FOREX Newsletter
Pulse of the Market
· Greenback rallied as investors worried about Euro Zone contagion from the Greek debt crisis
· EUR/USD fell more than 1.8 percent, which was the steepest decline in more than a month
· U.K jobless claims surged more than forecast, increased to 19.6K in May from 16.9K in April
· Manufacturing sales in Canada decreased 1.3 percent in April to 46.7 billion Canadian Dollars
The Greenback ended yesterday’s trading session higher against every major currency including the Japanese Yen and Swiss Franc which indicates that safe haven flows are not the only reason why investors are buying Dollars. Yesterday currencies and equities fell sharply with the EUR/USD experiencing its largest decline in 6 weeks. Even so the U.S economic data was weak. Manufacturing activity in the New York region slowed to its weakest level since November 2010 while industrial production growth increased less than the market had expected. Foreign purchases of U.S Dollars according to the Treasury's International Capital flow report also fell short of expectations while builder confidence fell to its lowest level in more than 2 years. Consumer prices rose 0.3 percent in May compared to a forecast of 0.1 percent. The current account balance, housing starts, building permits, jobless claims and the Philly Fed survey are scheduled for release today. The biggest story in the financial markets yesterday was the collapse of the Euro. Political, social and economic conflicts never go over well with investors and when the images of violent clashes between demonstrators in Athens and the police appeared on the TV screens, investors reacted by selling Euros. Police were fighting demonstrators with rubber rounds and tear gas; several people were injured and sent to the hospital. The EUR/USD fell more than 1.8 percent, which was the steepest decline in more than a month. The situation in Greece deteriorated rapidly, giving European leaders very little time to react. Greece is running out of time and reshuffling the Cabinet will only have limited effect because budget cuts are needed to convince countries like Germany to offer aid. The pressure is on for European officials to reach an agreement and the reaction in the EUR/USD shows just how much impact Greece’s problems can have on the financial markets. The British Pound erased a two day gain against the U.S Dollar as sovereign debt troubles hit all high beta currencies. U.K jobless claims surged more than forecast last month. According to the Claimant Count report, the number increased to 19.6K in May from 16.9K in April. Japanese Yen traded higher against all of the major currencies, except for the U.S Dollar. Japanese machine tools orders for May came out at 34.0 percent, slightly lower than the expected 34.2 percent.
| Time(GMT) | Economic Release | IMP | Actual | Forecast | Prior |
| 07:30 | Swiss National Bank Rate Decision (JUN 16) | High | | 0.25% | 0.25% |
| 08:30 | U.K Retail Sales (MoM) (MAY) | Low | | -0.6% | 1.1% |
| 09:00 | Euro Zone Consumer Price Index (MoM) (MAY) | Medium | | 0.0% | 0.6% |
| 12:30 | U.S Building Permits (MAY) | Medium | | 557K | 563K |
| 12:30 | U.S Housing Starts (MAY) | Medium | | 545K | 523K |
| 12:30 | U.S Initial Jobless Claims (JUN 10) | Low | | 420K | 427K |
| 14:00 | U.S Philadelphia Fed. (JUN) | Medium | | 7.0 | 3.9 |
Euro
The Single Currency fell sharply following the demonstrations in Greece combined with news Moody's placed three major French Banks for possible downgrade review. Support at 1.4400 broke quickly and the pair continued to plummet to fresh month lows under 1.4200. April Industrial Production rose 0.2% m/m as expected. Overall, the EUR/USD traded with a low of 1.4155 and a high of 1.4450 before closing the day around 1.4179 in the New York session.
Yen
The Japanese Yen moved higher in yesterday’s trading session as the U.S Dollar outperformed on safe have flows. The Japanese Yen did strengthen against risk currencies though with EUR/JPY breaking below the key 115.00 Yen level and NZD/JPY sharply back to 65.00 Yen. Overall, the USD/JPY traded with a low of 80.37 and a high of 81.04 before closing the day around 80.96 in the New York session.
British Pound
The British Pound was under heavy pressure on risk aversion and weak May Jobs data. U.K May Claimant Count came at +19.6k vs. 7k which was expected. EUR/GBP broke lower and this did provide support for the Cable which found a base under 1.6200. Overall, the GBP/USD traded with a low of 1.6167 and a high of 1.6382 before closing the day at 1.6191 in the New York session.
Canadian Dollar
The Canadian Dollar tumbled to its lowest point in 1-1/2 weeks yesterday, pressured by weak Canadian and U.S data and renewed concerns that the Greek debt crisis could escalate. The manufacturing sales in Canada decreased 1.3 percent in April to 46.7 billion Canadian Dollars. Overall, the USD/CAD traded with a low of 0.9668 and a high of 0.9827 before closing the day at 0.9787 in the New York session.
Australian Dollar
The Australian Dollar was very strong in the Asian session when RBA governor spoke hawkish about the chance of rate hikes if the July CPI data was above the bank's target rate. This was reversed in the stock slump and Euro crash later in the day but losses were limited so far. Overall, the AUD/USD traded with a low of 1.0534 and a high of 1.0713 before closing the day at 1.0575 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 43 and lies below the neutral zone. Overall, the cross has lost 1.22%.
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 44 reading and lies below the neutral zone. The pair has lost 0.50%.
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 46 reading and lies below the neutral region. The pair has lost 0.43%.
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 45 reading and lies below the neutral region. The pair has lost 0.73%.
Sterling-Swiss
This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The RSI is above 41 and lies below the neutral region. The pair has lost 0.22%.
Appendix
| Daily Pivot Points | |||||||
| | Trading Range | | |||||
| Contract | S3 | S2 | S1 | Pivot | R1 | R2 | R3 |
| EUR/USD | 1.3778 | 1.3966 | 1.4073 | 1.4261 | 1.4368 | 1.4556 | 1.4663 |
| USD/JPY | 79.87 | 80.12 | 80.54 | 80.79 | 81.21 | 81.46 | 81.88 |
| GBP/USD | 1.5896 | 1.6032 | 1.6111 | 1.6247 | 1.6326 | 1.6462 | 1.6541 |
| USD/CHF | 0.8355 | 0.8399 | 0.8463 | 0.8507 | 0.8571 | 0.8615 | 0.8679 |
| USD/CAD | 0.9535 | 0.9602 | 0.9694 | 0.9761 | 0.9853 | 0.9920 | 1.0012 |
| EUR/JPY | 112.16 | 113.35 | 114.07 | 115.26 | 115.98 | 117.17 | 117.89 |
| GBP/JPY | 129.12 | 129.89 | 130.49 | 131.26 | 131.86 | 132.63 | 133.23 |
| CHF/JPY | 93.87 | 94.27 | 94.58 | 94.98 | 95.29 | 95.69 | 96.00 |
| AUD/JPY | 83.99 | 84.62 | 85.11 | 85.74 | 86.23 | 86.86 | 87.35 |
| EUR/GBP | 0.8654 | 0.8701 | 0.8729 | 0.8776 | 0.8804 | 0.8851 | 0.8879 |
| EUR/CHF | 1.1868 | 1.1973 | 1.2033 | 1.2138 | 1.2198 | 1.2303 | 1.2363 |
| GBP/CHF | 1.3637 | 1.3709 | 1.3759 | 1.3831 | 1.3881 | 1.3953 | 1.4003 |
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