FOREX Newsletter
Pulse of the Market
· Greenback recovered some of its losses but little market participation kept the rates range bounded
· ECB President may continue to soften his hawkish tone as policy makers struggle to contain the risk
· British Pound halted the near term advance against the Greenback and may continue to lose ground
· The Bank of Canada is widely expected to keep its key rate steady at 1 percent
The Greenback made gains in quiet trading session yesterday, as holiday in the U.S and the U.K drained volume from the markets. The U.S Dollar was in a positive territory yesterday, after a heavy selloff last week. It slid 1.3% in the last two day of the past week, in the midst of concerns about slower growth and a Federal Reserve inclined to keep its monetary policy loose. Greenback managed to claw back some of Friday’s losses against the Euro, assisted by Euro negative press commentary. On Friday, U.S data was mostly in line with consensus, although the University of Michigan consumer sentiment was stronger, rising to 74.3 in May. The Euro continued to slide across the board, falling the most against the Dollar in illiquid trading conditions, as concerns over whether or not European governments will reach an accord on how to deal with potentially insolvent nations. While many officials have shrugged off default as a remote end result, there is at least the distinct possibility that there will be some kind of restructuring of the debt. The governor of the Greek central bank, Provopoulos, said he remained “firmly against” debt restructuring as it could be “accompanied by contagion” and “would damage the credibility of the Greek sovereign and the euro itself.” The British Pound halted the near term advance against its U.S Dollar and the Cable may continue to lose ground as the British Chambers of Commerce pushes back its forecasts for a rate hike by the Bank of England. As the outlook for growth falters, the BoE is expected to carry its wait and see approach into the second half of the year. The Japanese Yen ended the session almost unchanged against the U.S Dollar. BoJ Governor Shirakawa acknowledged that Japan’s deteriorating fiscal health is “serious”. On Friday, Fitch lowered the outlook on Japan’s rating to negative from stable, citing concerns over the country’s worsening fiscal position. Reacting to the news, Japan’s Deputy Chief Cabinet Secretary said Japan will continue to work on social security and fiscal reforms. The Canadian Dollar was moderately higher against the U.S currency yesterday. Canadian bond prices were mixed, with Canada's short end on the rise ahead of the data and the Bank of Canada's rate decision today.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 05:45 | Switzerland Gross Domestic Product (QoQ) (1Q) | High | | 0.7% | 0.9% |
| 06:00 | German Retail Sales (MoM) (APR) | Medium | | 1.8% | -2.7% |
| 06:45 | French Producer Prices (MoM) (APR) | Medium | | 0.8% | 0.9% |
| 07:55 | German Unemployment Change (MAY) | High | | -30K | -37K |
| 09:00 | Euro Zone Unemployment Rate (APR) | Medium | | 9.9% | 9.9% |
| 13:00 | Bank of Canada Rate Decision (MAY 31) | High | | 1.00% | 1.00% |
| 13:00 | U.S S&P/Case-Shiller Home Price Index (MAR) | Low | | | 139.27 |
| 14:00 | U.S Consumer Confidence (MAY) | High | | 66.5 | 65.4 |
Euro
The Single Currency was under pressure on weekend reports of Greece not hitting budget cuts required to receive bailout money. This was reversed sharply on the German sentiment shift reports late in the day that Greece would receive support without restructuring. Overall, the EUR/USD traded with a low of 1.4256 and a high of 1.4305 before closing the day around 1.4281 in the New York session.
Yen
The Japanese Yen kept to a 20 pip range in yesterday’s trading session with most of action reserved for crosses with EUR/JPY rallying into the end of the day. The outlook for the USD/JPY seems to be largely dependent on U.S monetary policy. Overall, the USD/JPY traded with a low of 80.75 and a high of 80.96 before closing the day around 80.92 in the New York session.
British Pound
The British Pound remained subdued in yesterday’s trading session but well supported near highs. The GBP/USD has broken above resistance in recent days and is threatening to begin an uptrend. Overall, the GBP/USD traded with a low of 1.6449 and a high of 1.6504 before closing the day at 1.6473 in the New York session.
Canadian Dollar
The Canadian Dollar was moderately higher against the U.S currency yesterday. The Bank of Canada will probably keep its key interest rate unchanged today and may emphasize the risks to Canada of a strong Dollar and uneven global growth rather than give hints on the timing of the next tightening. Overall, the USD/CAD traded with a low of 0.9750 and a high of 0.9785 before closing the day at 0.9769 in the New York session.
Australian Dollar
Australian Dollar consolidated near 1.0700 and is threatening to resume the uptrend with the correction seen over in stock markets. Concerns include China and Greece but if these fail to materialize then a retest of 1.1000 could be seen in coming weeks. Overall, the AUD/USD traded with a low of 1.0674 and a high of 1.0710 before closing the day at 1.0690 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The RSI is above 51 and lies above the neutral zone. Overall, the cross has gained 0.08%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 57 reading and lies above the neutral zone. The pair has gained 0.05%.
Aussie-Yen
Currently, the cross is trading above 14, 100 and below 50 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 52 reading and lies above the neutral region. The pair has gained 0.12%.
Euro-Sterling
This cross is trading below 14, 50 and above 100 days moving average. Fast stochastic is indicating a bullish and MACD is issuing a bearish signal. The RSI is above 44 reading and lies below the neutral region. The pair has gained 0.03%.
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 32 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 | 1.4207 | 1.4232 | 1.4256 | 1.4281 | 1.4305 | 1.4330 | 1.4354 |
| USD/JPY | 80.58 | 80.67 | 80.79 | 80.88 | 81.00 | 81.09 | 81.21 |
| GBP/USD | 1.6392 | 1.6420 | 1.6447 | 1.6475 | 1.6502 | 1.6530 | 1.6557 |
| USD/CHF | 0.8462 | 0.8478 | 0.8499 | 0.8515 | 0.8536 | 0.8552 | 0.8573 |
| USD/CAD | 0.9716 | 0.9733 | 0.9751 | 0.9768 | 0.9786 | 0.9803 | 0.9821 |
| EUR/JPY | 114.82 | 115.01 | 115.29 | 115.48 | 115.76 | 115.95 | 116.23 |
| GBP/JPY | 132.53 | 132.76 | 133.03 | 133.26 | 133.53 | 133.76 | 134.03 |
| CHF/JPY | 94.28 | 94.50 | 94.72 | 94.94 | 95.16 | 95.38 | 95.60 |
| AUD/JPY | 85.97 | 86.10 | 86.31 | 86.44 | 86.65 | 86.78 | 86.99 |
| EUR/GBP | 0.8632 | 0.8644 | 0.8656 | 0.8668 | 0.8680 | 0.8692 | 0.8704 |
| EUR/CHF | 1.2093 | 1.2113 | 1.2142 | 1.2162 | 1.2191 | 1.2211 | 1.2240 |
| GBP/CHF | 1.3932 | 1.3958 | 1.3998 | 1.4024 | 1.4064 | 1.4090 | 1.4130 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
