Forex Market Update
This morning, the greenback is trading lower against most of the major currencies.
The GBP held on to its yesterday’s gains against the USD even as data showed that UK retail sales fell for the first time in four months in May. Yesterday, a BoE official, Martin Weale projected interest rates in the economy to rise sooner than later while another policymaker, Andrew Haldane highlighted his expectations for first interest rate hike to take place in the UK economy by the end of 2014.
Earlier today, a BoJ Board member, Yoshihisa Morimoto reiterated the central bank’s view for the Japanese economy to continue with its moderate pace of recovery in the near future while highlighting his expectation for the economy to achieve its inflation target without additional QE measures.
In Switzerland, the SNB left its interest rate unchanged and vowed to defend its cap on the Swiss Franc, citing an “extremely challenging” climate in the Swiss economy.
Yesterday, in the New York session, the greenback traded lower against the key currencies, as the Fed Chief, Janet Yellen, following the central bank’s decision to taper its QE package by $10 billion, played down speculation for an early interest rate hike in the economy. The USD further came under pressure after the Fed slashed its growth forecast on the US economy for 2014 while projection growth to accelerate in 2015 and 2016.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3634 against the USD, 0.33% higher from the New York close. During the session, the pair traded at a high of 1.3644 and a low of 1.3587. Yesterday, the EUR traded 0.14% higher against the USD in the New York session, and closed at 1.3589. Late Wednesday, media reports highlighted the possibility for the IMF to urge the ECB to opt for US-style QE measures to boost growth and ward off deflation risks in the economy.
The pair is expected to find its first support at 1.3573 and first resistance at 1.3670.
GBP USD
At 9:40 GMT, the GBP is trading at 1.7020 against the USD, 0.18% higher from the New York close, despite data revealing that, UK retail sales, on a month-on-month basis, fell for the first time since January in May. During the session, the pair traded at a high of 1.7030 and a low of 1.6991. Yesterday, the British Pound traded 0.25% higher versus the Dollar in the New York session, and closed at 1.6989, as two of the top BoE policymakers hinted towards the possibility for an interest rate hike before the end of 2014.
The pair is expected to find its first support at 1.6950 and first resistance at 1.7060.
USD JPY
The USD is trading at 101.75 against the JPY at 9:40 GMT this morning, 0.18% lower from the New York close. Earlier today, BoJ’s Yoshihisa Morimoto expressed optimism on Japan’s capability in achieving its 2.0% inflation target without additional QE measures. Separately, data showed that Japan's leading index fell to its lowest level since March 2013 while its coincident indicator stood pat in April. During the session, the pair traded at a high of 102.02 and a low of 101.78. In the New York session yesterday, the USD traded 0.20% lower against the JPY, and closed at 101.94.
The pair is expected to find its first support at 101.53 and first resistance at 102.17.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8929 against the Swiss Franc, 0.38% lower from the New York close. The SNB held its interest rates near zero for a 12th straight quarter and pledged to maintain Swiss Franc’s cap at 1.20 per Euro while cautioning that it would “closely monitor” the impact of ECB’s recent policy measures and would take further action if necessary. During the session, the pair traded at a high of 0.8968 and a low of 0.8925. In the New York session yesterday, the USD traded 0.13% lower against the CHF, and closed at 0.8963.
The pair is expected to find its first support at 0.8900 and first resistance at 0.8977.
USD CAD
At 9:40 GMT, the USD is trading at 1.0814 against the CAD, 0.22% lower from the New York close. During the session, the pair traded at a high of 1.0842 and a low of 1.0813. Yesterday, the USD traded 0.26% lower against the CAD in the New York session, and closed at 1.0838. On the economic front, wholesale sales in Canada rose twice as much as expected in April to reach a level of C$51.2 billion.
The pair is expected to find its first support at 1.0781 and first resistance at 1.0873.
AUD USD
The AUD is trading at 0.9426 against the USD, at 9:40 GMT this morning, 0.30% higher from the New York close. The RBA, in its quarterly bulletin, released overnight, downplayed the effect of foreign investment on Australia's property market while further indicating that pessimism over future income gains is a key factor in the rise of household savings. During the session, the pair traded at a high of 0.9433 and a low of 0.9400. AUD traded 0.59% higher against the USD in the New York session, and closed at 0.9398.
The pair is expected to find its first support at 0.9353 and first resistance at 0.9466.
Gold
At 9:40 GMT, Gold is trading at $1282.20 per ounce, 0.37% higher from the New York close. This morning, Gold traded at a high of $1282.50 and a low of $1276.20 per ounce. In the New York session yesterday, the yellow metal traded 0.45% higher, and closed at $1277.50, as a drop in the US Dollar, following Fed’s decision to slash its 2014 growth-forecast on the US economy, spurred demand for safe-haven assets. However, data revealed that holdings in the SPDR Gold Trust fell for the second straight day on Tuesday.
Gold has its first support at $1272.03 and first resistance at $1287.43.
Silver
Silver is trading at $19.96 per ounce, 0.28% higher from the New York close, at 9:40 GMT this morning. This morning, Silver traded at a high of $19.97 and a low of $19.83. Silver traded 0.91% higher against the USD in the New York session, and closed at $19.90, amid strong demand for safe-haven assets and a broad decline in the US Dollar.
Silver has its first support at $19.78 and first resistance at $20.05.
Crude Oil
At 9:40 GMT, Oil is trading at $106.27 per barrel, 0.20% higher from the New York close. This morning, Oil traded at a high of $106.63 and a low of $106.01. Yesterday, Oil traded 0.71% lower in the New York session, and closed at $106.01. However, persistent unrest in Iraq and a weakness in the US Dollar, kept the commodity’s losses in check. Additionally, the Energy Information Administration, in its weekly report, reported 579,000 barrels drop in the US crude stockpiles.
It has its first support at $105.74 and first resistance at $106.85.
Economic Snapshot
UK retail sales declined in May
On a monthly basis, retail sales in the UK declined 0.5% in May, in line with market expectations and compared to a revised 1.0% increase recorded in the previous month. Additionally, on a monthly basis, retail sales ex-fuel in the UK declined 0.5% in May, compared to a revised 1.7% increase recorded in the previous month.
Italy’s current account surplus widened in April
Italy’s current account surplus widened to €2.0 billion in April from a surplus of €1.0 billion recorded in the previous month.
SNB kept its key interest rate unchanged
The Swiss National Bank (SNB) announced to keep its key interest rate unchanged at 0.00%, in line with market expectations. The central bank also reaffirmed that it would continue to implement the minimum exchange rate.
Japan all industry activity index declined more than anticipated in April
On a monthly basis, the all industry activity index in Japan dropped 4.3% in April, compared to a 1.5% increase recorded in the previous month. Markets were expecting the all industry activity index to decline 4.1% in April.
Japan’s final leading economic index declined in April
The final leading economic index in Japan dropped to a level of 106.5 in April, compared to a revised level of 107.4 reported in the previous month. Meanwhile, the final coincident index declined to a level of 111.1 in April, compared to a revised level of 114.7 recorded in the previous month.
Australia RBA foreign exchange transaction rose in May
The Reserve Bank of Australia (RBA) reported that the foreign exchange transaction in Australia rose to A$ 489.0 million in May, compared to A$ 325.0 million recorded in the previous month.
Good trades.
