FOREX Newsletter
Pulse of the Market
· Greenback tumbled after Bernanke curbs speculation of a timely stimulus withdrawal
· Euro climbed on Dollar’s weakness, though data and Bank of Portugal credit outlook deteriorate
· British Pound rallied after an in line first quarter GDP reading
· Bank of Japan left rates unchanged and holds its policy completely unchanged
The U.S Dollar ended yesterday’s trading session lower against the basket of major currencies. Ben Bernanke achieved his goal of providing greater transparency to the market and preparing everyone for an end to asset purchases in June. Fed plans to continue easy monetary policy confirms that the doves remain in control and explains why the Greenback has weakened on the heels of Bernanke’s comments. Anyone hoping for the Fed to end their asset purchases early was very much disappointed because the central bank plans to complete their $600 billion purchases of Treasury Securities on schedule at the end of June. The main takeaway from Bernanke’s comments yesterday was that the Federal Reserve believes there isn’t much they can do at this point to reduce inflationary pressures and promote growth and so they will continue to maintain stimulus. First quarter GDP numbers are scheduled for release today and Bernanke said in the press conference that he believes GDP growth will be less than 2 percent. The Euro rose to a fresh one year high against the U.S Dollar after Ben Bernanke confirmed that the U.S central bank will continue to reinvest payments from maturing securities once the $600 billion asset purchase program is completed in June. Economic data from the Euro Zone was mixed with weakening consumer confidence in Germany offset by rising inflationary pressures. German unemployment numbers are scheduled for release today and based upon the PMI reports, workforce numbers continue to increase at record levels which signal further improvement in the labor market. Cable traded at fresh yearly highs against the Greenback following growth in the U.K economy in the first quarter and U.S Dollar weakness. U.K GDP grew at 0.5% in the first quarter of 2011 recovering from the contraction in Q4 of 2010. Yen traded lower against all of the major currencies after S&P’s downgraded the outlook for Japan’s sovereign debt rating from stable to negative. In the beginning of the year, S&P was worried about political troubles in Japan and slow growth but the earthquake in March has created new problems for the country.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| | JPY BOJ Target Rate (APR 28) | High | | 0.10% | 0.10% |
| 05:00 | JPY Annualized Housing Starts (MAR) | Medium | | 0.814M | 0.872M |
| 06:45 | EUR French Consumer Spending (MoM) (MAR) | Low | | 0.2% | 0.9% |
| 07:55 | EUR German Unemployment Change (APR) | High | | -37K | -55K |
| 12:30 | USD Gross Domestic Product (Annualized) (1Q) | High | | 2.0% | 3.1% |
| 12:30 | USD Gross Domestic Product Price Index (1Q) | High | | 2.3% | 0.4% |
| 12:30 | USD Personal Consumption (1Q) | Medium | | 2.0% | 4.0% |
| 12:30 | USD Initial Jobless Claims (APR 23) | Low | | 395K | 403K |
| 14:00 | USD Pending Home Sales (MoM) (MAR) | Medium | | 1.5% | 2.1% |
Euro
The Single Currency tested 1.4800 in yesterday’s trading session after Ben Bernanke's speech with the market jumping out on the differing monetary policy outlook. February Industrial Orders gained 0.9% vs. 1.0% forecast. The trend is quite strong and now has little resistance up to the medium term 1.5000 target. Until the Fed signals that it too will begin to raise rates, the Euro will remain well supported. Overall, the EUR/USD traded with a low of 1.4632 and a high of 1.4794 before closing the day around 1.4786 in the New York session.
Yen
The Japanese Yen was well supported in yesterday’s European trading session on heavy cross buying with GBP/JPY leading the market higher. U.S Dollar weakness in the U.S session reversed the pair back to 82.00 Yen. The Japanese Yen dropped by more than a percent against the Dollar after S&P lowered its debt rating outlook from "stable" to "negative", citing costs for rebuilding from the country's natural disasters last month. Overall, the USD/JPY traded with a low of 81.25 and a high of 82.78 before closing the day around 82.14 in the New York session.
British Pound
The British Pound was the strongest currency in the market yesterday as the recent underperformance was corrected on strong first quarter GDP and Mortgage data. Mortgages increased 31k in March. The economy grew by 0.5% in the first quarter, erasing a decline of equal size in the last quarter of 2010 as the U.K service industry surged by the most in four years. Overall, the GBP/USD traded with a low of 1.6434 and a high of 1.6636 before closing the day at 1.6627 in the New York session.
Australian Dollar
The Australian Dollar reached yet another all time high in yesterday’s Asian trading session over 1.0878 before pulling back to the 1.0874 level as the Aussie expected to maintain its yield advantage over most other G10 currencies for the projected future. Australian CPI also beat forecast, registering 3.3% versus the 3.0% expected, suggesting that the RBA may consider more interest rate hikes in the near term. Overall, the AUD/USD traded with a low of 1.0774 and a high of 1.0878 before closing the day at 1.0874 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The RSI is above 62 and lies above the neutral zone. Overall, the cross has gained 1.72%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 57 reading and lies above the neutral zone. The pair has gained 1.64%.
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 65 reading and lies above the neutral region. The cross has gained 1.49%.
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 60 reading and lies above the neutral region. The pair has gained 0.08%.
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 42 and lies below the neutral region. The pair has gained 0.83%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4164 | 1.4246 | 1.4383 | 1.4465 | 1.4602 | 1.4684 | 1.4821 |
| USD/JPY | 81.32 | 81.78 | 82.17 | 82.63 | 83.02 | 83.48 | 83.87 |
| GBP/USD | 1.6212 | 1.6259 | 1.6331 | 1.6378 | 1.6450 | 1.6497 | 1.6569 |
| USD/CHF | 0.8707 | 0.8791 | 0.8834 | 0.8918 | 0.8961 | 0.9045 | 0.9088 |
| USD/CAD | 0.9424 | 0.9460 | 0.9491 | 0.9527 | 0.9558 | 0.9594 | 0.9625 |
| EUR/JPY | 116.52 | 117.38 | 118.64 | 119.50 | 120.76 | 121.62 | 122.88 |
| GBP/JPY | 133.64 | 134.15 | 134.79 | 135.30 | 135.94 | 136.45 | 137.09 |
| CHF/JPY | 90.87 | 91.29 | 92.13 | 92.55 | 93.39 | 93.81 | 94.65 |
| AUD/JPY | 85.68 | 86.24 | 87.34 | 87.90 | 89.00 | 89.56 | 90.66 |
| EUR/GBP | 0.8696 | 0.8737 | 0.8794 | 0.8835 | 0.8892 | 0.8933 | 0.8990 |
| EUR/CHF | 1.2776 | 1.2831 | 1.2862 | 1.2917 | 1.2948 | 1.3003 | 1.3034 |
| GBP/CHF | 1.4386 | 1.4472 | 1.4518 | 1.4604 | 1.4650 | 1.4736 | 1.4782 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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