FOREX Newsletter
Pulse of the Market
· Greenback unable to embrace gains in the midst of moving to and fro sentiment
· Euro vulnerable by a discussion of Greek debt restructuring at EU/IMF Summit
· U.K CPI data showed inflation surging 1% m/m in April, while the y/y figure topped 4.5%
· Canadian Dollar snaps four day losing streak as U.S Dollar gave up its early gains
The U.S Dollar gave up its earlier gains to end yesterday’s trading session lower against most of the major currencies. The only currency that performed worse than the Greenback was the Japanese Yen. Earlier concerns about global growth and the pace of the U.S and European recovery gave way to a broad aversion for U.S Dollar. U.S economic data surprised to the downside. Investors have become used to weak U.S economic reports that will keep the Federal Reserve on the sidelines for the near future. The minutes from the most recent monetary policy meeting will be released today and it will most likely remind investors how far away the U.S central bank is from normalizing monetary policy. Housing market numbers was expected to pullback after a strong March but few people anticipated the steep decline experienced last month. Housing starts fell 10.6 percent against expectations for a 3.6 percent rise. Building permits also fell 4.0 percent. Industrial production was also flat last month with capacity utilization ticking lower. The Euro rose strongly against the U.S Dollar but the rally was supported by risk appetite and a decline in the U.S Dollar than positive news from the Euro Zone. According to the German ZEW survey, investors have grown more optimistic about current activity but more concerned about the economic recovery. Recent economic reports from the Euro Zone also suggest that the recovery is losing momentum. At the same time, there has been no resolution yet for Greece. Next month, the stress test results of European banks will be released which means that sovereign debt troubles will continue to be a dark cloud that hangs over the Euro. No major Euro Zone economic reports are scheduled for release today. The British Pound ended the session higher against the U.S Dollar following stronger than expected inflation numbers. The annual core CPI rose to record high while the headline data was the strongest since October of 2008. The rise in inflation was driven by a rise in transportation costs. The BoE minutes and the employment report are scheduled for release today. Japanese Yen weakened significantly against all of its major counterparts after BOJ Governor said that the country’s economy is in a “very severe” state due to the devastation caused by the March earthquake and tsunami.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 00:30 | AUD Westpac Consumer Confidence (MAY) | Medium | -1.3% | | 1.2% |
| 08:30 | GBP Bank of England Meeting Minutes | High | | | |
| 08:30 | GBP Jobless Claims Change (APR) | Medium | | 0.0K | 0.7K |
| 11:00 | USD MBA Mortgage Applications (MAY 13) | Low | | | 8.2% |
| 12:30 | CAD Leading Indicators (MoM) (APR) | Medium | | 0.6% | 0.8% |
| 12:30 | CAD Wholesale Sales (MoM) (MAR) | Low | | 1.2% | -0.6% |
| 18:00 | USD Federal Open Market Committee Meeting Minutes | High | | | |
| 23:50 | JPY Gross Domestic Product (QoQ) (1Q) | High | | -0.5% | -0.3% |
Euro
The Single Currency moved back towards the higher end of its recent ranges yesterday after Euro Zone finance chiefs endorsed a bailout for Portugal at a meeting in Brussels. Despite some dissent from the region's more fiscally conservative members, such as Finland, it appears that Portugal will receive a "bailout" package similar to those received by Greece and Ireland last year. Overall, the EUR/USD traded with a low of 1.4119 and a high of 1.4237 before closing the day around 1.4236 in the New York session.
Yen
The Japanese Yen shed nearly a percent yesterday, despite falling stocks and equities, after Japanese officials said that the economy is in a "very severe" state. The Yen tumbled against all 16 of its major peers after BoJ officials warned markets to brace for weak economic performance throughout the year, but a weaker Yen could eventually boost the Japanese economy. Overall, the USD/JPY traded with a low of 80.72 and a high of 81.76 before closing the day around 81.40 in the U.S session.
British Pound
The British Pound began the day on strong footing after a report showed inflation accelerating at a faster pace than expected. CPI data registered a 4.5% gain, up from 4.0% last month, and higher than the 4.1% expected. This gave investors reasons to believe that the BoE may move earlier than expected to tighten monetary policy. Overall, the GBP/USD traded with a low of 1.6173 and a high of 1.6302 before closing the day at 1.6249 in the New York session.
Australian Dollar
The Australian Dollar ended the day higher against the Greenback following better than expected economic data and hawkish RBA minutes. Earlier this month, the RBA decided to keep interest rates unchanged but monetary policy officials felt that higher rates were needed at some point to meet their inflation target if current conditions continue. Overall, the AUD/USD traded with a low of 1.0504 and a high of 1.0627 before closing the day at 1.0626 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 bullish tone and MACD is issuing a bearish stance. The RSI is above 44 and lies below the neutral zone. Overall, the cross has gained 1.35%.
Sterling-Yen
Currently GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing bullish and MACD is indicating a bearish stance. The RSI is above 43 reading and lies below the neutral zone. The pair has gained 1.14%.
Aussie-Yen
Currently, the cross is trading below 14 and above 50, 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 48 reading and lies below the neutral region. The pair has gained 1.47%.
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 48 reading and lies below the neutral region. The pair has gained 0.21%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The RSI is above 41 and lies below the neutral region. The pair has lost 0.12%.
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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