FOREX Newsletter
Pulse of the Market
· U.S Dollar making slow progress on a recovery as capital markets slip through low data
· Single Currency attempts to hold back the Dollar tide with news of Portugal’s accepted bailout
· British Pound tumbles after manufacturing and sales data adds to diminished rate outlook
· Australian Dollar tumbles as the RBA polished dovish and sentiment trends dive
The Greenback ended yesterday’s trading session higher against nearly all of its major counterparts as a number of developments led investors to seek the Dollar's relative safety. A report showed that factory orders jumped 3% last month, up from the 0.7% the previous month, and better than the expected 2% gain. Growth in exports to emerging markets like China and Brazil have driven the factory rebound, which in turn has been at the forefront of the economic recovery. With the improved orders, and durable retail sales, investors will pay particularly close attention to this Friday's employment report to see if the increase in demand is translating to more jobs. Thin liquidity due to a week of holidays in Japan has also added to volatile trade. The Euro pulled back from its recent 16 month high against the U.S Dollar as investors reduce their bets on looming rate hikes from the ECB. The continuing debt account amongst the region's periphery economies has investors demanding record yields to hold Greek, Irish and Portuguese debt. Rumors have arisen that Greece may seek a restructuring, an easier name for default, later this year or early 2012 as debt has ballooned to 143% of GDP. However, as it has been the theme for the past month, the Euro's yield advantage over the Dollar will keep it well supported within its recent ranges until the Fed signals its intent to tighten. British Pound tumbled nearly 2% yesterday after a report showed that U.K manufacturing slowed. While U.K inflation remains well above the BoE's target level of 2%, weak economic data has most expecting the Bank to remain on hold when they meet later this week. The Cable slumped against all of its major counterparts as a U.K manufacturing index unexpectedly dropped to 54.6, down from 56.7 in March. BoE Governor Mervyn King also squashed all hopes of a rate hike later this week when he told reporters that "government indebtedness globally would worsen if interest rates were to rise." The Yen gained against most of its counterparts on falling equities. Thin liquidity with Japanese markets closed for public holidays has also compounded the gains.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
06:00 | GBP Nationwide House Prices n.s.a. (YoY) (APR) | Medium | -0.7% | 0.1% | |
07:55 | EUR German Purchasing Manager Index Services (APR) | Medium | 57.7 | 57.7 | |
08:00 | EUR Euro-Zone Purchasing Manager Index Services (APR) | Medium | 56.9 | 56.9 | |
08:30 | GBP Mortgage Approvals (MAR) | Medium | 48.0K | 47.0K | |
08:30 | GBP Net Consumer Credit (MAR) | Medium | 0.6B | 0.8B | |
09:00 | EUR Euro-Zone Retail Sales (YoY) (MAR) | High | 0.0% | 1.3% | |
11:00 | USD MBA Mortgage Applications (APR 29) | Low | -5.6% | ||
12:15 | USD ADP Employment Change (APR) | Medium | 195K | 201K | |
14:00 | USD ISM Non-Manufacturing Composite (APR) | High | 57.5 | 57.3 |
Euro
The Single Currency found support in yesterday’s European trading session after hitting day lows near 1.4754 but the market was unable to hold onto the bounce when U.S stocks turned lower and commodity losses piled up. March PPI increased at 0.7% vs. 0.6% previously. Overall the EUR/USD traded with a low of 1.4754 and a high of 1.4889 before closing the day around 1.4825 in the New York session.
Yen
The Japanese Yen broke below 81.00 Yen but quickly found support as the two safe havens competed for strength yesterday. EUR/JPY moved below 120.00 Yen but the market remained close to the level with buyers still hanging about. Overall the USD/JPY traded with a low of 80.68 and a high of 81.26 before closing the day around 80.93 in the New York session.
British Pound
The British Pound was very weak after the sharp fall in April Factory Purchasing Managers Index to 54.6 vs. 56.7 previously. Sterling fell through 1.6500 on the back of EUR/GBP pushing above 0.9000. Overall the GBP/USD traded with a low of 1.6462 and a high of 1.6660 before closing the day at 1.6485 in the New York session.
Canadian Dollar
The Canadian Dollar posted further gains in yesterday’s trading session. The Loonie has traded through a volatile session after Steven Harper's Conservative party won a majority in parliamentary elections, marking the first conservative majority since the early 1990's. Overall, the USD/CAD traded with a low of 0.9457 and a high of 0.9540 before closing the day at 0.9525 in the New York session.
Australian Dollar
The Australian Dollar was under heavy selling pressure with Silver and Oil pushing the commodity currency lower. The RBA held at 4.75% with the central bank still concerned about inflation but not indicating a rate hike in the next couple of months. Overall the AUD/USD traded with a low of 1.0837 and a high of 1.0951 before closing the day at 1.0844 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 53 and lies above the neutral zone. Overall, the cross has lost 0.37%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and above 100 days moving average. Fast stochastic is issuing bearish and MACD is also indicating a bearish stance. The RSI is above 42 reading and lies below the neutral zone. The pair has lost 1.33%.
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 51 reading and lies above the neutral region. The pair has lost 1.24%.
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 65 reading and lies above the neutral region. The pair has gained 0.98%.
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 1.45%.
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 |
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