FOREX Newsletter
Pulse of the Market
· The U.S Dollar run tangential in anticipation of risk aversion
· Euro recovered lost ground even though Greek Yields extends rise
· British Pound gearing up for BoE Minutes and might be a major catalyst
· Australian Dollar unfazed by nonaligned tone in RBA minutes
Greenback ended yesterday’s trading session lower against the basket of major currencies. Stronger housing market numbers from the U.S failed to lend much support to risk appetite. The U.S Dollar started yesterday’s session higher on the heels of stronger building permits and housing starts but the gains were short-lived. Last month, permits rose 11.2 percent which was 10 times more than expected while starts rose 7.2 percent. Although these reports indicate that the housing market in the U.S improved, but investors realized that the absolute level of permits and starts are still low compared to last year's average, when the U.S economy was on softer footing. Existing home sales are due for release in today’s trading session and like the housing reports released yesterday, a rebound is expected in the month of March. The Euro rebounded strongly in yesterday’s trading session after selling off aggressively on Monday as ECB officials continue to talk about the need for tighter monetary policy. Yesterday, Stark, Member of the Executive Board of the European Central Bank said inflation pressures are rising and rate normalization means a gradual increase in interest rates. Since raising interest rates earlier this month, comments from central bank officials have been fairly consistent. ECB still looking to raise interest rates and none of the sovereign debt troubles in recent weeks has affected their prejudice. The credit quality of both the Euro Zone and the U.S has come into question but the problems in the U.S are far more severe because in the Euro Zone, only the peripheral countries have credit issues. Even though they share a same currency, the 17 members of the Euro Zone have their own individual credit ratings. Overall, the latest economic data shows the Euro Zone economy performing very well despite a recent interest rate hike, higher commodity prices and a strong currency. The British Pound traded higher against the U.S Dollar regardless of the lack of economic data. The minutes from the most recent Bank of England meeting will be released today and how monetary policy officials voted earlier this month will determine whether Cable has enough momentum to break above 1.64, which has become an almost unfeasible barrier for the GBP/USD. Yen traded lower against the U.S Dollar following a rally in equities and improvement in risk appetite. The only economic data that was released from Japan was consumer confidence. The index only dropped from 41.2 to 38.6.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
00:30 | AUD Westpac Leading Index (MoM) (FEB) | Low | 0.4% | 0.3% | |
06:00 | EUR German Producer Prices (MoM) (MAR) | Medium | 0.8% | 0.7% | |
08:30 | GBP Bank of England Minutes | High | |||
11:00 | USD MBA Mortgage Applications (APR 15) | Low | -6.7% | ||
14:00 | USD Existing Home Sales (MAR) | Medium | 5.00M | 4.88M | |
14:00 | USD Existing Home Sales (MoM) (MAR) | Medium | 2.5% | -9.6% |
Euro
The Single Currency found some support and rallied in yesterday’s trading session at the same time as the German Finance minister commented that a Greek restructuring is to be expected. The market found extensive strength with both EUR/JPY and EUR/GBP outperforming. In the month of April, Purchasing Manager Index surveys were slightly weaker as the Composite fell to 57.8 from 58.2 previously. Overall the EUR/USD traded with a low of 1.4204 and a high of 1.4352 before closing the day around 1.4333 in the New York session.
Yen
The Japanese Yen weakened in yesterday’s trading session as risk appetite picked up and the market bought Yen crosses aggressively from week lows on Monday. A short term base has been found at the 82.50 Yen region and a test of 83.00 Yen is likely on coming sessions. Japanese Yen was also pressured by a rally in equities and improvement in risk appetite. Overall the USD/JPY traded with a low of 82.31 and a high of 82.75 before closing the day around 82.58 in the New York session.
British Pound
The British Pound found support and broke through 1.6300 in yesterday’s European trading session to hit day highs in the U.S session. The Monetary Policy Committee minutes scheduled for release today could provide additional support if it shows more members contemplating a rate hike at the April meeting. Overall the GBP/USD traded with a low of 1.6229 and a high of 1.6336 before closing the day at 1.6313 in the New York session.
Australian Dollar
The Australian Dollar surged back above 1.0500 as the risk off trade proved only temporary and threatens once again to test 1.0580 all time highs while risk appetite remain strong. AUD/JPY is testing 87.00 Yen and a break above could encourage more buyers into the market. The latest round of RBA minutes revealed that central bank is likely to remain stationary for the time being, with authorities noting that they would “look through” the near term inflation pressures. Overall the AUD/USD traded with a low of 1.0442 and a high of 1.0531 before closing the day at 1.0526 in the New York session.
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 55 and lies above the neutral zone. Overall, the cross has gained 0.64%.
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 53 reading and lies above the neutral zone. The pair has gained 0.22%.
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 60 reading and lies above the neutral region. The cross has gained 0.06%.
Euro-Sterling
This cross is trading below 14 and above 50, 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 54 reading and lies above the neutral region. The pair has gained 0.42%.
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 44 and lies below the neutral region. The pair has gained 0.67%.
Appendix
Daily Pivot Points | |||||||
Trading Range | |||||||
Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
EUR/USD | 1.4093 | 1.4148 | 1.4241 | 1.4296 | 1.4389 | 1.4444 | 1.4537 |
USD/JPY | 81.90 | 82.11 | 82.34 | 82.55 | 82.78 | 82.99 | 83.22 |
GBP/USD | 1.6142 | 1.6186 | 1.6249 | 1.6293 | 1.6356 | 1.6400 | 1.6463 |
USD/CHF | 0.8898 | 0.8921 | 0.8959 | 0.8982 | 0.9020 | 0.9043 | 0.9081 |
USD/CAD | 0.9399 | 0.9473 | 0.9517 | 0.9591 | 0.9635 | 0.9709 | 0.9753 |
EUR/JPY | 116.15 | 116.61 | 117.49 | 117.95 | 118.83 | 119.29 | 120.17 |
GBP/JPY | 132.99 | 133.38 | 134.05 | 134.44 | 135.11 | 135.50 | 136.17 |
CHF/JPY | 90.60 | 91.04 | 91.41 | 91.85 | 92.22 | 92.66 | 93.03 |
AUD/JPY | 85.43 | 85.74 | 86.33 | 86.64 | 87.23 | 87.54 | 88.13 |
EUR/GBP | 0.8700 | 0.8720 | 0.8752 | 0.8772 | 0.8804 | 0.8824 | 0.8856 |
EUR/CHF | 1.2591 | 1.2660 | 1.2777 | 1.2846 | 1.2963 | 1.3032 | 1.3149 |
GBP/CHF | 1.4415 | 1.4476 | 1.4577 | 1.4638 | 1.4739 | 1.4800 | 1.4901 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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