FOREX Newsletter
Pulse of the Market
· Greenback rally curbed as sentiment recovers from its dive and data comes up short
· Euro Zone problems persists nevertheless investors back off debt crisis fears
· British Pound holds firm despite a drop in inflation expectation and growing deficit
· Swiss Franc refuses to relinquish its bullish position in the defiance of SNB warning
Greenback ended yesterday’s trading session lower against most of the major currencies as safe haven flows eased out of the U.S Dollar. With a relatively quiet economic calendar that mostly includes revisions to first quarter GDP numbers for the rest of week there is little event risk to trigger a big move in currencies. At the same time, it is a long weekend in the U.S so some traders will be taking off early on Friday, which means that trading could mill to a halt. Yesterday’s U.S economic data contributed positively to risk appetite. New home sales rose 7.3 percent last month which was much stronger than the market had anticipated. Even with the downward revision to last month’s percentage increase, new home sales were very strong. Although it’s believed that the housing market will not experience any new life until the U.S economy experiences a stronger recovery, the new home sales report shows the housing market moving in the right direction. The Single Currency traded higher against the U.S Dollar yesterday. German economic was surprisingly strong and Spain attracted strong demand for their bond auction, which has helped to lend support to the Euro. German business confidence held steady at 114.2 which is a remarkable considering the slowdown in manufacturing and service sector activity as well as high commodity prices. No revisions were made to first quarter GDP with the economy reported to have grown 1.5 percent in the first quarter. However, growing concerns about Europe's sovereign debt troubles attracted a significant amount of safe haven demand for U.S Dollar. Although the problems are far from being resolved, Greece's front loaded privatization plan has helped to stabilize the financial markets. As a result, the Euro, British Pound and commodity currencies traded higher while the Dollar traded lower. The British pound experienced a nice relief rally that has helped to curtail the losses in the currency. The rally in the Pound was impressive considering the sharp deterioration in U.K fiscal finances. Public sector net borrowing was significantly higher than anticipated with public finances coming in well short of expectations. According to the Confederation of British Industry, consumer spending also holding up well. The Yen pared the gains it made on Monday against most of the majors. According to the Ministry of Finance, Japan's net overseas assets dropped for the first time in two years in 2010 as the Yen's significant strength negatively impacted the value of the nation’s overseas holdings.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 03:30 | BoJ Governor Masaaki Shirakawa to Speak on Japanese Economy | Medium | | | |
| 06:00 | German GfK Consumer Confidence Survey (JUN) | Medium | | 5.6 | 5.7 |
| 08:30 | U.K Gross Domestic Product (QoQ) (1Q) | High | | 0.5% | 0.5% |
| 12:30 | U.S Durable Goods Orders (APR) | Medium | | -2.5% | 4.1% |
| 14:00 | U.S House Price Index (MoM) (MAR) | Medium | | -0.5% | -1.6% |
| 14:30 | DOE U.S Crude Oil Inventories (MAY 20) | Low | | -1500K | -15K |
Euro
The Single Currency reversed losses seen on the day before yesterday with a gentle rally above 1.4100. The market took comfort in German IFO Climate at 114.2 against 113.9 forecast. Also helping the Euro was the rally in oil, back to $100 a barrel and bond yields falling slightly. Overall, the EUR/USD traded with a low of 1.4001 and a high of 1.4132 before closing the day around 1.4099 in the New York session.
Yen
The Japanese Yen broke above 82.00 Yen yesterday and was able to hold most of the day’s gains with Yen crosses on the move higher. EUR/JPY moved to 116.00 Yen but fell back in late trade on rumors of a snap Greece election. Overall, the USD/JPY traded with a low of 81.60 and a high of 82.20 before closing the day around 81.94 in the New York session.
British Pound
The British Pound was under pressure going into yesterday’s European trading session as Sterling put U.K banks under negative review. Some better than expected economic dates’ helped the British Pound rally to day highs above 1.6200. Overall, the GBP/USD traded with a low of 1.6056 and a high of 1.6208 before closing the day at 1.6177 in the New York session.
Canadian Dollar
The Canadian Dollar gained in late trading session yesterday, spurred by investors taking on riskier bets, but was still down from Friday’s close, with markets searching for a broad direction. Overall, the USD/CAD traded with a low of 0.9753 and a high of 0.9792 before closing the day at 0.9766 in the New York session.
Australian Dollar
Australian Dollar bounced off the 1.0500 level to track the Euro move higher. Concerns about China slowdown were noted in the reasons for the weakness in the Australian Dollar in recent days given worries about Australian exports. Overall the AUD/USD traded with a low of 1.0479 and a high of 1.0582 before closing the day at 1.0558 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 100 and below 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The RSI is above 42 and lies below the neutral zone. Overall, the cross has gained 0.31%.
Sterling-Yen
Currently GBP/JPY is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 47 reading and lies below the neutral zone. The pair has gained 0.27%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 46 reading and lies below the neutral region. The pair has gained 0.44%.
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 41 reading and lies below the neutral region. The pair has gained 0.03%.
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 39 and lies below the neutral region. The pair has lost 0.08%.
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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