FOREX Newsletter
Pulse of the Market
· U.S Dollar slid to its lowest level on a trade weighted basis since July 30th, 2008
· Euro investors may come back to reality this week after the ECB holds rates
· BoE rate decision is due just before its European region counterpart’s decision
· Canadian Dollar rate and growth outlook may point to further gains this week
The U.S Dollar ended Friday’s trading session higher against most of the major currencies following mixed economic reports providing little support to the Greenback. Personal income and personal spending grew more than economists had anticipated but manufacturing activity in the Chicago region slowed while consumer confidence in April was revised lower. Personal incomes rose 0.5 percent in March compared to 0.4 percent growth the previous month. Spending growth slowed but not by as much as people had feared with spending rising 0.6 percent compared to an upwardly revised 0.9 percent growth in March. The most important piece of U.S economic data scheduled for released this week is the non-farm payrolls report. However besides that, there are factory orders, manufacturing and service sector ISM on the calendar. Euro ended Friday’s session lower against the Greenback for the first time in 8 trading days. A surprise decline in German consumer spending pressured the Single Currency. One more thing weighing the currency was quiet and thin trading activity during the European session as most the U.K participants were on holiday for the Royal Wedding. Retail sales plunged 2.1 percent in March, which matched the slide in January 2010. The Euro Zone sentiment indicators also showed confidence deteriorating across the board. Aside from the ECB rate decision, which will be the most market moving event risk this week, Euro Zone PPI, Retail Sales, German industrial production and factor y orders are also scheduled for release. British Pound ended the session higher against the U.S Dollar. The lack of participation by U.K traders and the moves in other currencies indicates that Dollar weakness continues to be the main driver behind the GBP/USD rally. The U.K markets were closed for a holiday on Friday there were no U.K economic reports or comments made by U.K officials. U.K manufacturing, service and construction sector PMI reports are scheduled for release this week along with producer prices. The BoE also has a monetary policy announcement but unlike the ECB rate decision, it will have little impact on the currency market. Japanese Yen traded mixed on Friday as strengthened against the U.S Dollar, Euro and British Pound but weakened against the Swiss Franc and Canadian Dollar.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 05:00 | JPY Vehicle Sales (YoY) (APR) | Low | | | -37.0% |
| 07:15 | CHF Retail Sales (Real) (YoY) (MAR) | Medium | | | 1.5% |
| 07:30 | CHF SVME-Purchasing Managers Index (APR) | Medium | | 59.8 | 59.3 |
| 07:55 | EUR German Purchasing Manager Index Manufacturing (APR F) | Medium | | 61.7 | 61.7 |
| 08:00 | EUR Euro-Zone Purchasing Manager Index Manufacturing (APR F) | Medium | | 57.7 | 57.7 |
| 14:00 | USD Construction Spending (MoM) (MAR) | Medium | | 0.4% | -1.4% |
| 14:00 | USD ISM Manufacturing (APR) | Medium | | 59.5 | 61.2 |
Euro
The Single Currency remains near its 16 month high in Friday’s trading session on increased expectations that the ECB will continue to combat rising inflation with higher interest rates. With most investors expecting the Single Currency's yield advantage over the Dollar to only widen in the coming months, the Euro will remain well supported even as the region's periphery economies grapple with ballooning debt. Overall, the EUR/USD traded with a low of 1.4803 and a high of 1.4877 before closing the day around 1.4813 in the New York session.
Yen
The Japanese Yen rose to a five week high against the U.S Dollar on Friday. With violence escalating in Syria, investors have bought both the Japanese Yen and Swiss Franc for their safe haven status. Japan’s Ministry of Finance said that the government did not sell the local currency between March 30 and April 26 despite the recent appreciation in the Yen, but the Group of Seven may take additional steps to aid the ailing economy as the Bank of Japan curbs its assessment for the real economy. Overall, the USD/JPY traded with a low of 81.03 and a high of 81.64 before closing the day around 81.08 in the New York session.
British Pound
The British Pound traded higher on Friday. Last week's encouraging, although not overwhelming, 0.5% gain in Q1 GDP has prompted investors to increase their bets that the BoE will have the room to raise interest rates possibly as soon as at their next meeting in this month. However, BoE Governor Mervyn King, and the majority of the policy setting committee, has kept rates on hold despite soaring inflation, fearing that higher borrowing costs could extinguish the growing economic growth. Overall, the GBP/USD traded with a low of 1.6622 and a high of 1.6721 before closing the day at 1.6704 in the New York session.
Canadian Dollar
The Canadian Dollar soared to fresh highs against the Greenback. Rising commodity prices continue to fuel gains in the commodity Dollar despite mixed economic data. The Canadian economy contracted 0.2 percent in the month of February. On an annualized basis, the pace of growth was the slowest since February 2010. Higher oil prices have driven the Canadian Dollar to its highest level in 3 years. Overall, the USD/CAD traded with a low of 0.9448 and a high of 0.9548 before closing the day at 0.9458 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 56 and lies above the neutral zone. Overall, the cross has lost 0.60%.
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 0.10%.
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 62 reading and lies above the neutral region. The cross has lost 0.24%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 56 reading and lies above the neutral region. The pair has lost 0.49%.
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 40 and lies below the neutral region. The pair has lost 0.55%.
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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