FOREX Newsletter
Pulse of the Market
· Dollar fell against Cable and advanced against the Euro and Yen on Beige Book and budget proposal
· Euro edged lower as Greek, Irish and Portuguese troubles come under greater analysis
· British Pound heavily dependent on its interest rate potential with positive employment data
· Aussie bounced off trend line support to move above 1.0500 before easing into the U.S close
The Greenback ended yesterday’s trading session lower against most of the major currencies but rose against the Single Currency. The latest consumer spending and Beige Book reports indicate that the U.S recovery remains on track, but regardless of these positive reports, investors are still uncertain about buying U.S Dollars. The recent decline in commodity prices has reduced the pressure on other central banks to raise rates but the reality is that central banks in Europe and Asia are still more aggressive than the Fed and for that reason the gains in the Greenback have been limited. According to the latest Beige Book report, the U.S economy is improving thanks to the pickup in job growth and acceleration in manufacturing activity. Consumer spending rose 0.4 percent last month, down from 1.1 percent in February. This marked the ninth consecutive month of positive retail sales growth but also the smallest gain in nine months. Euro traded lower against the U.S Dollar pressured by profit taking. Economic data from the Euro Zone was better than expected with France and Germany reported stronger inflationary pressures. Consumer prices in France rose 0.9 percent, driving the annualized pace of growth up 2.2 from 1.8 percent. Germany wholesale prices rose another 1.3 percent. Industrial production also increased 0.4 percent. Yet weaker growth forecasts from the Italian government and S&P’s warning of a possible downgrade has prevented the Euro from extending its gains. Slower growth in Italy could mean slower growth for the entire region as it is the third largest economy in the Euro Zone. The Italian government cut its 2011 GDP forecast. Cable ended the session unchanged against the Greenback and slightly stronger against the Euro. U.K labor data for March printed mixed leaving currency markets uncertain as to the state of the U.K economic recovery. U.K claimant count was worse than forecast increasing to 0.7K from -3.6K originally expected. On the other hand the ILO unemployment rate dropped to 7.8 percent from 8.0 percent. Japanese Yen ended the session lower following the rally in U.S equities. Yesterday’s economic reports showed an increase in inflationary pressures with the Domestic Goods Price Index rising 0.6 percent.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
01:00 | AUD Consumer Inflation Expectation | Low | 3.5% | 3.6% | |
07:00 | CNY New Yuan Loans (MAR) | High | 600.0B | 535.6B | |
08:00 | EUR ECB Publishes Monthly Report | Medium | |||
09:00 | CHF ZEW Survey (Expectations) | Medium | -13.5 | ||
12:30 | USD Producer Price Index (YoY) (MAR) | Medium | 6.4% | 5.6% | |
12:30 | CAD Manufacturing Sales (MoM) (FEB) | Low | -0.5% | 4.5% | |
12:30 | USD Continuing Claims (APR 2) | Low | 3705K | 3723K | |
12:30 | USD Initial Jobless Claims (APR 9) | Low | 380K | 382K |
Euro
The Single Currency tested resistance above 1.4500 but this was redundant and the market tracked U.S stocks lower in the New York trading session. February Industrial Production rose 0.4% vs. 0.7% forecast m/m. The Euro remains near its 15 month high set against the U.S Dollar earlier this week as investors expect the interest rate gap between the Euro Zone and the U.S to further widen. Overall, the EUR/USD traded with a low of 1.4412 and a high of 1.4519 before closing the day around 1.4442 in the New York session.
Yen
The Japanese Yen fell against all 16 of its major counterparts as global stocks gained, encouraging investors to seek riskier, but higher yielding assets. The USD/JPY move to day highs at the start of the U.S session on some EUR/JPY buying but this was reversed later as analysts downgraded U.S GDP forecasts and U.S Bond yields fell in response. USD/JPY moves are closely linked with U.S bonds yields which are used by investors to predict the timing of U.S FOMC Rate Hikes. Overall, the USD/JPY traded with a low of 83.49 and a high of 84.25 before closing the day around 83.82 in the New York session.
British Pound
The British Pound was extremely contained against the U.S Dollar and Yen but made gains against the Single Currency as the markets waited for fresh catalysts. U.K March Claimant count was +0.7k vs. -10k previously. The Jobless Rate fared better dropping to 7.8% vs. 8.0% previously. Bets of higher rates faded fast after a report showed that CPI, actually contracted last month. Overall the GBP/USD traded with a low of 1.6236 and a high of 1.6308 before closing the day at 1.6266 in the New York session.
Canadian Dollar
The Canadian Dollar held steady against the Greenback. Loonie recovered from early losses as a strong retail sales report in the U.S, the primary destination for Canadian exports, offset waning interest in the Canadian Dollar after the Bank of Canada left interest rates on hold and invalidated expectations of imminent hikes. Overall the USD/CAD traded with a low of 0.9583 and a high of 0.9653 before closing the day at 0.09622 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is issuing a bullish stance. The RSI is above 64 and lies above the neutral zone. Overall, the cross has gained 0.06%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is indicating a bullish stance. The RSI is above 56 reading and lies above the neutral zone. The pair has gained 0.32%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is indicating a bullish stance. The RSI is above 60 reading and lies above the neutral region. The cross has gained 0.94%.
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 64 reading and lies above the neutral region. The pair has lost 0.29%.
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 lost 0.03%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.4289 | 1.4351 | 1.4396 | 1.4458 | 1.4503 | 1.4565 | 1.4610 |
USD/JPY | 82.70 | 83.09 | 83.46 | 83.85 | 84.22 | 84.61 | 84.98 |
GBP/USD | 1.6160 | 1.6198 | 1.6232 | 1.6270 | 1.6304 | 1.6342 | 1.6376 |
USD/CHF | 0.8866 | 0.8897 | 0.8929 | 0.8960 | 0.8992 | 0.9023 | 0.9055 |
USD/CAD | 0.9516 | 0.9549 | 0.9586 | 0.9619 | 0.9656 | 0.9689 | 0.9726 |
EUR/JPY | 119.09 | 119.92 | 120.49 | 121.32 | 121.89 | 122.72 | 123.29 |
GBP/JPY | 134.13 | 134.91 | 135.63 | 136.41 | 137.13 | 137.91 | 138.63 |
CHF/JPY | 92.33 | 92.72 | 93.11 | 93.50 | 93.89 | 94.28 | 94.67 |
AUD/JPY | 86.05 | 86.63 | 87.34 | 87.92 | 88.63 | 89.21 | 89.92 |
EUR/GBP | 0.8805 | 0.8837 | 0.8857 | 0.8889 | 0.8909 | 0.8941 | 0.8961 |
EUR/CHF | 1.2763 | 1.2839 | 1.2891 | 1.2967 | 1.3019 | 1.3095 | 1.3147 |
GBP/CHF | 1.4442 | 1.4490 | 1.4534 | 1.4582 | 1.4626 | 1.4674 | 1.4718 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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