FOREX Newsletter
Pulse of the Market
· Greenback ended past week on a notably weak footing on concerns Fed rate decision
· Single Currency struggle for relief with Greece and Moody’s raises a red flag on Italy
· Sterling is finding more of its direction from its counterparts than its own fundamental backdrop
· Canadian Dollar seems to holding strong as rate expectations despite U.S oil drop
The U.S Dollar ended Friday’s trading session lower against the basket of major currencies. Most investors will be waiting for breaking news about Greece, it will be important for everyone to not lose sight of the other big event risk this week, which is the Federal Reserve’s monetary policy announcement. End of the central bank’s $600 billion asset purchase program is near and the question is will the Fed be distressed enough about the recent disappointments in U.S data and the risk that the sovereign debt crisis poses to change their plans on monetary policy. Recent comments from Ben Bernanke suggest that he is worried about the labor market and consumer spending, so tighter monetary policy is not even a consideration. Friday’s economic reports were mixed, which confirms that there is no reason for the central bank to rush. The University of Michigan Consumer Sentiment survey fell from 74.3 to 71.8 in June. Leading indicators on the other hand rose 0.8 percent, which was more than double the market's expectations. The Euro has recovered nicely against the U.S Dollar on Friday thanks to German Chancellor Merkel’s willingness to cooperate but that could change quickly if she receives pressure from her own party and voters. If European officials want to restore confidence in European assets, they will need to get the consent of rating agencies that have said re-profiling, restructuring and rollover could trigger a credit event. European officials must do all they can to reach an agreement and do it quickly. Although there is a hope that European leaders will come up with a rescue plan that satisfies both the rating agencies and the market, it is a tall task and the challenges that have already forced Finance Ministers to start their meeting one day earlier on June 19th. If Greece defaults on their debt, it could tip off a global financial market sell-off. The British Pound ended the session unchanged against the Greenback but it has been a tough for the Cable. Pound fell to its lowest level since the beginning of the month and came within a beat of its 2 month low. The minutes will be released on Wednesday but it won’t take much to guess how central bank feels. The Japanese Yen traded higher against all of the major currencies with the exception of the New Zealand Dollar. While the market is bracing for the next chapter of the Greek tragedy, Japanese Yen was helped by a better sentiment in the domestic economy and risk aversion flow.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| | Japan Cabinet Office Monthly Economic Report | Medium | | | |
| 05:00 | Japan Leading Index (APR) | Low | | | 96.4 |
| 06:00 | German Producer Prices (MoM) (MAY) | Medium | | 0.1% | 1.0% |
| 08:00 | Euro Zone Current Account n.s.a (Euros) (APR) | Low | | | -3.8B |
| 08:00 | Italian Industrial Orders s.a (MoM) (APR) | Low | | -4.0% | 8.1% |
| 08:00 | Italian Industrial Sales s.a (MoM) (APR) | Low | | -1.0% | 2.0% |
Euro
The Single Currency extended its gains against its major counterparts. The move higher came as reporters received word that European officials were building a consensus on Greece following a seemingly positive meeting between French President Sarkozy and German Chancellor Merkel. Overall, the EUR/USD traded with a low of 1.4126 and a high of 1.4338 before closing the day around 1.4307 in the New York session.
Yen
The Japanese Yen gained on Friday, pushing ever closer to the key 80.0 barrier against the Dollar. While rising equities in the U.S has prompted investors to close out long U.S Dollar positions, mainly against the Euro, the Japanese Yen remains well supported against its major counterparts in its role as a safe haven investment. Overall, the USD/JPY traded with a low of 80.00 and a high of 80.66 before closing the day around 80.00 in the New York session.
British Pound
The British Pound was slightly higher on a modest improvement in risk sentiment, but remains towards the lower end of its recent ranges. A negative outlook for the U.K economy will continue to weigh on the Pound, but improving risk sentiment will provide downside support. Overall, the GBP/USD traded with a low of 1.6092 and a high of 1.6194 before closing the day at 1.6178 in the New York session.
Canadian Dollar
The Canadian Dollar rebounded against the Greenback despite the 2 percent drop in oil prices. Canadian wholesale sales edged down 0.1 percent in April, following a 0.3 percent gain in March. The April sales report gains in three of the seven industries were offset by declines in the four others, particularly in the miscellaneous and the building material and supplies industries. Overall, the USD/CAD traded with a low of 0.9773 and a high of 0.9867 before closing the day at 0.9799 in the New York session.
Australian Dollar
The Australian Dollar turned positive on Friday as investors assumed riskier positions with the outlook improved for a plan to extend Greece more financial aid. However, gains have been tempered as consumer spending in China, which is Australia’s main trading partner, slowed to less than the average of the past five years. Overall, the AUD/USD traded with a low of 1.0504 and a high of 1.0634 before closing the day at 1.0615 in the New York session.
Euro-Yen
EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The RSI is above 40 and lies below the neutral zone. Overall, the cross has lost 0.14%.
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 36 reading and lies below the neutral zone. The pair has lost 0.67%.
Aussie-Yen
Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 41 reading and lies below the neutral region. The pair has lost 0.25%.
Euro-Sterling
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish and MACD is also issuing a bearish signal. The RSI is above 52 reading and lies above the neutral region. The pair has gained 0.55%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 37 and lies below the neutral region. The pair has lost 0.20%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3964 | 1.4045 | 1.4176 | 1.4257 | 1.4388 | 1.4469 | 1.4600 |
| USD/JPY | 79.12 | 79.56 | 79.78 | 80.22 | 80.44 | 80.88 | 81.10 |
| GBP/USD | 1.6013 | 1.6053 | 1.6115 | 1.6155 | 1.6217 | 1.6257 | 1.6319 |
| USD/CHF | 0.8379 | 0.8411 | 0.8446 | 0.8478 | 0.8513 | 0.8545 | 0.8580 |
| USD/CAD | 0.9665 | 0.9719 | 0.9759 | 0.9813 | 0.9853 | 0.9907 | 0.9947 |
| EUR/JPY | 112.76 | 113.23 | 113.85 | 114.32 | 114.94 | 115.41 | 116.03 |
| GBP/JPY | 128.07 | 128.71 | 129.07 | 129.71 | 130.07 | 130.71 | 131.07 |
| CHF/JPY | 93.12 | 93.69 | 93.99 | 94.56 | 94.86 | 95.43 | 95.73 |
| AUD/JPY | 83.66 | 84.10 | 84.50 | 84.94 | 85.34 | 85.78 | 86.18 |
| EUR/GBP | 0.8706 | 0.8737 | 0.8790 | 0.8821 | 0.8874 | 0.8905 | 0.8958 |
| EUR/CHF | 1.1869 | 1.1926 | 1.2031 | 1.2088 | 1.2193 | 1.2250 | 1.2355 |
| GBP/CHF | 1.3554 | 1.3597 | 1.3660 | 1.3703 | 1.3766 | 1.3809 | 1.3872 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
