FOREX Newsletter
Pulse of the Market
· U.S Dollar may face increased selling pressures ahead of the Non-Farm Payrolls report due later today
· ECB is widely expected to keep the benchmark interest rate on hold at 1.25% in May
· British Pound pared the bearish reaction to the slew of U.K data that missed market expectations
· Canadian Dollar weighed down by softness in the price of U.S crude oil and other commodities
The Greenback ended yesterday’s trading session on a mixed note following contradictory interest rate expectations. Continued economic weakness in the U.S, and relatively slow inflation when compared with other G10 economies, have most investors expecting the Fed will keep rates at their current low levels at least for the rest of the year. However, other G10 and emerging market economies are tightening policy and raising borrowing costs to combat rising inflation. In the near term, markets are squarely focused on tomorrow's Non Farm Payrolls and Unemployment reports in the U.S, as well as today's ECB interest rate decision. Payrolls are expected to take a step back from last month's reading while the unemployment rate is expected to remain steady at 8.8%. However, weak private employment reports yesterday have some fearing that conditions in the labor market are again deteriorating. The ADP employment report showed that companies added 179K jobs in April, short of the 198K expected, and far from the 207K addition in the previous month. Consumer confidence also missed the mark, registering 89.7 down from 91.7 in April, and short of the 93 reading anticipated. The ISM Non-Manufacturing index, a gauge of the largest part of the economy, was released at 52.8, down from 57.3 in March. The Euro has been particularly volatile yesterday with all eyes on the ECB. While most expect the Bank to remain on hold after last month's 0.25% hike, Euro Zone policymakers remain hawkish on inflation. The details of an agreement between Portugal, the EU and IMF have largely slipped under the radar, with the nation set to receive 78B Euro. Investors appear to become largely resistant to Euro Zone "bailouts" as the region's core economies are growing and remain at least acquiescent to supporting their weaker neighbors for the time being. Sterling was relatively flat yesterday ahead of today's BoE decision. While the Bank is not expected to alter its current policies as the U.K economy sputters and inflation has begun to show signs of slowing. However, after yesterday's disappointing U.K PMI, consumer credit, and mortgage approval reports, it appears that a hike won't come until later this summer. The Japanese Yen continued to strengthen as fears that global growth could slow spurred investors to seek the Yen's relative safety.
Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
08:30 | GBP Purchasing Manager Index Services (APR) | Medium | 56.0 | 57.1 | |
11:00 | GBP Bank of England Asset Purchase Target (MAY) | High | 200B | 200B | |
11:00 | GBP Bank of England Rate Decision (MAY 5) | High | 0.50% | 0.50% | |
11:45 | EUR European Central Bank Rate Decision (MAY 5) | High | 1.25% | 1.25% | |
12:30 | CAD Building Permits (MoM) (MAR) | Low | -2.5% | 9.9% | |
12:30 | USD Initial Jobless Claims (APR 30) | Low | 410K | 429K | |
14:00 | CAD Ivey Purchasing Managers Index (APR) | Medium | 65.1 | 73 |
Euro
The Single Currency had a volatile intraday high during yesterday’s European trading session upturned on the weak U.S data. March Retail Sales fell -1.0% vs. +0.3% previously. EUR/JPY also came under pressure falling to the lower end of the recent 119 Yen to 121 Yen range. Overall the EUR/USD traded with a low of 1.4774 and a high of 1.4939 before closing the day around 1.4827 in the New York session.
Yen
The Japanese Yen did well with the risk off trading in the U.S session with the major falling to fresh month lows at 80.40 Yen. The support is being ground away as crosses also help the Yen and further stock market losses threaten a USD/JPY test of 80.00 Yen. Overall, the USD/JPY traded with a low of 80.42 and a high of 81.18 before closing the day around 80.61 in the New York session.
British Pound
The British Pound tracked the Euro with a rally in the European session reversed with U.S stock market losses. April Construction PMI fell to 53.3 vs. 56.4 previously. EUR/GBP pushed a little higher above 0.9020 but the market is careful not to get caught long as selling from this level has been noted in the past. Overall, the GBP/USD traded with a low of 1.6451 and a high of 1.6573 before closing the day at 1.6487 in the New York session.
Canadian Dollar
The Canadian Dollar slipped following the lower price of oil, Canada's primary export, and weak economic reports out of the U.S which is Canada's main trading partner. All these aspects prompted investors to seek safer assets. Oil prices shed nearly two percent falling to $109 a barrel. Overall, the USD/CAD traded with a low of 0.9503 and a high of 0.9602 before closing the day at 0.9588 in the New York session.
Australian Dollar
The Australian Dollar reacted to the heavy selling in commodities and weak risk appetite to fall through 1.0800 to pressure the uptrend. Adding to the pressure in today’s Asian session was the weak March Retail Sales at -1.0% inspiring a test of 1.0700 ahead of the ECB announcement later today. Overall, the AUD/USD traded with a low of 1.0728 and a high of 1.0876 before closing the day at 1.0746 in the New York session.
Euro-Yen
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 52 and lies above the neutral zone. Overall, the cross has lost 0.38%.
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 41 reading and lies below the neutral zone. The pair has lost 0.40%.
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 44 reading and lies below the neutral region. The pair has lost 1.29%.
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 66 reading and lies above the neutral region. The pair has gained 0.01%.
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 30 and lies below the neutral region. The pair has gained 0.06%.
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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