FOREX Newsletter
Pulse of the Market
· Greenback to take cues from jobless claims and housing starts data following FOMC
· Euro risks to downside against Swiss Franc on continued Greek debt troubles
· British Pound tumbles against U.S Dollar as Bank of England rate prospects descend
· Canadian Dollar rallies yesterday as crude oil inventories report sparks oil strength
The Greenback ended yesterday’s trading session higher following the release of the FOMC minutes, leading many investors to wonder if the Greenback rally can last. At the end of the day, the Federal Reserve is still on hold and nothing has changed that fact. Not only is the U.S recovery lacking momentum, but the problems in Europe pose a big risk to the economy. Nonetheless as it gets closer to the end of the Quantitative Easing program, the Federal Reserve is actively debating its exit strategy. According to the minutes from the most recent monetary policy meeting, the majority of FOMC members want to raise interest rates before selling assets. Talk of an exit strategy has helped to lift the U.S Dollar. The Euro ended the day almost unchanged against the U.S Dollar in the midst of little economic data. The only piece of Euro Zone data that was released yesterday was construction output which declined 0.3 percent in March. The day started with a speech from ECB member Stark who said Greece, Portugal, and Ireland are in a critical situation but the rest of the Euro Zone no longer needs the same degree of stimulus. This suggests that the central bank still believes that the sovereign debt troubles are remote problem even though many policymakers around the world have expressed concern about the impact that a mistreatment of the Greek situation could have on the financial markets. Cable ended yesterday’s trading session lower against the U.S Dollar. Weaker economic data and no new revelations from the MPC minutes drove the British Pound lower. Aside from the Japanese Yen, the Pound was the only other currency to perform worse than the Greenback. According to Office for National Statistics, the number of people claiming unemployment benefits rose by 12.4k, which boosted the unemployment rate from 4.5 to 4.6 percent. The Japanese Yen continued its decline against its majors, with the exception of the British Pound, against which it gained marginally. Investors appear to still be concerned about the comments made by Bank of Japan Governor Masaaki Shirakawa that the economy is in a “very severe” state.
Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
04:30 | Japan Industrial Production (MoM) (MAR) | Low | -15.5% | -15.3% | |
08:30 | U.K Retail Sales ex Auto Fuel (MoM) (APR) | Medium | 0.8% | 0.2% | |
09:00 | Switzerland ZEW Survey (Expectations) (MAY) | Low | 8.8 | ||
12:30 | U.S Initial Jobless Claims (MAY 14) | Low | 420K | 434K | |
13:00 | ECB's Trichet, Tumpel-Gugerell on European Economy | High | |||
14:00 | U.S Existing Home Sales (APR) | Medium | 5.20M | 5.10M | |
14:00 | U.S Philadelphia Fed. (MAY) | Medium | 20.0 | 18.5 | |
14:45 | BoC Governor Mark Carney Speaks on Bretton Woods | High |
Euro
The Single Currency ended yesterday’s trading session almost unchanged against the U.S Dollar in the risk on environment before the FOMC minutes and then found support from EUR/JPY buying after stock markets continued to rally post the minutes release. Overall the EUR/USD traded with a low of 1.4194 and a high of 1.4286 before closing the day around 1.4245 in the New York session.
Yen
The Japanese Yen remained under pressure across the board on strong Yen crosses and a rally in the U.S Bonds yields. Concern about the Japanese economy was highlighted by the first quarter GDP at -0.9% vs. -0.5% forecast with the effects of the Japanese Earthquake still reverberating through the country. Overall the USD/JPY traded with a low of 80.93 and a high of 81.71 before closing the day around 81.66 in the New York session.
British Pound
The British Pound struggled in the risk on environment as the Data disappointed and EUR/GBP buying hurt sentiment. The BOE minutes remained unchanged from April. The Unemployment data showed weakness in the jobs market with claims rising 12.4k in April. Overall the GBP/USD traded with a low of 1.6104 and a high of 1.6287 before closing the day at 1.6164 in the New York session.
Australian Dollar
The Australian Dollar did well tracking stocks and commodities higher throughout the day. AUD/JPY also broke resistance heading towards 87.00 Yen in a strong move higher. Wage Price index was slower than expected at 0.8% vs. 1.0% previously. Overall the AUD/USD traded with a low of 1.0568 and a high of 1.0665 before closing the day at 1.0627 in the New York session.
Canadian Dollar
The Canadian Dollar ended the day unchanged against the Greenback. Canadian leading indicators rose more than expected by 0.8 percent, there was little benefit to the Loonie. The rise was at odds with other reports such as IVEY PMI and labor numbers showed weaker growth last month. Overall the USD/CAD traded with a low of 0.9696 and a high of 0.9757 before closing the day at 0.9699 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 47 and lies below the neutral zone. Overall, the cross has gained 0.39%.
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 lost 0.20%.
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 51 reading and lies above the neutral region. The pair has gained 0.35%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is issuing a bearish signal. The RSI is above 52 reading and lies below the neutral region. The pair has gained 0.59%.
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 38 and lies below the neutral region. The pair has lost 0.43%.
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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