U.S. Dollar Trading (USD) with little movement seen in the markets overnight the Dollar finished roughly where it began against most pairs. Weekly Jobless Claims were strong at 421k vs. 435k forecast. In US stocks, DJIA -2 points closing at 11370, S&P +4 points closing at 1233 and NASDAQ +7 points closing at 2616. Looking ahead, November Trade Balance is forecast at -43.5bn vs. -44bn previously.

The Euro (EUR) fell from day highs above 1.3300 after Ireland was downgraded by Fitch and Standard & Poors. The market slid below 1.3200 but when US stocks remained supported by strong data the Euro bounced back to the mid 1.3200 region. EUR/USD traded with a low of 1.3163 and a high of 1.3324 before closing at 1.3240. Looking ahead, November WPI is previously at -0.3%.

The Japanese Yen (JPY) struggled to push above multimonth resistance at Y84.40 and spent most of the day with a slight downside bias. Support was found at Y83.50. Q3 GDP at 1.1% vs. 1.0% forecast y/y.  Overall the USDJPY traded with a low of 83.50 and a high of 84.13 before closing the day around 83.70 in the New York session.

The Sterling (GBP) The BoE meeting was a non event with the central bank holding at 0.5% as expected and leaving the Asset Purchase Program at 200bn. Cable fell tracking the Euro lower but found support at 1.5700, finishing in the middle of the recent range. Overall the GBP/USD traded with a low of 1.5710 and a high of 1.5844 before closing the day at 1.5765 in the New York session. Looking ahead, November PPI forecast at 0.4% vs. 0.6% previously.

The Australian Dollar (AUD) the Aussie jumped on very strong November Jobs Numbers at +54k vs. +20k  forecast. The Unemployment rate fell to 5.2% vs. 5.4% previously. AUD/USD found solid resistance at 0.9880 and eased back to 0.9820. Overall the AUD/USD traded with a low of 0.9778 and a high of 0.9886 before closing the US session at 0.9840.

Oil & Gold (XAU) edged higher orbiting around the $1390 level. Overall trading with a low of USD$1380 and high of USD $1394 before ending the New York session at USD$1388 an ounce. Traded in a 200 point range but finished only slightly higher. WTI Oil Closed +$0.29 at $88.57 a barrel.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.2969	1.3165	1.3245	1.3323	1.3401
USD/JPY	82.32	83.46	83.80	84.41	85.40
GBP/USD	1.5581	1.5669	1.5770	1.5841	1.5965
AUD/USD	0.9625	0.9739	0.9855	0.9939	1.000
XAU/USD	1362.00	1371	1389	1404	1438
OIL/USD	87.0	88.00	88.75	90.00	91.00

Euro – 1.3245

Initial support at 1.3165 (Dec 9 low) followed by 1.2969 (Nov 30 low). Initial resistance is now located at 1.3323 (Dec 9 high) followed by 1.3401 (Dec 7 high)

Yen – 83.80

Initial support is located at 83.46 (Dec 8 high) followed by 82.32 (50% retrace of 80.22-84.41). Initial resistance is now at 84.41 (Nov 29 high) followed by 85.40 (Sept 24 high).

Pound – 1.5770

Initial support at 1.5669 (Dec 8 Low) followed by 1.5581 (Dec 3 low). Initial resistance is now at 1.5841 (Dec 9 high) followed by 1.5965 (Nov 23 high).

Australian Dollar – 0.9855

Initial support at 0.9739 (Dec 3 low) followed by the 0.9625 (Dec 2 low). Initial resistance is now at 0.9939 (Dec 3 high) followed by 1.0000 (Psychological Resistance).

Gold – 1389

Initial support at 1371 (Dec 3 low) followed by 1362 (Nov 30 low). Initial resistance is now at 1404 (Dec 8 high) followed by 1438 (1329.70 plus 1315.45-1424.60).

Oil – 88.40

Initial support at 88.00 (Intraday Support) followed by 87.00 (Intraday Support). Initial resistance is now at 90.00 (Intraday Resistance) followed by 91.00 (Intraday Resistance).

Written by Anthony Darvall

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

USD in a trading range as US observes Thanks Giving!

• The Dollar Traded quietly during yesterdays US market holiday. The majors traded inside recent ranges with little fresh news to move the markets beyond. Risk aversion took a small break during the day however as the Asian session begun risk aversion trickled back in the market once again pushing the EURUSD back to its lows.  In Asia the focus was on the Korean peninsula standoff which dampened appetite further. US stocks remained unchanged yesterday due to Bank Holiday for Thanks Giving.
• The Euro (EUR) was able to find support at the 1.3300 level with ECM Member Weber stating the Euro is a long term project and that it was possible to increase the size of the EU bailout fund. Euro zone Government Bonds continue to be under pressure with Spanish and Portugal yields rising. EUR/USD traded with a low of 1.3285 and a high of 1.3389 before closing at 1.3335. Looking ahead, German October Import Prices forecast at 0.1% vs. 0.3% previously.

Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3280 with a preference to enter into Long positions at 1.3290
• § The USDJPY pivot point is at 83.50 with a preference to enter Long positions at 83.90

Today’s calendar and market movers:

• § Switzerland KOF Indicator for November forecasted at 2.1
• § Canada Budget Balance for September is out with previous month -5.81 bio

Equity Markets:

• US equities were closed yesterday with a market holiday. The European bourses were positive with the FTSE up at 0.74% the DAX and the CAC closing up at 0.82% and at 0.34% respectively. The NIKKEI and the HSI at the time of writing is -0.4% and -0.98% respectively.

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

US Market holiday focus on EU peripheral spreads!

• The U.S. Dollar Traded stronger as risk aversion crept back into the market on continual growing unease with some European countries Debt issues. The G20 has failed to produce much as of yet but markets are watching closely for any friction particularly on US FED Monetary Policy. In US stocks the DJIA traded down -73 points closing at 11283 and the S&P traded  down -5 points closing at 1213 and NASDAQ -23 points closing at 2555. Looking ahead, November UoM Consumer Confidence is forecast at 63.5 vs. 61.9.The Euro was sensitive yesterday to European wide market  talk of EU-Irish bailouts and bondholders having to bear the pain in any cost of bailouts. Stocks were also under pressure as  the Euro pushed lower towards 1.3600 and the market s positioning increasingly grew with a bearish bias. EUR/USD traded with a low of 1.3607 and a high of 1.3822 before closing at 1.3650. Looking ahead, Q3 GDP forecast at 0.4% Q/Q, 1.9% Y/Y.

Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3680 with a preference to enter into Short positions at 1.3670
• § The USDJPY pivot point is at 82.10 with a preference to enter Long positions at 82.12

Today’s calendar and market movers:

• § Germany GDP Q3 expected at 0.7%
• § Euro Zone GDP for Q3 expected at 0.4% 

Equity Markets:

• US equities closed negative yesterday with the S&P500 at -0.42 % and the DJIA at -0.65%. The European bourses were mixed with the FTSE down -0.03% the DAX and the CAC closing down up at 0.05% and down at -0.54% respectively. The NIKKEI and the HSI at the time of writing is -1.39% and -1.62% respectively.

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

U.S. Dollar Trading (USD) the dollar went to multi-month lows against most majors before market wide aggressive profit taking saw losses turned into gains. Weekly Jobless Claims continued to improve down to 445k vs. 453k previously. Stocks reversed sharply after the US market opened after the Dow Jones tested 11000. In US stocks, DJIA -19 points closing at 10948, S&P -2 points closing at 1157 and NASDAQ +3 points closing at 2383. Looking ahead, September Non Farm Payrolls forecast at +1k vs. -54k. September Unemployment Rate is forecast to rise to 9.7% vs. 9.6% previously.

The Euro (EUR) the Euro Broke above 1.4000 on strong US data but the market took profit aggressively back over 150 pips. The ECB held rates at 1.0% as expected and Trichet stated he expected slow growth in the 2^nd half and he supported the US strong Dollar policy. EUR/USD traded with a low of 1.3857 and a high of 1.4028 before closing at 1.3920. Looking ahead, August German Trade Balance is forecast at 12.3bn vs.12.7bn previously.

The Japanese Yen (JPY) Dollar weakness in Europe sent the USD/JPY back through year lows at Y82.80 to fall quickly Y82.10. The BOJ was noticeably absent and the market is now looking to test the central bank intervention policies. Overall the USDJPY traded with a low of 82.11 and a high of 83.03 before closing the day around 82.40 in the New York session.

The Sterling (GBP) broke above the key 1.6000 level but came under pressure quickly as sentiment in the market turned in the US session. The BoE held at 0.5% and no statement was released as expected. US FED officials stating that further QE was not certain and FED’s Hoenig calling for rate hikes added to the USD buybacks. Overall the GBP/USD traded with a low of 1.5826 and a high of 1.6017 before closing the day at 1.5880 in the New York session. Looking ahead, September PPI Output is forecast at 0.2% vs. 0.0% previously m/m.

The Australian Dollar (AUD) the Aussie was the strongest currency once again after extremely strong employment data helped lift the commodity currency. September Employment change was +49k vs. 20k forecast. Parity is on the cards now as the market still prices in further rate hikes this year. Overall the AUD/USD traded with a low of 0.9756 and a high of 0.9917 before closing the US session at 0.9820.

Oil & Gold (XAU) rallied to all time highs before crashing over $30 an ounce on USD demand and profit taking. Overall trading with a low of USD$1325 and high of USD $1364 before ending the New York session at USD$1334 an ounce. Fell under profit taking after significant gains in recent sessions. WTI Oil Closed -$1.79 at $81.44 a barrel.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3637	1.3799	1.3920	1.4029	1.4194
USD/JPY	75.00	79.75	82.40	83.99	85.40
GBP/USD	1.5503	1.5670	1.5875	1.6018	1.6253
AUD/USD	0.9542	0.9757	0.9820	0.9918	1.0000
XAU/USD	1283.00	1312	1334	1368	1400
OIL/USD	80.00	81.00	81.70	82.50	84.00

Euro – 1.3920

Initial support at 1.3799 (Oct 6 low) followed by 1.3637 (Oct 5 low). Initial resistance is now located at 1.4029 (Oct 7 High) followed by 1.4194 (Feb 3 high)

Yen – 82.40

Initial support is located at 79.75 (April 1995 low) followed by 75 (Round number). Initial resistance is now at 84.50 (Sep 27 high) followed by 85.93 (Sept 16 high).

Pound – 1.5875

Initial support at 1.5670 (Sept 30 low) followed by 1.5503 (Sept 21 low). Initial resistance is now at 1.6018 (Oct 7 high) followed by 1.6253 (76.4% retrace of 1.6878-1.4231).

Australian Dollar – 0.9820

Initial support at 0.9757 (Oct 7 low) followed by the 0.9542 (Oct 5 low). Initial resistance is now at 0.9918 (Oct 7 high) followed by 1.0000 (Parity).

Gold – 1334

Initial support at 1312 (Oct 5 low) followed by 1283 (Sept 28 low). Initial resistance is now at 1364 (Oct 7 High) followed by 1400 (Round Number).

Oil – 81.70

Initial support at 81.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 84.00 (Intraday Resistance).

Written by Anthony Darvall

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

The Dollar traded weaker overnight giving up most of yesterday’s gains as Asian equities rebounded. However with US stocks remaining under pressure and Euro Zone peripheral risks resurfacing the Dollar may resume its strength across the board as safe haven appetite comes back. Weekly Jobless Claims caused concern again at 484 vs. 465k and is creeping higher in recent weeks. The DJIA traded down -58 points closing at 10320 and the S&P traded down -5 indicating fear over the pace of US economic growth. Looking ahead, July Retail Sales are expected to come in at 0.5% vs.-0.5% previously. Also released, August Consumer Confidence forecast at 69.3 vs. 67.8 previously. USDJPY price action yesterday was between 84.93 – 86.18.

European banking concerns remained in the spotlight as well as renewed fears over the funding abilities of EU peripheral economies such as Ireland and lower than expected GDP growth for Greece which spooked the markets. As fears intensified Euro crosses were sold across the board whilst the JPY, CHF and USD benefited due to safe haven demand. EUR/JPY was volatile on Japanese intervention fears but a rally in Asia was sold aggressively in Europe after weak economic data. June Industrial Production fell -0.1% vs. 0.7% forecast. EUR/USD traded with a low of 1.2781 and a high of 1.2934 before closing at 1.2830. Looking ahead, Q2 German GDP forecast at 1.3% vs.0.2% previously and Q2 EU GDP forecast at 0.7% vs. 0.2% previously.

Currency to watch out for: EURUSD & USDJPY

• The EURUSD pivot point is at 1.2900 with a preference to enter into Short positions at 1.2890
• The USDJPY pivot point is at 85.75 with a preference to enter Long positions at 85.80

Today’s calendar and market movers:

• Germany GDP Q2 is forecasted at 1.3%
• Euro Zone GDP for Q2 is forecasted at 0.7%
• United States Retail Sales for July is expected at 0.5%
• Michigan Sentiment for August is expected at 69.3

Equity Markets:

US equities closed negative yesterday with the S&P500 at -0.54% and the DJIA at -0.57%. The European bourses were mixed with the FTSE up 0.4% the DAX and the CAC closing at -0.31% and -0.20% respectively. The NIKKEI and the HSI at the time of writing is 0.47% and 0.07% respectively.

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

EU Morning Report – Dollar weakness across the board as risk appetite soars!

• The Dollar was sold across the board as demand for the safe haven eased and the market bought stocks and commodities aggressively. Company Earnings were strong but economic data was a little weak with Weekly Jobless Claims at 464k vs. 449k previously. In US stocks, the DJIA traded up +201 points closing at 10322, S&P +24 points closing at 1093 and NASDAQ +58 points closing at 2245.

• The Euro rallied aggressively after some strong economic data and improvement in sentiment helped lift the pair back to the 1.2900 level. The market is eagerly awaiting the European stress tests released at 1400 GMT. July EU Manufacturing PMI jumped 56.5 vs. 55.2. EUR/USD traded with a low of 1.2736 and a high of 1.2934 before closing at 1.2890. Looking ahead, German July IFO forecast at 101.5 vs. 101.8 previously.

• The Japanese Yen had a volatile day with the market testing Y110 support on the EUR/JPY and month lows on the USD/JPY at Y86.30 before profit taking and a reversal of stock market direction ignited a fierce short covering rally. Overall the USDJPY traded with a low of 86.32 and a high of 87.25 before closing the day around 87.10 in the New York session.

Currency to watch out for: EURUSD & USDJPY

• The EURUSD pivot point is at 1.2840 with a preference to enter into Long positions at 1.2840
• The USDJPY pivot point is at 86.75 with a preference to enter Long positions at 86.75

Today’s calendar and market movers:

• European Stress Test Results
• German IFO Business Climate Expected at 101.6
• UK GDP year on year expected to grow at 1.1 %
• CAD Core CPI year on year expected at 1.8%

Equity Markets:

• US equities closed positively yesterday with the S&P500 at 2.25% and the DJIA at 1.99%. The European bourses were positive with the FTSE up 1.90% the DAX and the CAC closing at 2.53% and 3.05% respectively. The NIKKEI and the HSI at the time of writing is 2.09% and 1.09% respectively.

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

CURRENCY TRADING SUMMARY – 30th April (00:30GMT)

U.S. Dollar Trading (USD) as fears about Greece eased on perceived efforts to speed up aid delivery the market focused on Q1 earnings and continued pushing higher. Weekly Jobless Claims came in at 448k vs. 465k previously. In US stocks, DJIA +122 points closing at 11167, S&P +15 points closing at 1191 and NASDAQ +40 points closing at 2511. Looking ahead, Q1 GDP forecast at 3.4% vs. 5.6% previously. Also Released, April Michigan Final 71 vs. 73.6.

The Euro (EUR) with yields coming down on Greece and Portugal bonds the Euro was able to stage a decent relief rally. Traders are speculating an improved bailout package will be announced over the weekend and are hesitant to aggressively short the market before then. Also helping Eurozone sentiment was the large drop in German Unemployment -68k in April. EUR/USD traded with a low of 1.3183 and a high of 1.3280 before closing at 1.3260. Looking ahead, April Inflation is forecast at 1.5% vs. 1.4% previously.

The Japanese Yen (JPY) was under pressure as stock markets rallied and Yen crosses lifted higher led by GBP/JPY which enjoyed a solid bounce. USD/JPY bulls are still targeting Y95 and US GDP tonight or next weeks NFP could be the catalyst. Overall the USDJPY traded with a low of 93.84 and a high of 94.28 before closing the day around 94.10 in the New York session. Looking ahead, BOJ Rate announcement forecast to remain at 0.1%.

The Sterling (GBP) rallied well on the back of improving risk appetite and a good performance from Tory Leader Cameron in the final debate. April Nationwide HPI at 1.0% vs. 0.4% forecast. EUR/GBP was briefly above 0.8700 but the market used the rally to aggressively sell the cross back to the lower 0.8600 region. Overall the GBP/USD traded with a low of 1.5140 and a high of 1.5367 before closing the day at 1.5340 in the New York session.

The Australian Dollar (AUD) continued to be well supported in the ‘Risk on’ enviroment sitting under 0.9300 for most of the day. Major Resistance is close and a break above 0.9400 would allow talk of parity to quickly come back into the frame. Fluctuating expectations of next week’s RBA rate decision is providing some volatility. Overall the AUD/USD traded with a low of 0.9221 and a high of 0.9316 before closing the US session at 0.9300.

Oil & Gold (XAU) traded in a tight range but finished near resistance at $1170. Overall trading with a low of USD$1161 and high of USD$1171 before ending the New York session at USD$1169 an ounce. Rallied back above the key $85 level. WTI Oil Closed +$1.95 at $85.17 a barrel.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.2965	1.3115	1.3245	1.3416	1.3523
USD/JPY	92.25	92.74	94.05	94.79	95.29
GBP/USD	1.4805	1.5126	1.5335	1.5524	1.5688
AUD/USD	0.9003	0.9035	0.9305	0.9312	0.9364
XAU/USD	1122.00	1135	1171.00	1173	1183.00
OIL/USD	82.50	85	85.50	86	88.00

Euro – 1.3245

Initial support at 1.3115 (Apr 28 low) followed by 1.2965 (Apr 29 2009 low). Initial resistance is now located at 1.3416 (Apr 27 high) followed by 1.3523 (Apr 20 high)

Yen – 94.05

Initial support is located at 92.74 (Apr 22 low) followed by 92.25 (38.2% retracement of 88.13 – 94.77). Initial resistance is now at 94.79 (Aug 5 high) followed by 95.29 (Aug 18 High).

Pound – 1.5335

Initial support at 1.5126 (Apr 28 low) followed by 1.4805 (Mar 26 low). Initial resistance is now at 1.5524 (Apr 15 low) followed by 1.5688 (Feb 18 low).

Australian Dollar – 0.9305

Initial support at 0.9035 (Mar 29 low) followed by the 0.9003 (Mar 26 low). Initial resistance is now at 0.9312 (Apr 16 high) followed by 0.9364 (Apr 15 high).

Gold – 1171

Initial support at 1135 (Apr 23 low) followed by 1122 (Apr 7 low). Initial resistance is now at 1173 (April 27 high) followed by 1183 (0.764 of 1126.56-1044.85).

Oil – 85.5

Initial support at 85.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 86.00 (March high) followed by 88.00 (Intraday Resistance).

Source: Easy Forex

Recommended Forex Brokers: AvaFX and Forex Yard

• USD: Higher, fresh Greek debt worries, improving US housing data, consumer confidence declines
• JPY: Higher, China tightening, Yuan revaluation speculation, Goldman default swap spreads widen
• EUR: Lower, Greece may soon tap EU IMF aid, Trichet says Greek bank troubles could worsen
• GBP: Lower, UK election uncertainty, polls suggest surge for the Liberal Democratic Party
• CAD and AUD: AUD & CAD lower, China tightening, Canada’s mfg. shipments weaker than expected

Overview
The USD and JPY traded higher supported by worries over the Greek fiscal crisis and in reaction to report that China is taking measures to curb growth and allow the Yuan to gradually appreciate. EUR traded lower pressured by report that Greek officials seek talks on the rescue plan and may soon tap EU/IMF aid. EUR was also pressured by a statement from ECB President Trichet that Greek bank troubles could worsen. China raised its down payment requirements and rates on some mortgages to cool off the housing market. A Chinese central bank adviser says that China has come to consensus on adjusting its exchange rate gradually. Asian equities traded lower and commodity currencies were pressured by the report of tightening by China. GBP continued to trade in a narrow range despite the latest UK election polls which indicate that support for the Liberal Democratic Party has surged and support for the Conservative party and Labor party has declined increasing the risk of a hung parliament. JPY traded higher supported by an uptick in risk aversion and Yuan revaluation speculation. JPY rallied despite by a statement from Japan’s ruling party that monetary easing and currency intervention are needed to weaken the JPY and combat deflation. JPY traded to the day’s highs in reaction to a sharp selloff in US equities sparked by report that the SEC has charged Goldman Sachs with fraud on subprime mortgages and credit default swaps rise. Financial stocks and risk related markets were hit by the Goldman news. Today’s US economic data was mixed as housing starts and building permits rose more than expected. US housing starts rose to the highest level since November 2008 and building permits hit a 17 month high. Consumer confidence came in weaker than expected declining to an 8 month low. The trade will continue to monitor news on the Greek debt, next week’s US economic data and BOC policy meeting Tuesday.

Today’s US data:
April housing starts rose by 1.6% to 626k, a reading of 590k was expected. April building permits rose by 7.5% to 685k, a reading of 620k was expected. April Michigan consumer sentiment came in at 69.5, a reading of 74 was expected.

Upcoming US data:
Next week’s US economic calendar includes the April 19th release of March leading indicators expected at 0.9% compared to 0.1% last month. On April 22nd initial jobless claims for week ending 4/17 will be released expected at 460k compared to 484k last month. March PPI and existing home sales will also be released on April 22nd.PPI is expected to rise by 0.3% compared to 0.6% last month. Existing home sales are expected at 521k compared to 502k last month. On April 23rd March durable goods and new home sales will be released. Durable goods are expected to rise by 0.3% compared to 0.9% last month and to rise by 0.8% ex-transports. New home sales are expected at 320k compared to 308k last month.

JPY
JPY traded sharply higher supported by gains in cross trade and by Yuan revaluation speculation. JPY was supported by a spike in risk aversion as the Nikkei closed 172 points lower and Asian equities traded weaker in reaction to report that China is taking measures to curb growth. Earlier in the week China reported acceleration in its Q1 GDP and strong retail sales and industrial production. These reports increase fears that the Chinese economy is overheating and maybe creating a bubble in the real estate market. China raised its down payment requirements rates on some mortgages to cool off the housing market as property prices in major cities rose at the fastest pace in five years. A Chinese central bank adviser says that China has come to consensus on adjusting its exchange rate gradually. A revaluation of the Yuan could boost demand for Asian currencies because it makes their exports more competitive. The JPY sometimes trades as a proxy for Yuan revaluation and anticipated rise in Asian currencies that may result from appreciation of the Yuan. JPY rallied despite increased threat of intervention and strong US housing data. A spokesperson for the Japanese ruling party said that monetary easing and currency intervention are needed to weaken the JPY and combat deflation. US housing starts and building permits rose more than expected confirming improving outlook for the US recovery. JPY gains in cross trade are attributed to fresh worries about the Greek fiscal outlook and the impact tightening in China. EUR/JPY and AUD/JPY traded almost 1% lower. Recent economic data from Japan shows that the economy is picking up. This may make it more difficult for the Japanese government to convince the BOJ to ease monetary policy and will likely help BOJ officials deflect calls for additional monetary ease. BOJ Governor Shirakawa said growth may moderate in the near term and the BOJ will maintain very easy monetary policy. Shirikawa went on to say that the BOJ is committed to combating deflation. His comments suggest that the BOJ may be open to calls for intervention to try to weaken the JPY as a stronger JPY tightens monetary conditions and ads to deflationary pressures. JPY traded to the days highs as stocks drop in reaction to news that the SEC has charged Goldman Sachs with fraud on subprime mortgages.

Next week’s Japanese economic calendar includes the April 19th release of February tertiary activity expected at 1.4% compared to -0.8% last month along with April consumer confidence expected at 40 compared to 39.8 last month. On April 20th revised February leading indicators will be released expected at 1% compared to 2.2% in the original report. March trade balance and February all industry activity will be released April 22nd. March trade balance is expected at ¥750bln compared to ¥651bln last month. All industry activity is expected to decline by 0.4% compared to the 3.8% rise last month.

Key technical levels to watch in USD/JPY include support at 91.75 the March 25th low with resistance at 93.79 the April 9th high.

EUR
EUR traded lower pressured by report that Greece may soon tap EU/ MF aid and in reaction to strong US housing data. The latest concern about Greek debt troubles have been fueled by report that Greece will seek aid and may not issue US denominated bonds. Additionally there are reports that some EU nations may try to block aid for Greece and EU President Trichet says that Greek bank troubles could worsen. US March housing starts and building permits came in higher than expected. The US housing data follows recent improvements in US employment, retail sales and manufacturing/ services PMI. Improving US economic data encourages speculation that the US recovery is gaining traction and that faster US growth may encourage the Fed to soon change its policy guidance and move the timetable forward for hiking interest rates. The Fed’s Yellen who has expressed concern about the strength of the US recovery said today that she thinks that the economy is on the right track but the recovery remains fragile. Yellen went on to say that the Fed will have to hike rates at some point. Today’s EU economic data was generally positive with report that the February trade balance swung to a 2.6bln surplus from a 9bln deficit last month and March inflation rose by 0.9%.There is report on MarketWatch which suggests that investors remain skeptical about the viability of the EU/IMF Greek rescue package. New York University economist Roubini says the Greek crisis is the “canary in the coal mine” for the EU. Roubini is referring to rising fiscal troubles in peripheral European in nations like Spain, Portugal, Italy and Ireland. Investors are also concerned that the measures needed by Greece and other European nations to reduce their deficits could lead to a sharp contraction of growth spark deflationary pressures. The deteriorating fiscal outlook in peripheral European nations will encourage the ECB to maintain accommodative policy and could threaten the existence of European Monetary Union. Yield differential is moving in favor of the USD as the ECB is seen on hold for the remainder of 2010 and improving US economic outlook suggests that the Fed is likely to hike rates before the ECB.

Next week’s EU economic calendar includes the April 19th release of February construction output expected at -1% compared to 2.2% last month. On April 20th German March Producer Price Index will be released expected at 0.1% compared to flat last month along with EU February current account expected at – €12.3bln compared to minus -€16.7bln last month. On April 20th German ZEW survey will also be released expected at 45.2 compared to -44.5 last month. On April 22nd EU manufacturing and services PMI for April be released. The manufacturing PMI is expected to improve to 56.7 from 56.3 and the services index is expected to improve to 54.5 from 53.7. On April 23rd German April IFO business climate survey will be released expected at 98.6 compared to 98.1 last month along with EU February industrial orders expected that -1% compared to -2% last month.

The technical outlook for the EUR is negative as EUR fails to hold above 1.3600. Expect EUR support at 1.3441 the April 9th low with resistance at 1.3667 the April 15th high.

GBP
GBP traded mixed to lower pressured by UK election uncertainty as the latest UK election polls show that support  for the Liberal Democratic Party has surged and support for the Conservative party and Labor party has declined increasing the risk of a hung parliament. The UK Parliamentary election will be held on May 6th. If the election results in a hung Parliament it would greatly reduce the likelihood that the UK will take action to reduce its budget deficit. Failure by the UK government to reduce its budget deficit could result in a downgrade of the UK AAA sovereign debt rating. UK election uncertainty coupled with improvement in the UK economy clouds the outlook for BOE policy. UK economic data suggest that the UK economy is improving and inflation rising. Tuesday the UK reported a 9.5% jump in exports and 0.9% rise in house prices. Earlier in the week the UK reported a sharp jump in input prices. The improvement in the UK economic outlook and rising inflation may encourage the BOE to end its asset purchases and move towards normalization of monetary policy. The BOE is less likely to move towards normalization of policy if the UK election results in the Conservative party winning a majority. The conservative party has pledged to take quick action to reduce the deficit. The reduction government spending would be a near-term drag on the UK economy and could slow the recovery. The BOE may elect to try to counteract this drag by increasing its asset purchases and expanding monetary policy accommodation. Focus turns to next week’s release of UK inflation data and the MPC minutes for the April meeting. Investors will be looking to see if UK inflationary pressures are continuing to build and if the MPC is shifting its focus from growth risks to inflation risk.

Next week’s UK economic calendar includes the April 18th release of April Rightmove house price index expected to rise by 0.5% compared to 0.1% last month. On April 20th March CPI will be released expected at 3.1% compared to 2.9% last month. On April 21st February average earnings, April mortgage approvals, March claimant count, February unemployment rate and March money supply will be released. Average earnings are expected to rise by 0.6% compared to 8% last month. Mortgage approvals are expected at 38.4k compared to 35.2k last month. Claimant count is expected unchanged at 4.9% and the unemployment rate is expected at 7.7% compared to 7.8% last month. Money supply is expected to rise by 0.4% compared to 0.2% last month. The minutes for the April 7/8 BOE policy meeting will be released on Wednesday.  On April 22nd March retail sales will be released expected to rise by 0.8% compared to 2.1% last month. On April 23rd Q1 GDP will be released expected at 0.5%.

The technical outlook for GBP is positive as GBP holds above 1.5400. Expect near-term support at 1.5335 the April 13th low with resistance at 1.5575 the February 23rd high.

CAD
CAD traded lower pressured by a number of factors which include weaker equity markets and lower commodity prices, tightening of lending conditions in China, report of weaker than expected Canadian manufacturing shipments. The Goldman news dampens risk appetite. CAD traded to the lows of the day in reaction to the Goldman charge and widening of credit default spreads. Today’s weakness in equity markets and commodities is partly attributed to report that China has raised down payment requirements and rates on some mortgages to slow the housing market. Investors are concerned that China may be planning to take additional measures to tighten monetary conditions to curb acceleration of China’s growth. The tightening of monetary conditions in China could be a drag on the global recovery and reduce demand for commodities. Canada’s manufacturing shipments came in weaker than expected reported up 0.1%, a 0.6% rise was expected. The weaker Canadian manufacturing shipments report may dampen BOC rate hike speculation. CAD traded lower despite Yuan revaluation speculation as Chinese officials signaled that they may soon allow a gradual appreciation of Yuan and strong US housing data. Yuan revaluation speculation and stronger US economic data cuts two ways for the CAD. Yuan revaluation could be an additional drag on the global recovery and dampen demand for exports. Yuan revaluation could also be a boom for commodity prices because it makes it cheaper for China to purchase commodities. Strengthening of the US economy is positive for North American domestic growth outlook and export sales for Canada .The data may also increase the odds of the earlier Fed rate hike canceling out the positive impact of BOC rate hike expectations. Focus turns to the BOC policy meeting Tuesday. Investors will be looking to see if the BOC signals that rate hikes are coming.

Next week’s Canadian economic calendar includes the April 19th release of March foreign investment flows expected at 7bln compared to 11.8bln last month. On April 21st February wholesale sales will be released expected to rise by 3.2% compared to 3% last month. On April 22nd March leading indicators will be released expected at 1% compared 0.8% last month. On April 23rd March CPI will be released expected to rise by 0.9% compared to 0.7% last month along with February retail sales expected to rise by 1.2% compared to 0.7% last month.

The technical outlook for CAD is mixed as USD/CAD trades above 1.0100. Look for near-term support at 1.0003 the April 16thlow with resistance at 1.0304 the March 26th high.

AUD
AUD traded lower as investors reduce risk positions in reaction to weaker equity and commodity prices. Fresh worries about the Greek fiscal crisis coupled with report that China is taking actions to curb lending activity sparked selling of equities and commodity markets. The drop in equities accelerated on news that the SEC has charged Goldman Sachs with fraud. China reported a sharp acceleration in Q1 GDP and acceleration in China’s growth increases the risk that the Chinese economy is overheating. China has taken measures to cool the housing market and may be setting the stage for additional tightening of monetary conditions including the Yuan revaluation. A revaluation of the Yuan could help the Chinese central bank control the money supply and would be a drag on growth. The Greek fiscal crisis has not had great impact on investor confidence up to now and investors will be monitoring the situation to see if it is contained. If the Greek fiscal crisis spreads to other parts of Europe it could increase investor concern about global sovereign debt risks and dampen risk appetite in demand for growth led currencies. AUD should remain well supported on breaks by RBA rate hike speculation. The tightening of monetary conditions in China may cloud the outlook for the RBA policy. Earlier in the year the RBA paused its tightening cycle because tighter monetary conditions in China did the job for the RBA. Thursday, Australia reported that inflation expectations rose to the highest level since October 2008. The rise in Australia’s inflation expectations could revive RBA rate hike speculation. Over the past few weeks there has been growing uncertainty about RBA policy outlook and whether the RBA is nearing a pause in its rate hike cycle. The RBA’s Debelle said interest rates are close to normal levels. Debelle’s comments have encouraged speculation that the RBA may pause. Last week the RBA raised interest rates 25bps to 4.25% and left the door open for future rate hikes. Debelle’s comments and mixed Australian economic data suggest that the RBA may elect to pause in its rate hike cycle. Thursday’s Australian inflation report may tip the scales back in favor of another 25bps RBA rate hike next month. AUD downside was partly limited by report of strong housing data from New Zealand.

Next week’s Australian economic calendar includes April 22nd release of March new car sales expected to rise by 3% compared to -1.9% last month. On April 23rd Q1 export and import prices will be released. Export prices are expected to rise by 0.7% compared to a 1.7% decline last quarter and imports prices are expected to fall by 0.6% compared to a 4.3% decline last quarter.

The technical outlook for the AUD is positive as the AUD rallies above 9300. Expect AUD support at 9273 the April 14h low with resistance at 9389 the April 12th high.

Source: Easy Forex

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The Fed surprised the markets Thursday and hiked the discount rate 25bps to 0.75%. Stocks and commodities declined and the USD rallied to a nine month high in reaction to the Fed’s discount rate hike. Stocks and commodities rebounded from earlier losses and the dollar pared gains in reaction to Fed assurances that the discount rate hike was not a signal that the Fed is considering an imminent tightening of monetary policy. The Fed says that the rate hike was a technical action to start to normalize monetary policy. In a statement accompanying the Fed’s discount rate hike the Fed said that “the changes are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.” Thursday’s discount rate hike was the first rate hike since December of 2008. The discount rate is the emergency lending rate that the Fed charges banks. The Fed will seek to maintain a 50bps spread between the Fed funds rate and the discount rate. The Fed funds rate is currently at 0 to 0.25%. According to the Fed’s Lockhart the Fed funds rate may remain at this level throughout 2010 as the Fed remains concerned about high unemployment and the strength of the recovery.

There are a number of reasons why the Fed elected to hike the discount rate. One reason for the discount rate hike is that the Fed sees the banking system strengthening. Another rationale for the discount rate hike is that the Fed wants to normalize monetary policy and begin to prepare for an eventual tightening of monetary policy. A tightening by the Fed is not likely to occur until the Fed sees employment growth and that the trend in employment growth is sustainable. The fact that the Fed hiked the discount rate was not as much a surprise as the timing of the rate hike. In testimony before Congress last week Fed Chairman Bernanke said that the Fed was considering the possibility of hiking the discount rate as one of the ways of normalizing policy and to start withdrawal of stimulus. Some argue that the Fed acted on Thursday because last week’s 10 year note auction was not well received and China sold a record amount of US debt in December. Foreign demand for US treasuries has declined. Because of the record US budget deficit the US will continue to auction a record amount bonds. If the Fed did not soon signal the start of withdrawal of stimulus, inflation fears might discourage foreign demand for US bonds and light a fire under the bond vigilantes.

Friday the US reported that CPI remains subdued with January core inflation reported to have declined by 0.1%. As long as US inflation remains subdued a tightening of Fed policy will remain far off into the future and a Fed funds rate hike is unlikely until late 2010 at the earliest. This suggests that initial selloff in the global equity markets and commodities and dollar surge was an overreaction to the Fed discount rate hike. So when is a Fed rate hike not a rate hike? when the rate hike means that no imminent tightening of policy is coming.

Source: Easy Forex

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