Forex Bulletin, March 21, 2011

Pulse of the Market

·      Greenback fell below 2010 Lows as EUR/USD and GBP/USD follow Rates and USD/JPY carried

·      Euro faced the top event risk this week but it may anchor rather than catalyze

·      British Pound speculators will look for CPI data to leverage the BoE’s rate war

·      Japanese Yen faced heavy fundamental seas through intervention and economic uncertainty

The Greenback traded lower against all of the major currencies except for the Japanese Yen and Swiss Franc as safe haven flows continued to ease out of the U.S Dollar. With little market moving U.S economic data on the calendar this week, how the Yen responds to the intervention should remain a main focus.  Housing market data, durable goods and the third release of GDP are the only U.S economic reports on the calendar to be released this week. The Single Currency reached fresh 4 month highs against the Cable, U.S and Canadian Dollars on Friday and strengthened against most of its major counterparts as the rally in risk continued for the second consecutive day. Euro’s rally was supported by the comments made by European Central Bank president Jean Claude Trichet, indicating that the central bank will likely go through with its plan to raise interest rates at its upcoming policy meeting next month as it tries to control excessive inflation and balance higher growth prospects. Inflation in the Euro Zone increased 2.4 percent last month, above the ECB’s limit of 2 percent. The European Central Bank reported that the Euro Zone’s Current Account figures beat forecasts, improving significantly in the month of January with a deficit of only 0.7 billion Euros, as compared to December’s deficit of 12.5 billion Euros. The British Pound ended the Friday’s trading session higher against the U.S Dollar as the improvement in risk appetite helped Cable investors to overlook a major disappointment in economic data. Consumer confidence plunged 10 points to a record low in the month of February. The minutes from this month’s monetary policy meeting will be published on this week. Price pressures in the U.K are even more significant than in the Euro Zone and for this reason it is believed that another U.K policymaker could have voted for higher interest rates. Back in February, three members voted to tighten monetary policy while six members voted to abstain from any changes. U.K retail sales are scheduled for release this week. The Japanese Yen traded sharply lower against all of the major currencies on Friday. For the first time in more than a decade, central banks around the world stepped into the foreign exchange market and jointly intervened to sell the Japanese Yen. Japan successfully convinced its G7 partners to jointly intervene in the foreign exchange market to sell the Japanese Yen. The Canadian Dollar ended the day unchanged against the U.S Dollar while the Australian Dollar rose strongly. Intervention by G7 central banks helped risk appetite to recover and the Aussie was among the biggest beneficiaries.

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
00:01	U.K Rightmove House Prices (MoM) (MAR)	Medium		0.8%	3.1%
02:00	New Zealand Credit Card Spending (MoM) (FEB)	Medium		3.4%	3.8%
08:00	Switzerland Money Supply M3 (YoY) (FEB)	Low			6.7%
12:30	U.S Chicago Fed Nat Activity Index (FEB)	Medium			-0.16
14:00	U.S Existing Home Sales (FEB)	High		5.11M	5.36M

Euro

The Single Currency surged against the U.S Dollar and the Japanese Yen in the Friday’s session following the ECB involvement in co-ordinate intervention. Japanese Finance Minister Noda made specific mention throughout the trading day that the ECB may further intervene during the European Session on the EURJPY cross, pushing the pair from lows near 110.53 to as high as 115.58. Overall the EUR/USD traded with a low of 1.3979 and a high of 1.4183 before closing the day around 1.4168 in the New York session.

Yen

The Japanese Yen was the biggest mover on Friday and very much in spotlight. The USD/JPY traded at lowest levels since World War II, the Friday’s session of was well off historic lows following multi-lateral central bank intervention at the stroke to lift the pair from levels around 79.80 to session highs 82.00. Markets will remain on alert as an obscure of uncertainty that is a nuclear crisis continues to hover over currency markets. Overall the USD/JPY traded with a low of 78.82 and a high of 81.98 before closing the day around 80.70 in the New York session.
British Pound

The British Pound was higher against the U.S Dollar but ended the Friday’s trading session lower against the Euro heading for the longest run of weekly declines since October, after a report showed U.K consumer confidence fell to a record low, fueling concern the economic recovery will slow. The Cable jumped against the yen as Group of Seven nations intervened to weaken the Japanese currency. Overall the GBP/USD traded with a low of 1.6059 and a high of 1.6254 before closing the day at 1.6221 in the New York session.




Canadian Dollar

The Canadian Dollar ended the Friday’s trading session unchanged against the Greenback. Canada was the only commodity producing country to release any meaningful economic data on Friday and according to the Consumer Price Index report, inflationary pressures declined in the month of February. CPI rose 0.3 percent last month with core prices growing by a mere 0.2 percent. Overall the USD/CAD traded with a low of 0.9802 and a high of 0.9864 before closing the day at 0.9856 in the New York session.

Euro-Yen

EURJPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The RSI is above 56 and lies above the neutral zone. Overall the cross has gained 3.38%.

Sterling-Yen

Currently GBPJPY 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 47 reading and lies below the neutral zone. The pair has gained 2.86%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic gives bullish and MACD is indicating a bearish stance. The RSI is above 44 reading and lies below the neutral region. The cross has gained 4.04%.

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 68 reading and lies above the neutral region. The pair has gained 0.51%.

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 36 and lies below the neutral region. The pair has gained 1.02%.

Appendix

 

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.3833	1.3906	1.4037	1.4110	1.4241	1.4314	1.4445
USD/JPY	75.86	77.34	79.02	80.50	82.18	83.66	85.34
GBP/USD	1.5907	1.5983	1.6102	1.6178	1.6297	1.6373	1.6492
USD/CHF	0.8833	0.8897	0.8962	0.9026	0.9091	0.9155	0.9220
USD/CAD	0.9755	0.9779	0.9817	0.9841	0.9879	0.9903	0.9941
EUR/JPY	106.36	108.43	111.39	113.46	116.42	118.49	121.45
GBP/JPY	122.57	124.87	127.89	130.19	133.21	135.51	138.53
CHF/JPY	85.00	86.38	87.88	89.26	90.76	92.14	93.64
AUD/JPY	73.88	75.57	78.00	79.69	82.12	83.81	86.24
EUR/GBP	0.8600	0.8638	0.8685	0.8723	0.8770	0.8808	0.8855
EUR/CHF	1.2400	1.2482	1.2637	1.2719	1.2874	1.2956	1.3111
GBP/CHF	1.4293	1.4376	1.4511	1.4594	1.4729	1.4812	1.4947

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

Forex Bulletin, March 18, 2011

Pulse of the Market

·      Dollar fell earlier in Asian session reprieve on G7’s announcement of coordinated intervention

·      Euro finds more buoyancy in steadied risk trends than a direct threat to push EUR/JPY higher

·      British Pound comparatively quiet in the Asian session rally, suggesting weakness

·      Japanese Yen plunged as the BoJ, Fed, ECB, BoE and BoC move to advance USD/JPY

The Greenback traded lower against all of the major currencies except for the Japanese Yen and Swiss Franc. The sell-off in the U.S Dollar can be attributed as the Greenback’s losing its safe haven status and improvement in risk appetite that has encouraged investors to put their money back to work in the financial markets. Better than expected U.S economic data lent further support to USD/JPY. The manufacturing sector continues to show signs of improvement and is an area that has brought much optimism for the U.S economy. Meanwhile the Philly Fed survey jumped to its highest level since 1984, a sign of continued recovery in the U.S economy. The sharp rise in the Philly Fed index can be largely attributed to the increase in new orders, inventories and average workweek. No major U.S economic reports are due for release today. The Single Currency had a busy trading session yesterday, hitting 4 month highs against the U.S and Australian Dollar. After a credit downgrade caused the currency to slip, the resilient Euro stood its ground. While the European Central Bank and the rest of the world monitors the Japanese situation carefully, the Bank is likely to continue forward with its plan to raise rates, as it tries to balance prospects for higher growth and controlling excessive inflation. Of all the major central banks, the ECB is expected to be the most aggressive. A number of German economic reports are due for release today including producer prices and current account, but investors will most likely be focused on Japan. The British Pound strengthened against all of the major currencies, hitting five month high against the Japanese Yen. On the economic calendar the Bank of England’s Quarterly Inflation Expectations report showed a fifth consecutive rise. Such news puts an added pressure on the BoE to raise interest rates in an effort to curb runaway inflation. The U.K Unemployment Rate saw an unexpected rise to 8.0 percent from previous month’s 7.9 percent. Japanese Yen extended its gains yesterday. The Bank of Japan did not intervene in their currency yesterday but their lack of intervention should not be misapprehended. Aussie pared some of its losses, after tumbling for the past three days against the Greenback. The Loonie gained strength due to a spike in crude oil prices and positive economic data.

Time(GMT)	Economic Release	IM	Actual	Forecast	Prior
00:01	GBP Nationwide Consumer Confidence (FEB)	Medium	38	47	48
05:00	JPY Coincident Index (JAN)	Low			106.2
05:00	JPY Leading Index (JAN)	Low			101.9
07:00	EUR German Producer Prices (YoY) (FEB)	High		6.3%	5.7%
09:30	GBP Public Finances (PSNCR) (Pounds) (FEB)	Medium			-14.4B
10:00	EUR Euro-Zone Trade Balance (Euros) (JAN)	Low		-9.0B	-0.5B
11:00	CAD Consumer Price Index (YoY) (FEB)	High		2.3%	2.3%

Euro

The Single Currency paired much of its recent losses this morning, and remains well supported on either side of the key 1.40 figure. Investors are awaiting a regional summit, scheduled for late next week, at which European policymakers hope to hammer out the final extension of Euro Zone "bailout" fund to backstop the debt of countries like Portugal and Spain. Overall the EUR/USD traded with a low of 1.3868 and a high of 1.4052 before closing the day around 1.4019 in the New York session.

Yen

The Japanese Yen extended its gains yesterday to a fresh high well below the key 80 barrier. Soon after the U.S session ended, the Dollar Yen pair plummeted all the way to 76.36, a 4% drop in a matter of minutes. The pair soon reversed at the start of the Japanese trading day, but it still remains well supported below 80 as investors seek the Yen's safe haven status. Overall the USD/JPY traded with a low of 76.35 and a high of 79.73 before closing the day around 78.89 in the New York session.

British Pound

The British Pound was higher on broad Dollar weakness, but has been moving in the opposite direction against the Euro. Cable depreciated to its weakest levels in more than four months against the Single Currency as investors speculate that the BoE will be slower than the ECB to raise interest rates later this year. Overall the GBP/USD traded with a low of 1.5981 and a high of 1.6169 before closing the day at 1.6131 in the New York session.

Canadian Dollar

The Canadian Dollar gained strength due to a spike in crude oil prices and positive economic data. Easing concerns of a potential nuclear crisis in Japan and no new developments from the middle-east have led to a rally in risk currencies. Canadian Dollar also gained as data surprised to the upside, showing that foreigners bought a net $13.3 Billion of Canadian Securities in the month of January. Overall the USD/CAD traded with a low of 0.9832 and a high of 0.9950 before closing the day at 0.9852 in the New York session.

 

Euro-Yen

EURJPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The RSI is above 58 and lies above the neutral zone. Overall the cross has lost 0.05%.

Sterling-Yen

Currently GBPJPY 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 51 reading and lies above the neutral zone. The pair has lost 0.24%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 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 cross has lost 1.28%.

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 65 reading and lies above the neutral region. The pair has gained 0.22%.

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 35 and lies below the neutral region. The pair has lost 0.38%.

Appendix

 

Daily Pivot Points
			Trading Range
Contract	S3	S2	S1	Pivot	R1	R2	R3
EUR/USD	1.3723	1.3796	1.3907	1.3980	1.4091	1.4164	1.4275
USD/JPY	73.54	74.94	76.92	78.32	80.30	81.70	83.68
GBP/USD	1.5830	1.5906	1.6018	1.6094	1.6206	1.6282	1.6394
USD/CHF	0.8762	0.8844	0.8915	0.8997	0.9068	0.9150	0.9221
USD/CAD	0.9688	0.9760	0.9806	0.9878	0.9924	0.9996	1.0042
EUR/JPY	103.02	104.79	107.70	109.47	112.38	114.15	117.06
GBP/JPY	118.33	120.41	123.85	125.93	129.37	131.45	134.89
CHF/JPY	82.84	84.00	85.88	87.04	88.92	90.08	91.96
AUD/JPY	71.73	73.18	75.24	76.69	78.75	80.20	82.26
EUR/GBP	0.8604	0.8634	0.8662	0.8692	0.8720	0.8750	0.8778
EUR/CHF	1.2225	1.2331	1.2464	1.2570	1.2703	1.2809	1.2942
GBP/CHF	1.4069	1.4190	1.4343	1.4464	1.4617	1.4738	1.4891

  

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