Forex Market Update
This morning, the greenback is trading mostly higher against most of the major currencies.
The GBP is trading lower even after data showed that UK’s trade deficit narrowed the most since December 2013 in March as manufacturing production in the nation accelerated at the fastest quarterly pace in almost 15 years.
The AUD lost ground against the USD as inflation data from China disappointed market sentiment and after the RBA, in its quarterly policy statement, slashed its growth and inflation forecast on the Australian economy for the June quarter of 2014 and projected interest rates to remain low for some more time amid uncertainty over the nation’s growth-outlook.
In a noteworthy development, S&P Ratings Services upgraded its outlook on Portugal’s “BB” sovereign rating to “Stable” from “Negative”, citing the nation’s strong economic and budgetary performance.
Yesterday, in the New York session, the USD traded mostly higher against the key currencies. Philadelphia Fed Chief, Charles Plosser projected a 3.0% growth in the US GDP for 2014, despite the recent winter slowdown.
The EUR came under pressure yesterday after the ECB President, Mario Draghi, following the central bank’s decision to hold its interest rate at 0.25%, stated that policymakers were ready to inject fresh stimulus measures in the economy as early at its next policy meeting in June if the conditions warranted it.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3811 against the USD, 0.22% lower from the New York close. In economic news, Germany’s trade surplus unexpectedly narrowed as exports slipped for the second consecutive month in March to post its biggest monthly fall in nearly 10 months. During the session, the pair traded at a high of 1.3845 and a low of 1.3811. Yesterday, the EUR traded 0.48% lower against the USD in the New York session, and closed at 1.3842, after the ECB President, Mario Draghi, hinted that policymakers were willing to add fresh stimulus measures as early in June if needed.
The pair is expected to find its first support at 1.3745 and first resistance at 1.3936.
GBP USD
At 9:40 GMT, the GBP is trading at 1.6902 against the USD, 0.18% lower from the New York close. Data showed, manufacturing production in the UK rose at the fastest quarterly pace since 1999 while total trade deficit narrowed to £1.284 billion in March. During the session, the pair traded at a high of 1.6938 and a low of 1.6905. Yesterday, the British Pound traded 0.08% lower versus the Dollar in the New York session, and closed at 1.6933. The BoE, at its May policy meeting, kept its interest rate unchanged at 0.5% and maintained the size of its asset purchase facility at £375.0 billion.
The pair is expected to find its first support at 1.6875 and first resistance at 1.6952.
USD JPY
The USD is trading at 101.73 against the JPY at 9:40 GMT this morning, 0.11% higher from the New York close. Data released overnight showed that, Japan’s leading economic index fell more-than-expected to reach a 12-month low reading while its coincident index improved to a score of 114.0 in March. During the session, the pair traded at a high of 101.79 and a low of 101.59. In the New York session yesterday, the USD traded 0.14% lower against the JPY, and closed at 101.62.
The pair is expected to find its first support at 101.50 and first resistance at 101.92.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8826 against the Swiss Franc, 0.28% higher from the New York close. Early morning, the Fitch rating agency applauded the robust governance and track record of sound economic policy in the Swiss economy and affirmed its “AAA” sovereign rating on Switzerland, with a “Stable” outlook. During the session, the pair traded at a high of 0.8831 and a low of 0.8802. In the New York session yesterday, the USD traded 0.53% higher against the CHF, and closed at 0.8801.
The pair is expected to find its first support at 0.8742 and first resistance at 0.8870.
USD CAD
At 9:40 GMT, the USD is trading at 1.0823 against the CAD, 0.08% lower from the New York close, ahead of Canada’s employment data for April. During the session, the pair traded at a high of 1.0837 and a low of 1.0821. Yesterday, the USD traded 0.42% lower against the CAD in the New York session, and closed at 1.0832. In Canada, new housing price index rose 0.2% in March while annual housing starts surpassed analysts’ call and rose to a seasonally adjusted 194,809 units in April.
The pair is expected to find its first support at 1.0792 and first resistance at 1.0874.
AUD USD
The AUD is trading at 0.9366 against the USD, at 9:40 GMT this morning, marginally lower from the New York close, hurt by the latest batch of dismal economic releases from China and following the RBA’s decision to lower its growth forecast on the Australian economy for the June quarter of 2014. During the session, the pair traded at a high of 0.9376 and a low of 0.9356. AUD traded 0.16% lower against the USD in the New York session, and closed at 0.9370.
The pair is expected to find its first support at 0.9343 and first resistance at 0.9392.
Gold
At 9:40 GMT, Gold is trading at $1289.70 per ounce, slightly lower from the New York close. However, earlier gold prices advanced amid escalating tensions over Ukraine crisis. This morning, Gold traded at a high of $1292.90 and a low of $1287.70 per ounce. In the New York session yesterday, the yellow metal traded 0.08% higher, and closed at $1290.20, after Janet Yellen hinted that the US Fed was in no hurry to trim the size of its balance sheet and after pro-Moscow separatists ignored Russia’s decision to postpone a referendum on self-rule.
Gold has its first support at $1284.50 and first resistance at $1295.20.
Silver
Silver is trading at $19.19 per ounce, 0.08% lower from the New York close, at 9:40 GMT this morning. This morning, Silver traded at a high of $19.24 and a low of $19.12. Silver traded marginally lower against the USD in the New York session, and closed at $19.21.
Silver has its first support at $19.08 and first resistance at $19.35.
Crude Oil
At 9:40 GMT, Oil is trading at $101.08 per barrel, 0.80% higher from the New York close, on renewed tensions over Ukraine and amid lingering concerns over Libya’s supply-outlook. This morning, Oil traded at a high of $101.18 and a low of $100.24. Yesterday, Oil traded 0.07% higher in the New York session, and closed at $100.28. An official data from China, the world’s second largest consumer of crude oil, showed that crude imports to the nation jumped by a record 22.0% in April.
It has its first support at $100.24 and first resistance at $101.55.
Economic Snapshot
UK industrial production rose in March
On an annual basis, industrial production in the UK rose 2.3% in March, compared to a revised 2.5% increase in the previous month. Meanwhile, on an annual basis, manufacturing production in the UK rose 3.3% in March, following a revised rise of 3.9% recorded in the preceding month.
UK construction output rose in March
On an annual basis, construction output in the UK rose 6.4% in March, following a revised rise of 3.9% recorded in the preceding month.
UK total trade deficit narrowed unexpectedly in March
UK’s total trade deficit surprisingly narrowed to £1.28 billion in March, from a revised deficit of £1.71 billion recorded in the previous month. Market had expected the UK’s total trade deficit to widen to £2.0 billion in March.
German trade balance narrowed in March
The seasonally adjusted trade surplus in Germany narrowed to €14.8 billion in March, compared to a revised surplus of €15.8 billion reported in the previous month.
Italian industrial production declined unexpectedly in March
On a seasonally adjusted monthly basis, industrial production in Italy dropped 0.5% in March, following a revised decline of 0.4% recorded in the preceding month. Markets were expecting industrial production to rise 0.3% in March.
Japan preliminary leading economic index declined in March
The preliminary leading economic index in Japan fell to a level of 106.5 in March, compared to a revised reading of 108.7 reported in the previous month. Meanwhile, Japan’s preliminary coincident index rose to a level of 114.0 in March, compared to a revised reading of 112.9 reported in the previous month.
Loose monetary policy to stay in the near future, indicated RBA quarterly policy statement
The Reserve Bank of Australia (RBA), in its quarterly monetary policy statement, raised its annual growth forecast to 3.0% by mid-2014, up from 2.75% estimated in February, while lowering its growth projections for 2015 by 0.25%. RBA also downgraded its inflation forecast in June to 3.0%, from 3.25% it projected in February.
China consumer price index rose at a slower pace in April
On an annual basis, China’s consumer price index (CPI) increased 1.8% in April, less than market expectations and compared to a 2.4% rise recorded in the previous month.
China producer prices declined in April
On an annual basis, China’s producer price index fell 2.0% in April, compared to a 2.3% fall recorded in the previous month.
Good weekend.
