FOREX Newsletter
Pulse of the Market
· Greenback puts in for its first loss in six days as anti Euro sentiment eases
· Euro attempts to regain lost ground as officials agree to discuss Greece adjustments
· British Pound rides Euro gains, reaction to biggest jump in retail sales in years
· Canadian Dollar posted a quick stumble after housing data and oil gains offer support
The U.S Dollar ended yesterday’s trading session lower against the basket of major currencies. This week's main mover of the U.S Dollar will be retail sales data due on Thursday. Based on data for car and chain store sales, the forecast is for a rise in total retail sales of 0.7% m/m, and an increase in core retail sales of 0.6% m/m. However, last week's sharp decline in oil prices bodes well for a rebound in retail sales in May. CPI and PPI reports for last month are also due for release. Headline and core inflation rates are forecast to rise but should not change the market's view on Fed policies. The Greenback is expected to remain weak until there is a change in perception of U.S monetary and fiscal policies. Euro ended yesterday’s trading session slightly higher. The Single Currency tumbled last week after the ECB left interest rates unchanged and causing it to struggle to hold current support levels. The Euro's sharp decline was came after the ECB appeared to moderate its hawkish anti-inflation stance in its accompanying statement and pared back expectations for an imminent rate hike. Euro weakness is continuing after S&P downgraded Greece to B from BB- and warned of further downgrades. With a Euro correction underway, the Euro is likely to remain under pressure in the near term, pending the outlook for further interest rate increases. The British Pound fell in the starting hours of yesterday’s trading session against both the Dollar and the Euro after the Confederation of British Industry lowered its economic growth estimates for the U.K and a report showed house prices unexpectedly fell the most in seven months in April. The Bank of England kept its benchmark interest rate at 0.5% last week in an effort to boost the economy, regardless of inflation figures that continue to exceed their target of 2.0%. But the losses were limited and Cable rebounded to end the day higher as there were still some in the market that thought they would tighten to stave off inflation. The Japanese Yen ended the session almost unchanged. The BOJ published yesterday that they will continue to carefully monitor the effects of the nuclear disaster and "take appropriate policy action as necessary". The speculation of policy easing had the nation's 10 year bond yields touching 1.125% earlier, the lowest in four months.
| Time(GMT) | Economic Release | IM | Actual | Forecast | Prior |
| 01:30 | AUD Trade Balance (Australian Dollar) (MAR) | High | 1740M | 500M | -87M |
| 06:45 | EUR French Industrial Production (MoM) (MAR) | Low | | 0.4% | 0.4% |
| 07:15 | CHF Consumer Price Index (MoM) (APR) | High | | 0.5% | 0.6% |
| 11:30 | USD NFIB Small Business Optimism (APR) | Low | | 91.8 | 91.9 |
| 12:30 | USD Import Price Index (YoY) (APR) | High | | 10.5% | 9.7% |
| 14:00 | USD Wholesale Inventories (MAR) | Low | | 1.0% | 1.0% |
| 23:50 | JPY Official Reserve Assets (APR) | Low | | | $1116.0B |
Euro
The Single Currency brief recovery rally was abruptly ended in the European trading session when S&P cut Greece's rating. The March German Trade Balance was very strong at 15.2b vs. 12.5bn previously. The market found support under 1.4300 and was able to bounce in the U.S to roughly opening levels. Overall, the EUR/USD traded with a low of 1.4253 and a high of 1.4441 before closing the day around 1.4362 in the New York session.
Yen
The Japanese Yen was sold against most of the major currencies to begin the day lower but the U.S session saw crosses fall back to opening levels with the market struggling to hold onto gains. EUR/JPY slumped to 115.00 Yen but was able to find support and consolidate. Overall, the USD/JPY traded with a low of 80.17 and a high of 80.83 before closing the day around 80.33 in the New York session.
British Pound
The British Pound ended yesterday’s trading session higher against the U.S Dollar. April U.K Halifax House Price Index fell 1.4% m/m and kept the recovery limited. When Greece was downgraded the Pound fell in sympathy but was able to rebound to opening levels as well later in the U.S session. Overall, the GBP/USD traded with a low of 1.6269 and a high of 1.6406 before closing the day at 1.6401 in the New York session.
Canadian Dollar
The Canadian Dollar climbed against its U.S counterpart in yesterday’s trading session as a rebound in commodities following the steepest weekly slump since 2008 overshadowed the reduction of Greece’s credit rating by Standard & Poor’s. Canadian government bonds rose, pushing the 10 year yield down one basis point. Overall, the USD/CAD traded with a low of 0.9602 and a high of 0.9694 before closing the day at 0.9618 in the New York session.
Australian Dollar
The Australian Dollar did well yesterday tracking the stock markets higher and shrugging off the Euro weakness. Commodities led by Oil and Gold helped the Australian Dollar to break briefly above 1.0800 but this level proved solid resistance. Overall, the AUD/USD traded with a low of 1.0707 and a high of 1.0811 before closing the day at 1.0806 in the New York session.
Euro-Yen
EUR/JPY is trading below 14, 50 and above 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 35 and lies below the neutral zone. Overall, the cross has lost 0.23%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is also indicating a bearish stance. The RSI is above 38 reading and lies below the neutral zone. The pair has lost 0.24%.
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 47 reading and lies below the neutral region. The pair has gained 0.74%.
Euro-Sterling
This cross is trading below 14, 50 and above 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 42 reading and lies below 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 bullish stance and MACD is indicating a bearish tone. The RSI is above 39 and lies below the neutral region. The pair has lost 0.52%.
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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