FOREX Newsletter
Pulse of the Market
· U.S durable goods report for April delivered a significant disappointment with the biggest drop in six months
· Euro advanced to a one week high against U.S Dollar in today’s session as strong commodities prices
· British Pound extended its rebound yesterday following some extent to ambiguous fundamentals
· Japanese Yen slides as sentiment weighs the funding currency and OECD Lowers GDP forecasts
The Greenback started yesterday’s trading session higher against most of the major currencies but by the end of the day, the U.S Dollar gave up most of its gains. The intraday recovery was seen in all of the major currency pairs with the omission of USD/CHF, which held onto its earlier losses and USD/JPY which remained unchanged for most of the day. The situation in Europe continues to make investors nervous but at the same time, the outlook for the U.S economy is not very bright, which explains why investors aren’t rushing into the U.S Dollar. Part of the reason is because U.S economic data continues to surprise to the downside, illustrating just how weak the U.S recovery really is. Durable goods orders fell 3.6 percent in April, the most in 6 months. The second release of first quarter GDP is due for release in today’s session. The Single Currency traded lower against the U.S Dollar. After a one day breathing space, investors have returned to selling Euros. Greece's accelerated privatization plan far from resolves Europe of its sovereign troubles and concerns about populist movements in Spain and Greece have made investors nervous. Even though, the Greek privatization plans increase the chance of the country receiving additional aid from the EU and IMF. As a result, Greece will remain a problem for the Euro especially in the midst of talk that its Euro membership is at risk which will make it very difficult for the EUR/USD to stage a serious recovery. German consumer confidence deteriorated in the month of June as consumers grew less optimistic about incomes and business activity. On today and tomorrow the leaders of the G8 are convening for their annual discussion of world affairs. The Cable rose to a 6 week high against the Euro while extending its gains against the U.S Dollar. As expected U.K GDP growth was left at unchanged at 0.5 percent. The U.K economy struggled through the first three months of the year as austerity measures curvy growth and demand. Bank of England member Sentance continued to talk of the need for monetary tightening. Japanese Yen ended yesterday’s trading session almost unchanged against the U.S Dollar. Exports plunged 12.5 percent last month while imports rose a mere 8.9 percent. Bank of Japan Governor Shirakawa said the economy is starting to recover from the quake but demand remains weak.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 06:00 | Swiss Franc Trade Balance (Swiss Franc) (APR) | Medium | | | 1.00B |
| 06:00 | German Import Price Index (MoM) (APR) | Low | | 0.7% | 1.1% |
| 09:20 | ECB President Jean Claude Trichet Speaks on European Economy | High | | | |
| 12:30 | U.S Gross Domestic Product (Annualized) (1Q) | High | | 2.2% | 1.8% |
| 12:30 | U.S Personal Consumption (1Q) | Medium | | 2.8% | 2.7% |
| 12:30 | U.S Initial Jobless Claims (MAY 21) | Low | | 404K | 409K |
| 23:01 | U.K GfK Consumer Confidence Survey (MAY) | Medium | | -31 | -31 |
| 23:30 | Japan National Consumer Price Index (YoY) (APR) | Medium | | 0.3% | 0.0% |
Euro
The Single Currency did well to find support yesterday and reverse in European trading session with the market ignoring rumors of snap Greek elections and extending the relief rally. June German GFK index disappointed at 5.5 against 5.6 previously. Overall, the EUR/USD traded with a low of 1.4012 and a high of 1.4117 before closing the day around 1.4085 in the New York session.
Yen
The Japanese Yen held steady against the U.S Dollar, weakened against the Cable and Swiss Franc but ticked higher against the Euro, Loonie and Aussie. EUR/JPY and GBP/JPY led the market higher with the risk on trading in European and U.S trading session helping reverse recent losses. Overall, the USD/JPY traded with a low of 81.78 and a high of 82.16 before closing the day around 81.95 in the New York session.
British Pound
The British Pound was the strongest currency in yesterday’s trading session surging across the board. EUR/GBP reversed below 0.8700 and GBP/JPY soared above 133.00 Yen. First quarter GDP was confirmed at 0.5% Q/Q. Overall, the GBP/USD traded with a low of 1.6131 and a high of 1.6292 before closing the day at 1.6272 in the New York session.
Canadian Dollar
The Canadian Dollar gave up its gains yesterday. With oil prices rising 1.65 percent and Canadian house prices growing 0.6 percent in March, the Loonie should have traded higher but failure to do so is indicative of the risk aversion hanging over the market. Overall, the USD/CAD traded with a low of 0.9742 and a high of 0.9814 before closing the day at 0.9773 in the New York session.
Australian Dollar
Australian Dollar suffered from weaker leading indicator growth. In the month of March, leading indicators rose 0.4 percent compared to 0.6 percent the previous month. Construction activity also increased by a mere 0.7 percent in the first quarter, down sharply from the 1.4 percent growth experienced the previous month. Overall, the AUD/USD traded with a low of 1.0440 and a high of 1.0560 before closing the day at 1.0532 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 45 and lies below the neutral zone. Overall, the cross has lost 0.08%.
Sterling-Yen
Currently GBP/JPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is issuing bullish and MACD is also indicating a bullish stance. The RSI is above 52 reading and lies above the neutral zone. The pair has gained 0.61%.
Aussie-Yen
Currently, the cross is trading below 14, 50 and above 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 49 reading and lies below the neutral region. The pair has lost 0.23%.
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 41 reading and lies below the neutral region. The pair has lost 0.69%.
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 0.26%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3921 | 1.3966 | 1.4026 | 1.4071 | 1.4131 | 1.4176 | 1.4236 |
| USD/JPY | 81.39 | 81.58 | 81.77 | 81.96 | 82.15 | 82.34 | 82.53 |
| GBP/USD | 1.6010 | 1.6071 | 1.6171 | 1.6232 | 1.6332 | 1.6393 | 1.6493 |
| USD/CHF | 0.8579 | 0.8644 | 0.8684 | 0.8749 | 0.8789 | 0.8854 | 0.8894 |
| USD/CAD | 0.9667 | 0.9704 | 0.9739 | 0.9776 | 0.9811 | 0.9848 | 0.9883 |
| EUR/JPY | 113.77 | 114.23 | 114.84 | 115.30 | 115.91 | 116.37 | 116.98 |
| GBP/JPY | 130.82 | 131.45 | 132.41 | 133.04 | 134.00 | 134.63 | 135.59 |
| CHF/JPY | 91.93 | 92.40 | 93.15 | 93.62 | 94.37 | 94.84 | 95.59 |
| AUD/JPY | 84.33 | 84.88 | 85.59 | 86.14 | 86.85 | 87.40 | 88.11 |
| EUR/GBP | 0.8533 | 0.8582 | 0.8618 | 0.8667 | 0.8703 | 0.8752 | 0.8788 |
| EUR/CHF | 1.2091 | 1.2180 | 1.2235 | 1.2324 | 1.2379 | 1.2468 | 1.2523 |
| GBP/CHF | 1.4065 | 1.4116 | 1.4157 | 1.4208 | 1.4249 | 1.4300 | 1.4341 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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