FOREX Newsletter
Pulse of the Market
· U.S economy expanded by 1.8 percent in the first quarter, which was less than the market had anticipated
· The latest Euro Zone economic reports showed continued strength in the Germany but weakness in France
· U.K Consumer Confidence printed a two year low of -31 for the month of April
· Canadian Dollar held steady against the U.S Dollar while the Australian Dollar climbed to a fresh record high
The U.S Dollar ended yesterday’s trading session lower against most of the major currencies. All of the speculation in recent weeks was aimed at FOMC meeting. Now that the meeting is over and Ben Bernanke has let the world be acquainted with the level of stimulus will remain unchanged when the asset purchase program is completed in June. The Federal Reserve will keep monetary policy easy into the third quarter and possibly even the fourth quarter, which means that from the perception of interest rate gap, the Dollar will bid very little. Personal income, personal spending, Chicago PMI and the Personal Consumption Expenditure numbers are scheduled for release today. Yesterday's weaker U.S economic reports added additional pressure on the Dollar. The U.S economy expanded by 1.8 percent in the first quarter, which was less than the market had anticipated and significantly weaker than the fourth quarter. The big surprise came from jobless claims which rose to 429k from an upwardly revised 404k. The Euro traded slightly higher against the U.S Dollar. Initially the Single Currency rose to a fresh one year high during the Asian trading session but trended lower for the rest of the day. By the end of the session, the Euro had given up nearly two thirds of its earlier gains. The latest Euro Zone economic reports showed continued strength in the Germany but weakness in France. The number of people claiming unemployment benefits declined by 37k in April, leaving the jobless rate at a record low of 7.1 percent. Cable traded as high as 1.6745 during the Asian trading session but ended the day just a few pips off its lows. Yesterday’s the Gfk Consumer Confidence report came out much worse than expected. The monthly consumer confidence survey was expected to fall in line with the previous month’s -28 level, but instead printed a two year low of -31 for the month of April. U.K markets are closed today for the Royal Wedding, so investors should expect less liquidity in the foreign exchange market today. The Japanese Yen traded higher against all of the major currencies despite weak economic data. Industrial production and household spending contracted at record pace. The only economic statistic that showed no deterioration was the unemployment rate which remained at 4.6% against expectations of a rise to 4.8%.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
06:00 | EUR Germany Retail Sales MoM (MAR) | Medium | 0.2% | -0.4% | |
09:00 | EUR Euro-Zone Consumer Confidence (APR) | Medium | -11.4 | -11.4 | |
09:00 | EUR Euro-Zone Unemployment Rate (MAR) | Medium | 9.9% | 9.9% | |
09:30 | CHF KOF Swiss Leading Indicator (APR) | Medium | 2.20 | 2.24 | |
12:30 | CAD Gross Domestic Product (MoM) (FEB) | High | 0.0% | 0.5% | |
12:30 | USD Personal Spending (MAR) | Medium | 0.5% | 0.7% | |
13:55 | USD U. of Michigan Confidence (APR) | High | 70.0 | 69.6 |
Euro
The Single Currency extended gains against the U.S Dollar after the Fed's interest rate announcement and Bernanke's press conference. Domestically, The Euro stat reported industrial new orders in the Euro Zone rose 0.9% m/m to a 21.3% y/y gain. Meanwhile, the Federal Labor Office showed the number of unemployed in Germany fell by 37,000, more than expected in April, its lowest point since 1992. Overall, the EUR/USD traded with a low of 1.4768 and a high of 1.4881 before closing the day around 1.4822 in the New York session.
Yen
The Japanese Yen gained on the dollar as the BOJ kept its monetary policy steady. As widely expected, the central bank kept its interest rates unchanged at a range of 0-0.1% by unanimous vote and pushed off on any further loosening policy. Domestically, construction orders year over year dropped to -11.0% from the previous month at +19.5%. In addition, Japan's housing starts year over year plummeted to -2.4% from the previous month at +10.1%. Overall, the USD/JPY traded with a low of 81.39 and a high of 82.26 before closing the day around 81.51 in the New York session.
British Pound
The British Pound stood at near a 17 month high against the U.S Dollar in yesterday’s trading session as investors took a more bearish stance on the Greenback after the Fed's announcement. U.K consumer confidence unexpectedly sank as the people bared the pressure of public spending cuts. The GfK consumer confidence index fell to -31 in April from -29 in March, the lowest reading since January 2009. Overall, the GBP/USD traded with a low of 1.6620 and a high of 1.6745 before closing the day at 1.6630 in the New York session.
Australian Dollar
The Australian Dollar climbed to a fresh record high. No major economic data was released from the country yesterday but the Aussie has performed extremely well thanks in large part to the persistent rise in Gold prices and the weakness of the U.S Dollar. Although Australian interest rates are among the highest in the developed world and rising commodity prices provide a further boost to the economy, the RBA is in no position to raise interest rates with the AUD/USD trading at such a high level. Overall, the AUD/USD traded with a low of 1.0851 and a high of 1.0947 before closing the day at 1.0927 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 59 and lies above the neutral zone. Overall, the cross has lost 0.53%.
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 53 reading and lies above the neutral zone. The pair has lost 0.75%.
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 61 reading and lies above the neutral region. The cross has lost 0.25%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is also issuing a bullish signal. The RSI is above 61 reading and lies above the neutral region. The pair has gained 0.21%.
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 lost 0.10%.
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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