Forex Market Update
This morning, the greenback is trading mostly lower against most of the major currencies.
The EUR is trading higher against the USD, reversing its previous session losses on the back of lackluster ZEW economic data. However, initially during the day, the EUR came under pressure after the ECB Board member, Peter Praet stated that the central bank is looking at various options of stimulus programme. Separately, an ECB policymaker, Yves Mersch hinted that the ECB may purchase sovereign bonds in the secondary market.
The GBP lost ground after UK’s claimant count data failed to meet market expectations for April. Negative sentiment was also fuelled after the BoE, in its quarterly inflation report casted doubts on the sustainability of the recent UK economic recovery and lowered its forecast on the nation’s unemployment rate. Separately, the BoE Chief, Mark Carney indicated that the bank was in no hurry to raise its interest rate. He further highlighted that there was "considerable uncertainty" around the estimate of the amount of slack in the economy and it has to be reduced first before borrowing costs are raised.
Earlier during the day, the NZD came under pressure after the RBNZ Governor, Graeme Wheeler cautioned the central bank would monitor the NZD exchange rate before tightening policy.
Yesterday, the greenback traded higher against the key currencies in the New York session despite a decline in the US April retail sales.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3714 against the USD, 0.08% higher from the New York close. On the economic front, Euro-zone’s industrial production unexpectedly fell in March while consumer inflation rate in Germany and Spain matched analysts’ expectations for April. However, France’s EU normalized consumer inflation rate registered a month-on-month fall in April. During the session, the pair traded at a high of 1.3732 and a low of 1.3702. Yesterday, the EUR traded 0.15% lower against the USD in the New York session, and closed at 1.3703.
The pair is expected to find its first support at 1.3683 and first resistance at 1.3750.
GBP USD
At 9:40 GMT, the GBP is trading at 1.6798 against the USD, 0.17% lower from the New York close, after the BoE’s quarterly inflation report revealed that interest rate might continue to remain at low levels for some time and after data showed that jobless claims in the nation fell less than market expectations for April, even as unemployment rate fell to a to a five-year low of 6.8% in the three months to March. During the session, the pair traded at a high of 1.6876 and a low of 1.6788. Yesterday, the British Pound traded 0.14% lower versus the Dollar in the New York session, and closed at 1.6826.
The pair is expected to find its first support at 1.6745 and first resistance at 1.6863.
USD JPY
The USD is trading at 101.78 against the JPY at 9:40 GMT this morning, 0.49% lower from the New York close, ahead of Japan’s first quarter GDP data. Data released overnight showed that, on a year-on-year basis, Japan’s domestic corporate goods prices rose 4.1% in April while machine tool orders surged 48.8% in Japan last month. During the session, the pair traded at a high of 102.29 and a low of 101.79. In the New York session yesterday, the USD traded 0.14% higher against the JPY, and closed at 102.27.
The pair is expected to find its first support at 101.54 and first resistance at 102.19.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8896 against the Swiss Franc, 0.06% lower from the New York close. However, earlier, the CHF came under pressure after the ZEW survey on the economic expectations from the Swiss economy rose to a reading of 7.4 in May, no where comparable to market expectations for the index to rise to a score of 10.0. During the session, the pair traded at a high of 0.8906 and a low of 0.8889. In the New York session yesterday, the USD traded 0.16% higher against the CHF, and closed at 0.8901.
The pair is expected to find its first support at 0.8874 and first resistance at 0.8914.
USD CAD
At 9:40 GMT, the USD is trading at 1.0898 against the CAD, 0.09% lower from the New York close. During the session, the pair traded at a high of 1.0923 and a low of 1.0899. Yesterday, the USD traded 0.11% higher against the CAD in the New York session, and closed at 1.0908. The BoC, in its semi-annual review report, opined that official jobless rate in Canada was overstated as compared to the actual figures.
The pair is expected to find its first support at 1.0880 and first resistance at 1.0920.
AUD USD
The AUD is trading at 0.9399 against the USD, at 9:40 GMT this morning, 0.45% higher from the New York close. During the session, the pair traded at a high of 0.9411 and a low of 0.9360. AUD traded 0.26% lower against the USD in the New York session, and closed at 0.9357, hurt by the recent batch of soft economic releases from Australia and its largest trading partner, China.
The pair is expected to find its first support at 0.9354 and first resistance at 0.9428.
Gold
At 9:40 GMT, Gold is trading at $1300.80 per ounce, 0.51% higher from the New York close, on escalating tensions over Ukraine crisis. This morning, Gold traded at a high of $1302.50 and a low of $1291.60 per ounce. In the New York session yesterday, the yellow metal traded 0.22% lower, and closed at $1294.20, as a rally in global equity markets and a stronger US Dollar lured investors away from the safe-haven metal. Separately, a leading broker slashes it 3 month and 6 month price estimate on gold to $1,250.00 and $1,300.00 per ounce, respectively.
Gold has its first support at $1292.43 and first resistance at $1305.83.
Silver
Silver is trading at $19.76 per ounce, 1.07% higher from the New York close, at 9:40 GMT this morning, tracking gains in gold prices. This morning, Silver traded at a high of $19.85 and a low of $19.51. Silver traded marginally higher against the USD in the New York session, and closed at $19.55, amid ongoing geo-political tensions in Ukraine. However, a stronger US Dollar and soft demand for industrial metals capped the commodity’s gains.
Silver has its first support at $19.49 and first resistance at $19.94.
Crude Oil
At 9:40 GMT, Oil is trading at $101.94 per barrel, 0.10% higher from the New York close, ahead of the EIA’s weekly report on the US crude inventories. This morning, Oil traded at a high of $102.18 and a low of $101.84. Yesterday, Oil traded 0.48% higher in the New York session, and closed at $101.86, as lingering concerns on supply-outlook from Libya and the Russia- Ukraine region overshadowed a gain in the API’s US crude supplies data. Additionally, the OPEC raised its forecast on total global oil demand for 2014.
It has its first support at $101.13 and first resistance at $102.47.
Economic Snapshot
UK ILO unemployment rate fell in line with market estimates in March
The ILO unemployment rate in the UK fell to 6.8% for January to March 2014, in line with market expectations and compared to a level of 6.9% recorded for December 2013 to February 2014.
UK average earnings rose less than expected in March
On an annual basis, average earnings excluding bonus in the UK rose 1.3% % for January to March 2014, less than market expectations for a rise of 1.5% and compared to a 1.4% increase recorded for December 2013 to February 2014.
Employment in the UK advanced more than expected in March
The number of people employed in the UK rose 283.0K for January to March 2014, more than market estimates of a rise of 248.0K and compared to a rise of 239.0K recorded for December 2013 to February 2014. Meanwhile, the number of people claiming unemployment benefits in the UK declined 25.1K in April, compared to a revised fall of 30.6K recorded in the previous month.
BoE maintained its growth and inflation outlook
The Bank of England (BoE) in its quarterly inflation report stated that it expects the UK economy to expand in 2014, the same forecast it made in February, and that annual inflation would be close to its 2% target over the next two to three years if interest rates in the UK rise in line with expectations in financial markets. However, it lowered its expectations for unemployment.
BoE’s Carney played down earlier than anticipated hike in interest rates
The Bank of England (BoE) Governor, Mark Carney, dispelled expectations of an earlier than anticipated rise in interest rates, despite signs of a pickup in the nation’s economic recovery.
Euro-zone industrial production fell in line with the market estimates in March
On a seasonally adjusted monthly basis, industrial production in the Euro-zone fell 0.3% in March, in line with the market expectations and compared to a 0.2% increase recorded in the previous month.
German final CPI rose in line with the preliminary estimate in April
On an annual basis, the final consumer price index (CPI) in Germany rose 1.3% in April, in line with the preliminary estimate and compared to a 1.0% rise in the previous month.
French CPI rose less than market estimates in April
On an annual basis, the EU normalised consumer price index (CPI) in France rose 0.8% in April, compared to a 0.7% rise reported in the previous month. Markets were expecting the EU normalised CPI to rise 0.9% in April.
Spain’s final CPI rose in line with the preliminary estimate in April
On an annual basis, the final consumer price index (CPI) in Spain rose 0.4% in April, in line with the flash estimate and compared to a fall of 0.1% in the previous month.
Switzerland ZEW economic expectations index rose less than market estimates in May
The Centre for European Economic Research reported that the ZEW economic expectations index in Switzerland rose to a level of 7.4 in May, lower than market expectations of a level of 10.0 and compared to a reading of 7.0 reported in the previous month.
Good trades.
