and a high of 1.0791 before closing the day at 1.0783 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 bullish tone and MACD is issuing a bearish stance. The RSI is above 56 and lies above the neutral zone. Overall, the cross has gained 0.11%.
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 48 reading and lies below the neutral zone. The pair has lost 0.43%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 60 reading and lies above the neutral region. The cross has gained 0.29%.
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 61 reading and lies above the neutral region. The pair has gained 0.54%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The RSI is above 34 and lies below the neutral region. The pair has lost 0.77%.
Appendix
No comments:
Post a Comment