Forex Market Update
This morning, the greenback is trading mostly lower against most of the major currencies. Earlier today, Fed Governor, Jerome Powell opined that the central bank’s forward guidance on interest rates has supported economic growth in the US.
The EUR is trading lower amid a mixed batch of economic releases from Germany. However, German Bundesbank, in its bi-annual report, projected the economy to expand at an annual pace of 1.9%. Yesterday, the Euro came under pressure for a brief period of time after the ECB imposed negative interest rates and introduced measures to encourage lending in the bloc and stimulate recovery in the region.
Yesterday, in the New York session, the greenback traded mostly lower against the key currencies, hurt by a more-than-expected rise in the weekly US jobless claims benefits for last week. Negative sentiment was also fuelled as Fed’s Narayana Kocherlakota urged the central bank to keep its interest rate low for nearly next 5 years to “achieve congressionally mandated goals.”
In the UK, the BoE kept its monetary policy intact for another month by keeping its interest rate unchanged at 0.5% and maintained the size of its QE package at £375.0 billion.
Following the G7 meeting, Japan’s Prime Minister, Shinzo Abe expressed confidence in economic recovery of Japan despite the recent sales-tax hike in April.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3630 against the USD, 0.23% lower from the New York close. Earlier today, Bundesbank raised its 2014 growth forecast on the Germany economy, further adding that Euro-zone’s largest economy is on a "robust" growth path. During the session, the pair traded at a high of 1.3666 and a low of 1.3631. Yesterday, the EUR traded 0.91% higher against the USD in the New York session, and closed at 1.3662, paring its initial losses, triggered by ECB’s decision to ease its policy further.
The pair is expected to find its first support at 1.3532 and first resistance at 1.3700.
GBP USD
At 9:40 GMT, the GBP is trading at 1.6815 against the USD, a tad higher from the New York close. Earlier today, data showed that Britain’s trade deficit widened in April while a BoE survey reflected that inflation expectations in the economy dropped to their lowest levels for more than four years. During the session, the pair traded at a high of 1.6822 and a low of 1.6806. Yesterday, the British Pound traded 0.29% higher versus the Dollar in the New York session, and closed at 1.6814. The BoE decided to keep its policy measures unchanged for another month at its June policy meeting.
The pair is expected to find its first support at 1.6749 and first resistance at 1.6853.
USD JPY
The USD is trading at 102.37 against the JPY at 9:40 GMT this morning, marginally lower from the New York close. Early morning, data showed that Japan’s leading economic index declined by 0.5 point to 106.6 while its coincident indicator fell by 3.4 points to 111.1 in April. During the session, the pair traded at a high of 102.46 and a low of 102.29. In the New York session yesterday, the USD traded 0.15% lower against the JPY, and closed at 102.43. Yesterday, following the G7 meeting, Japan’s PM, Shinzo Abe expressed confidence in the recovery of his nation, despite the recent sale-tax hike.
The pair is expected to find its first support at 102.15 and first resistance at 102.67.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8934 against the Swiss Franc, 0.21% higher from the New York close. On the economic front, consumer prices in Switzerland increased for the first time in four months in May as Swiss industrial production rose at faster pace in the first quarter. During the session, the pair traded at a high of 0.8934 and a low of 0.8913. In the New York session yesterday, the USD traded 1.01% lower against the CHF, and closed at 0.8915.
The pair is expected to find its first support at 0.8882 and first resistance at 0.9012.
USD CAD
At 9:40 GMT, the USD is trading at 1.0924 against the CAD, marginally lower from the New York close. Traders keenly await Canada’s employment data for further cues in the Canadian Dollar. During the session, the pair traded at a high of 1.0930 and a low of 1.0914. Yesterday, the USD traded 0.08% lower against the CAD in the New York session, and closed at 1.0925. In economic news, Canadian building permits rose for the first time in three months in April while the seasonally adjusted Ivey PMI in Canada unexpectedly contracted in May for the first time in five months.
The pair is expected to find its first support at 1.0900 and first resistance at 1.0955.
AUD USD
The AUD is trading at 0.9351 against the USD, at 9:40 GMT this morning, 0.16% higher from the New York close. Overnight, the AiG performance of construction index in Australia improved in May. Meanwhile, the World Bank opined that reforms in China’s fiscal and financial sector would enable the nation to achieve its 2014 growth target and eliminate its debt problems. During the session, the pair traded at a high of 0.9359 and a low of 0.9329. AUD traded 0.23% lower against the USD in the New York session, and closed at 0.9336.
The pair is expected to find its first support at 0.9301 and first resistance at 0.9380.
Gold
At 9:40 GMT, Gold is trading at $1253.80 per ounce, slightly higher from the New York close. This morning, Gold traded at a high of $1256.90 and a low of $1252.90 per ounce. In the New York session yesterday, the yellow metal traded 0.15% lower, and closed at $1253.40, as a leading broking house slashed its price projections of the yellow metal for 2014-2015. However, earlier, gold prices advanced after the ECB introduced fresh stimulus measures in the Euro-zone economy.
Gold has its first support at $1244.03 and first resistance at $1260.73.
Silver
Silver is trading at $19.09 per ounce, 0.24% higher from the New York close, at 9:40 GMT this morning. This morning, Silver traded at a high of $19.15 and a low of $19.03. Silver traded marginally lower against the USD in the New York session, and closed at $19.05, tracking losses in gold prices.
Silver has its first support at $18.79 and first resistance at $19.27.
Crude Oil
At 9:40 GMT, Oil is trading at $102.67 per barrel, 0.20% higher from the New York close. This morning, Oil traded at a high of $102.75 and a low of $102.32. Yesterday, Oil traded 0.20% higher in the New York session, and closed at $102.43. However, prospects of easing supply-concerns in the Ukraine-Russian region and a rise in Libya’s output capped the gains in the oil prices.
It has its first support at $101.93 and first resistance at $103.08.
Economic Snapshot
UK’s total trade deficit widened more than expected in April
The total trade deficit of the UK widened to £2.5 billion in April from a revised deficit of £1.1 billion recorded in the previous month. Markets had expected the UK’s total trade deficit to widen to £1.5 billion in April.
UK’s consumer inflation expectations declined, indicated BoE
The consumer median inflation expectations for the next 12 months in the UK declined to 2.6%, compared to a rate of 2.8% recorded in February survey.
German trade balance widened more than expected in April
The seasonally adjusted trade surplus in Germany widened to €17.7 billion in April from a revised surplus of €15.0 billion recorded in the previous month. Markets had expected Germany’s trade surplus to widen to €15.1 billion in April.
German industrial production rose less than expected in April
On a seasonally adjusted monthly basis, industrial production in Germany rose 0.2% in April, compared to a revised 0.6% decline recorded in the previous month. Markets were expecting the seasonally adjusted industrial production to rise 0.4% in April.
German labor costs rose at a slower pace in the first quarter of 2014
On a working day adjusted annual basis, labor costs in Germany rose 1.1% in Q1 2014, compared to a revised 2.2% increase in the previous quarter.
France’s trade deficit narrowed unexpectedly in April
Trade deficit of France narrowed to €3.9 billion in April from a revised deficit of €4.9 billion recorded in the previous month. Markets had expected France’s trade deficit to widen to €5.0 billion in April.
Swiss foreign currency reserves rose in May
Switzerland’s foreign currency reserves rose to CHF 444.35 billion in May, compared to reserves of CHF 438.95 billion recorded in the previous month.
Swiss consumer price index rose more than expected in May
On a monthly basis, the consumer price index in Switzerland increased 0.3% in May, compared to a 0.1% rise reported in the previous month. Markets were expecting the consumer price index to rise 0.2% in May.
Swiss industrial production rose at a faster pace in Q1 2014
On a working day adjusted annual basis, industrial production in Switzerland rose 0.5% in Q1 2014, compared to a revised 0.3% increase recorded in the previous quarter.
Japan preliminary leading economic index declined in April
The preliminary leading economic index in Japan fell to a level of 106.6 in April, compared to a reading of 107.1 reported in the previous month. Meanwhile, Japan’s preliminary coincident index also fell to a level of 111.1 in April, compared to a reading of 114.5 reported in the previous month.
Australia’s foreign exchange reserves rose in May
Australia’s foreign exchange reserves rose to A$ 65.1 at the end of May 2014 from A$ 62.1 billion of reserves recorded at the end of April 2014.
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