Forex Market Daily Report

FOREX Newsletter

Pulse of the Market

·      Greenback perceives slight QE3 possibility in Bernanke commentary and seems to risk trends

·      Single Currency auxiliaries its sprint in spite of rising conflict over a reliable rescue for Greece

·      British Pound investors presenting modest concentration in the lead up to tomorrow’s BoE

·      The Canadian Dollar progressively more dependent on oil prices in addition to risk trends

The Greenback ended yesterday’s trading session lower against most of the major currencies with the exception of the Aussie and Swiss Franc. There was very little U.S economic data on the calendar yesterday. The only piece of event risk on the U.S calendar is the Fed’s Beige Book report. In Bernanke speech in Atlanta yesterday, he admitted that there has been a loss of momentum in the labor market with economic growth being uneven and frustratingly slow. Households are facing some significant headwinds but he still believes that economic growth will accelerate in the second half of the year. According to Fed President Fisher, there is no need to be overly concerned about the outlook for the U.S economy and the labor market. He expects the economy to grow by more than 3 percent in the second half of the year which suggests that he expects the pull back in the labor market to be temporarily. The Single Currency ended the session higher against the U.S Dollar following better than expected economic data. The European Central Bank’s rate decision is getting closer and based upon the price action, investors expect the ECB to be hawkish. The latest economic reports from the Euro Zone show remarkable resilience in the region’s economy compared to the disappointments out of the United States. German factory orders rose 2.8 percent in the month of April while Euro Zone retail sales jumped 0.9 percent. Although demand from the U.S remains soft and demand from Asia continues to pick up the slack. German trade and current account numbers are scheduled for release today along with industrial production and first quarter GDP. Meanwhile even the Swiss Franc weakened against the Euro, but it climbed to a fresh record high against the Greenback on intraday basis. The British Pound appreciated against the U.S Dollar but fell to a one month low against the Cable. The much anticipated BRC retail sales reports showed revenue from retailers falling by 2.1 percent in the month of May compared to a 5.2 percent rise the previous month. Regardless of the disappointing economic number from the U.K, the weakness of the U.S Dollar and cautionary comments from the Federal Reserve kept high yielding currencies in demand. The Japanese Yen was unchanged against most of the major currencies yesterday, with the exception of the Swiss Franc.

Time(GMT)	Economic Release	IMP	Actual	Forecast	Prior
05:45	Switzerland Unemployment Rate (MAY)	Medium		3.0%	3.10%
06:00	German Trade Balance (Euros) (APR)	Medium		14.9B	18.9B
09:00	Euro Zone Gross Domestic Product s.a. (QoQ) (1Q)	High		0.80%	0.80%
10:00	German Industrial Production s.a. (MoM) (APR)	Medium		0.2%	0.70%
11:00	U.S MBA Mortgage Applications (JUN 3)	Low			-0.4%
12:15	Canada Housing Starts (MAY)	High		182.0K	179.0K
23:50	Japan Gross Domestic Product (QoQ)	High		-0.80%	-0.90%

Euro

The Single Currency stalled near 1.4700 with concerns that Greece debt may be rolled over or extended given comments from German Finance minister on the subject. The weak U.S Dollar even as stock markets fall is making the Euro perform well across the board. Overall, the EUR/USD traded with a low of 1.4563 and a high of 1.4695 before closing the day around 1.4689 in the New York session.

Yen

The Japanese Yen remained close to the Key 80.00 Yen level with risk off trading hurting the crosses and the U.S fiscal outlook providing plenty of incentive for bears. Comments from Japanese officials began yesterday saying they are watching the recent Yen strength closely. Overall, the USD/JPY traded with a low of 79.97 and a high of 80.32 before closing the day around 80.08 in the New York session.

British Pound

The British Pound rallied in yesterday’s European session on Chinese diversification talks before standing with EUR/GBP buying and stock market softness in the U.S session. GBP/AUD provided support as the risk sensitive cross rallied after months of weakness. Overall, the GBP/USD traded with a low of 1.6323 and a high of 1.6471 before closing the day at 1.6445 in the New York session.

Canadian Dollar

The Canadian Dollar rose against a broadly weaker U.S Dollar yesterday after bearish comments from China on U.S assets and improved market sentiment in Europe helped put a floor under commodity prices. Canada is a major exporter of commodities and swings in commodity prices often influence its currency. Overall, the USD/CAD traded with a low of 0.9729 and a high of 0.9808 before closing the day at 0.9743 in the New York session.

Australian Dollar

The Australian Dollar was under pressure after the RBA meeting which held at 4.75% and was more dovish than forecast causing rate hike expectation to be pushed back later into the year. Weakness in most crosses also hurt sentiment with more downside testing likely ahead. Overall, the AUD/USD traded with a low of 1.0670 and a high of 1.0756 before closing the day at 1.0716 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 52 and lies above the neutral zone. Overall, the cross has gained 0.78%.

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 41 reading and lies below the neutral zone. The pair has gained 0.53%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and above 100 days moving average. Fast stochastic gives bearish and MACD is also indicating a bearish stance. The RSI is above 40 reading and lies below the neutral region. The pair has gained 0.03%.

Euro-Sterling

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is also issuing a bullish signal. The RSI is above 63 reading and lies above the neutral region. The pair has gained 0.24%.

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The RSI is above 29 and lies below the neutral region. The pair has gained 0.76%.

Appendix

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.4471	1.4517	1.4603	1.4649	1.4735	1.4781	1.4867
USD/JPY	79.58	79.77	79.93	80.12	80.28	80.47	80.63
GBP/USD	1.6207	1.6265	1.6355	1.6413	1.6503	1.6561	1.6651
USD/CHF	0.8264	0.8295	0.8328	0.8359	0.8392	0.8423	0.8456
USD/CAD	0.9633	0.9681	0.9712	0.9760	0.9791	0.9839	0.9870
EUR/JPY	115.76	116.22	116.94	117.40	118.12	118.58	119.30
GBP/JPY	129.86	130.36	131.04	131.54	132.22	132.72	133.40
CHF/JPY	94.65	95.09	95.42	95.86	96.19	96.63	96.96
AUD/JPY	84.83	85.21	85.52	85.90	86.21	86.59	86.90
EUR/GBP	0.8871	0.8889	0.8909	0.8927	0.8947	0.8965	0.8985
EUR/CHF	1.2046	1.2104	1.2195	1.2253	1.2344	1.2402	1.2493
GBP/CHF	1.3502	1.3570	1.3661	1.3729	1.3820	1.3888	1.3979

 Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)