Forex Market Update
This morning, the greenback is trading higher against most of the major currencies, ahead of the outcome of the Fed FOMC meeting.
The EUR is trading lower against the USD, hurt by the latest batch of mixed economic releases from the Euro-zone and the German economy. Earlier today, ECB’s Luis María Linde reinforced the common view that economic recovery in the region remained fragile while hinting towards a risk of destabilization in the global financial markets.
Demand for the GBP fell after consumer prices in the UK economy fell more-than-expected in May. However, earlier BoE’s David Miles signaled his intention to vote for an interest rate hike in the Britain economy by May of 2015.
The AUD lost ground after the minutes from the RBA’s June policy meeting hinted that the central bank would continue with its accommodative monetary policy for a longer time as a weak mining investment, coupled with a stubbornly stronger Aussie could risk Australia’s economic growth.
Yesterday, in the New York session, the greenback traded lower against the key currencies, as the IMF slashed its 2014 growth-forecast on the world’s largest economy, adding that the US would not reach full employment until the end of 2017. Furthermore, the IMF Chief, Christine Lagarde opined that a gradual hike in the US interest rate could prove beneficial for the economy, which according to her could come well after the mid-2015.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3560 against the USD, 0.10% lower from the New York close. In economic news, the ZEW economic sentiment in Germany fell for the six consecutive months to reach its lowest level in 18 months however ZEW index on German current situation improved in June. Also, ZEW's readings on Euro-zone’s economic sentiment posted a modest rise in June. During the session, the pair traded at a high of 1.3588 and a low of 1.3559. Yesterday, the EUR traded 0.13% higher against the USD in the New York session, and closed at 1.3573.
The pair is expected to find its first support at 1.3527 and first resistance at 1.3590.
GBP USD
At 9:40 GMT, the GBP is trading at 1.6965 against the USD, 0.11% lower from the New York close, after data showed that consumer prices in the UK economy on a yearly basis fell more than market expectations to reach its lowest level in 4-1/2 years in May. However, BoE’s David Miles, citing strong economic growth in the UK, hinted that he would vote for an interest rate hike by May 2015. During the session, the pair traded at a high of 1.6989 and a low of 1.6957. Yesterday, the British Pound traded a tad higher versus the Dollar in the New York session, and closed at 1.6984.
The pair is expected to find its first support at 1.6937 and first resistance at 1.6994.
USD JPY
The USD is trading at 102.01 against the JPY at 9:40 GMT this morning, 0.19% higher from the New York close. Amid a lack of economic releases from Japan, traders are expected to keep a tab on global economic news for further cues in the currency pair. During the session, the pair traded at a high of 102.09 and a low of 101.84. In the New York session yesterday, the USD traded marginally lower against the JPY, and closed at 101.82, as escalating tensions in Iraq and Ukraine bolstered the safe-haven appeal of the Japanese Yen.
The pair is expected to find its first support at 101.81 and first resistance at 102.15.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8988 against the Swiss Franc, 0.18% higher from the New York close. Earlier today, the Swiss government slashed its growth forecast on Switzerland to 2.0% and 2.6% for 2014 and 2015, from its earlier estimate of 2.2% and 2.7%, respectively. Separately, data revealed that producer and import prices in the Swiss economy continued to decline in May. During the session, the pair traded at a high of 0.8992 and a low of 0.8969. In the New York session yesterday, the USD traded 0.13% lower against the CHF, and closed at 0.8972.
The pair is expected to find its first support at 0.8966 and first resistance at 0.9006.
USD CAD
At 9:40 GMT, the USD is trading at 1.0857 against the CAD, 0.12% higher from the New York close. During the session, the pair traded at a high of 1.0861 and a low of 1.0846. Yesterday, the USD traded 0.24% lower against the CAD in the New York session, and closed at 1.0844. On the economic front, existing homes sales in Canada posted its largest month-on-month increase in nearly four years in May. Meanwhile, another report showed that foreign inventors invested $10.13 billion in Canadian securities while Canadian investors invested $2.49 billion in foreign portfolio.
The pair is expected to find its first support at 1.0833 and first resistance at 1.0883.
AUD USD
The AUD is trading at 0.9357 against the USD, at 9:40 GMT this morning, 0.46% lower from the New York close, after the minutes for RBA’s June policy meeting highlighted the economic perils of a persistent stronger Aussie while hinting that the central bank could keep its accommodative policy stance in place for a longer time than expected. During the session, the pair traded at a high of 0.9402 and a low of 0.9344. AUD traded 0.19% higher against the USD in the New York session, and closed at 0.9400.
The pair is expected to find its first support at 0.9327 and first resistance at 0.9397.
Gold
At 9:40 GMT, Gold is trading at $1265.00 per ounce, 0.51% lower from the New York close, as reports showed that holding in the SPDR Gold Trust fell 4.20 tons to 782.88 tons on Monday and after the Indian Government hiked tariff on imports of gold and silver to the nation. This morning, Gold traded at a high of $1273.50 and a low of $1262.80 per ounce. In the New York session yesterday, the yellow metal traded 0.70% lower, and closed at $1271.50, amid profit-taking. However, escalating tensions in Iraq and Ukraine, kept the commodity’s losses in check.
Gold has its first support at $1257.53 and first resistance at $1277.73.
Silver
Silver is trading at $19.60 per ounce, 0.36% lower from the New York close, at 9:40 GMT this morning. Negative sentiment for the white metal was fueled after reports showed that Indian Government hiked its tariff on imports of gold and silver to India. This morning, Silver traded at a high of $19.69 and a low of $19.52. Silver traded 0.08% lower against the USD in the New York session, and closed at $19.67.
Silver has its first support at $19.50 and first resistance at $19.73.
Crude Oil
At 9:40 GMT, Oil is trading at $106.40 per barrel, 0.20% lower from the New York close. This morning, Oil traded at a high of $106.84 and a low of $106.01. Yesterday, Oil traded 0.33% lower in the New York session, and closed at $106.60, as concerns on the supply-outlook of the commodity eased after Iraq’s Government deployed additional troops at its oilfields and as Libya’s El Feel oilfield reopened after two months of blockage. Additionally, the EIA indicated that the crude oil exports in the US stood at its highest level in 15 years in April.
It has its first support at $105.86 and first resistance at $107.09.
Economic Snapshot
UK CPI rose less than anticipated in May
On an annual basis, the consumer price index (CPI) in the UK rose 1.5% in May, compared to 1.8% rise recorded in the previous month. Markets were expecting the consumer price index to rise 1.7% in May.
UK retail price index rose less than expectations in May
On a monthly basis, the retail price index in the UK advanced 0.1% to a level of 255.9 in May, compared to a 0.4% increase recorded in the previous month. Markets were expecting the retail price index to rise 0.2% in May.
UK ONS house prices rose in April
On an annual basis, the house price index in the UK climbed 9.9% in April, compared to an 8.0% increase recorded in the previous month.
Euro-zone ZEW economic sentiment climbed in June
The ZEW economic sentiment index in the Euro-zone climbed to a level of 58.4 in June, compared to a level of 55.2 recorded in the previous month.
German ZEW economic sentiment dropped unexpectedly in June
The ZEW economic sentiment index in Germany dropped to a level of 29.8 in June from a level of 33.1 reported in the previous month and against the market expectations of a rise to a level of 35.0. Meanwhile, the ZEW current situation index in Germany rose to a level of 67.7 in June, compared to a reading of 62.1 reported in the previous month.
Italy’s trade surplus narrowed in April
Italy’s global trade surplus narrowed to €3.5 billion in April from a revised surplus of €3.9 billion recorded in the previous month.
Swiss government trimmed its 2014 and 2015 growth forecasts
Switzerland’s State Secretariat for Economics (SECO) slashed its domestic economic growth forecast for 2014 to 2.0% from 2.2% and 2015 growth outlook to 2.6% from 2.7% it had estimated in March 2014, citing a sluggish outlook for exports on the back of the fragile global economic recovery.
Swiss producer and import prices rebounded in May
On a monthly basis, the producer and import price index in Switzerland climbed 0.1% in May, compared to a 0.3% decrease reported in the previous month.
RBA minutes indicated low rates to remain in place “for some time yet”
The minutes of the Reserve Bank of Australia’s (RBA) monetary policy meeting held on 03 June, 2014 revealed that the current accommodative monetary policy is expected to remain in place in the foreseeable future.
China’s foreign direct investment declined unexpectedly in May
On an annual basis, actual foreign direct investment (FDI) in China dropped 6.7% in May, compared to a 3.4% rise recorded in the previous month. Markets had expected China’s actual FDI to rise 3.2% in May.
Good trades.
