FOREX Newsletter
Pulse of the Market
· Greenback faltered against the Euro but held firm against the others despite risk trends
· Euro has staged an impressive recovery against the U.S Dollar, reflecting fundamental health
· British Pound investors look to perceive what manufacturing and consumer credit can do
· Canadian Dollar surged after the BoC Governor offers a distant view of a rate hike
The U.S Dollar ended yesterday’s trading session higher against the British Pound, Japanese Yen, Swiss Franc and Australian Dollar, but losses against the Euro and New Zealand Dollar suggests that weaker U.S economic data hasn’t been ignored by everyone. Over the past few weeks, there have been a number of negative surprises in U.S economic data that tells the U.S recovery is losing momentum. Rising commodity prices created a little worry last month and with the unemployment rate remaining high, consumer confidence has fallen to a 6 month low. May was the tough month for the U.S economy. Not only consumer confidence slipped to a 6 month low, but manufacturing activity in the Chicago and Dallas regions also slowed significantly. In Chicago, manufacturing production was at its weakest level since November 2009 while the Dallas region reported its weakest growth since September 2010. According to S&P Case/Shiller, house prices also fell to its lowest level in 8 months. The Euro traded higher yesterday regardless of weaker economic data, signs of hope for Greece have helped to lift the Single Currency. As the IMF and ECB are set to finish up review for Greece’s progress after the rescue, the EU is stepping up talks for a second bailout plan by the end of June. German retail sales, French consumer spending, German labor market numbers and the Euro Zone Consumer Price Index estimate all surprised to the downside. Consumer spending in Germany grew by a mere 0.6 percent last month while retail sales in France fell by its largest amount since August 2010. Unemployment in Germany declined for the 23rd consecutive month, lowering the jobless rate to 7 percent, but the change was smallest since the beginning of the year. The British pound ended the day almost unchanged against the U.S Dollar but it weakened significantly against the Euro which indicates that optimism in the single currency is the primary driver of currency flows. U.K markets were closed yesterday so no economic data was released. The Japanese Yen weakened against all of the major currencies, after Moody’s Investors Service put Japan’s debt rating on review for a downgrade.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 01:30 | Australia Gross Domestic Product (QoQ) (1Q) | High | -1.2% | -1.1% | 0.8% |
| 04:00 | BOJ to Hold International Conference on Monetary Policy | Medium | | | |
| 07:30 | Switzerland SVME-Purchasing Managers Index (MAY) | Low | | 57.5 | 58.4 |
| 07:55 | German Purchasing Manager Index Manufacturing (MAY) | Medium | | 58.2 | 58.2 |
| 08:00 | Euro Zone Purchasing Manager Index Manufacturing (MAY) | Medium | | 54.8 | 54.8 |
| 08:30 | U.K Mortgage Approvals (APR) | Medium | | 47.0K | 47.6K |
| 12:15 | U.S ADP Employment Change (MAY) | Medium | | 175K | 179K |
| 14:00 | U.S ISM Manufacturing (MAY) | High | | 57.2 | 60.4 |
Euro
The Single Currency hit highs above 1.4400 on the back of the growing belief more bailout funds for Greece would be available and default would be avoided. German Jobless for the month of May fell 8k and the Unemployment rate fell to 7.0% from 7.1% previously. Overall, the EUR/USD traded with a low of 1.4278 and a high of 1.4423 before closing the day around 1.4395 in the New York session.
Yen
The Japanese Yen was a big mover in yesterday’s trading session coming under pressure when Moody's put the Aa2 rating on negative watch. USD/JPY surged back above 81.00 Yen and then found resistance at 81.75 Yen. EUR/JPY was even more aggressive pushing above 117.00 Yen. Overall, the USD/JPY traded with a low of 80.70 and a high of 81.76 before closing the day around 81.51 in the New York session.
British Pound
The British Pound rallied above 1.6500 but found very strong resistance at 1.6550 and when the market reversed fresh day lows were seen in the near 1.6400. GBP/JPY tested 135.00 Yen before reversing late in yesterday’s session. Overall, the GBP/USD traded with a low of 1.6422 and a high of 1.6546 before closing the day at 1.6445 in the New York session.
Canadian Dollar
The Canadian Dollar appreciated significantly against the Greenback. The Loonie was lifted by hawkish comments from the Bank of Canada. Although the BoC left interest rates unchanged at 1.00 percent, they are slowly preparing the market for a resumption of tightening. Overall, the USD/CAD traded with a low of 0.9653 and a high of 0.9769 before closing the day at 0.9683 in the New York session.
Australian Dollar
Australian Dollar was unable to hold onto gains that the Euro pitch provided and the market instead focused on the weak trade data to push the Aussie to day’s lows late in the U.S session. First quarter Current Account at -10.45bn vs. -8bn previously. Overall, the AUD/USD traded with a low of 1.0642 and a high of 1.0756 before closing the day at 1.0671 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 100 and below 50 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The RSI is above 53 and lies above the neutral zone. Overall, the cross has gained 1.53%.
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 53 reading and lies above the neutral zone. The pair has gained 0.56%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is also indicating a bullish stance. The RSI is above 54 reading and lies above the neutral region. The pair has gained 0.53%.
Euro-Sterling
This cross is trading above 14, 100 and below 50 days moving average. Fast stochastic is indicating a bullish and MACD is also issuing a bullish signal. The RSI is above 50 reading and lies above the neutral region. The pair has gained 0.96%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The RSI is above 31 and lies below the neutral region. The pair has gained 0.02%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.4163 | 1.4220 | 1.4308 | 1.4365 | 1.4453 | 1.4510 | 1.4598 |
| USD/JPY | 79.83 | 80.26 | 80.89 | 81.32 | 81.95 | 82.38 | 83.01 |
| GBP/USD | 1.6272 | 1.6347 | 1.6396 | 1.6471 | 1.6520 | 1.6595 | 1.6644 |
| USD/CHF | 0.8406 | 0.8435 | 0.8486 | 0.8515 | 0.8566 | 0.8595 | 0.8646 |
| USD/CAD | 0.9518 | 0.9586 | 0.9634 | 0.9702 | 0.9750 | 0.9818 | 0.9866 |
| EUR/JPY | 113.79 | 114.68 | 116.01 | 116.90 | 118.23 | 119.12 | 120.45 |
| GBP/JPY | 131.34 | 132.30 | 133.18 | 134.14 | 135.02 | 135.98 | 136.86 |
| CHF/JPY | 93.73 | 94.32 | 94.89 | 95.48 | 96.05 | 96.64 | 97.21 |
| AUD/JPY | 85.50 | 85.96 | 86.47 | 86.93 | 87.44 | 87.90 | 88.41 |
| EUR/GBP | 0.8608 | 0.8637 | 0.8694 | 0.8723 | 0.8780 | 0.8809 | 0.8866 |
| EUR/CHF | 1.2036 | 1.2094 | 1.2193 | 1.2251 | 1.2350 | 1.2408 | 1.2507 |
| GBP/CHF | 1.3839 | 1.3910 | 1.3975 | 1.4046 | 1.4111 | 1.4182 | 1.4247 |
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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