Forex Market Update
This morning, the greenback is trading mixed against most of the major currencies, ahead of the US consumer confidence and new home sales data.
The EUR is trading higher as traders overlooked the latest batch of soft IFO economic data for Germany. Separately, ECB’s Jens Weidmann urged governments of the Euro-zone member nations to strengthen debt and deficits rules in their countries to promote economic growth. Meanwhile, yesterday, another ECB policymaker, Ewald Nowotny highlighted the central bank’s interest in depreciating the EUR, as it prevents inflation rate to reach its 2.0% target.
The GBP lost ground as expectations for an early interest rate hike in the UK economy were dampened after the BoE Governor, Mark Carney opined that the recent wage data was softer than the central bank’s forecast and there still exists some slack in the economy.
Earlier today, RBA’s John Edwards dismissed concerns on the recent slowdown in the Australia’s mining sector by highlighting the nation’s ability to withstand a slump in mining investment as according to him low interest rate and infrastructure spending would benefit other sectors of the nation.
Yesterday, in the New York session, the greenback traded mostly lower against the key currencies. Data showed that activities in the US manufacturing sector expanded more-than-expected to a 4-year high level in June while existing home sales rose for the second-straight month in May.
EUR USD
This morning at 9:40 GMT, the EUR is trading at 1.3621 against the USD, 0.13% higher from the New York close, despite data showing that the IFO business sentiment in Germany deteriorated for the second consecutive month in June while its index on outlook fell to its lowest level since October 2013. During the session, the pair traded at a high of 1.3627 and a low of 1.3594. Yesterday, the EUR traded a tad higher against the USD in the New York session, and closed at 1.3603.
The pair is expected to find its first support at 1.3587 and first resistance at 1.3641.
GBP USD
At 9:40 GMT, the GBP is trading at 1.6998 against the USD, 0.18% lower from the New York close, as speculation for an earlier-than-expected interest rate hike in the UK economy dampened after BoE Governor, Mark Carney stated that there still remained slackness in the economy and that the recent wage data was softer than expected. During the session, the pair traded at a high of 1.7033 and a low of 1.6980. Yesterday, the British Pound traded 0.11% higher versus the Dollar in the New York session, and closed at 1.7028.
The pair is expected to find its first support at 1.6970 and first resistance at 1.7029.
USD JPY
The USD is trading at 101.86 against the JPY at 9:40 GMT this morning, 0.06% lower from the New York close. Earlier today, media reports showed that Japan’s Prime Minister, Shinzo Abe formally unveiled a host of economic reforms, including cutting corporate tax rate and eliminating long-standing regulations in various aspects of the economy, to boost growth in the nation. During the session, the pair traded at a high of 102.03 and a low of 101.85. In the New York session yesterday, the USD traded 0.06% higher against the JPY, and closed at 101.92.
The pair is expected to find its first support at 101.78 and first resistance at 101.99.
USD CHF
This morning at 9:40 GMT, the USD is trading at 0.8927 against the Swiss Franc, 0.18% lower from the New York close. The Swiss Franc gained ground after Swiss trade surplus widened more than market expectations in May. During the session, the pair traded at a high of 0.8954 and a low of 0.8929. In the New York session yesterday, the USD traded 0.06% lower against the CHF, and closed at 0.8943.
The pair is expected to find its first support at 0.8911 and first resistance at 0.8957.
USD CAD
At 9:40 GMT, the USD is trading at 1.0722 against the CAD, 0.08% lower from the New York close. During the session, the pair traded at a high of 1.0734 and a low of 1.0719. Yesterday, the USD traded 0.09% lower against the CAD in the New York session, and closed at 1.0731. Late Monday, the Canadian Finance Minister, Joe Oliver opined that inflation rate in Canada would stay around the BoC’s 2.0% target, despite an unexpected acceleration in May.
The pair is expected to find its first support at 1.0708 and first resistance at 1.0740.
AUD USD
The AUD is trading at 0.9402 against the USD, at 9:40 GMT this morning, 0.23% lower from the New York close. Early morning, RBA’s John Edwards highlighted his confidence in the Australian economy to withstand a downturn in its mining sector as he feels that low interest rates and investment spending could spur growth in other sectors. During the session, the pair traded at a high of 0.9433 and a low of 0.9399. AUD traded 0.12% lower against the USD in the New York session, and closed at 0.9424.
The pair is expected to find its first support at 0.9381 and first resistance at 0.9435.
Gold
At 9:40 GMT, Gold is trading at $1323.40 per ounce, 0.39% higher from the New York close. Earlier today, data showed that holding in the SPDR Gold Trust rose by 2.4 tons to 785.02 tons on Monday. This morning, Gold traded at a high of $1326.40 and a low of $1314.50 per ounce. In the New York session yesterday, the yellow metal traded 0.14% higher, and closed at $1318.20, as a broad weakness in the global equity markets and lingering tensions in Iraq, bolstered the safe-haven appeal of the metal.
Gold has its first support at $1313.73 and first resistance at $1329.73.
Silver
Silver is trading at $21.10 per ounce, 0.98% higher from the New York close, at 9:40 GMT this morning. This morning, Silver traded at a high of $21.16 and a low of $20.81. Silver traded 0.07% lower against the USD in the New York session, and closed at $20.89.
Silver has its first support at $20.84 and first resistance at $21.26.
Crude Oil
At 9:40 GMT, Oil is trading at $105.88 per barrel, 0.20% lower from the New York close. This morning, Oil traded at a high of $106.08 and a low of $105.25. Yesterday, Oil traded 0.42% lower in the New York session, and closed at $106.06, as reports showed that oil exports from Iraq were near record high level of around 2.53 million barrels per day in June. However, strong Chinese and US manufacturing PMI data, kept the commodity’s losses in check.
It has its first support at $105.05 and first resistance at $106.90.
Economic Snapshot
UK mortgage approvals declined in May, indicated BBA
The British Bankers' Association (BBA) mortgage approvals in the UK dropped to 41.8 K in May, compared to revised 41.9 K approvals reported in the previous month. Market had expected the number of mortgages approvals to fall to 41.0 K in May.
Interest rate hike would be limited and gradual, indicated Carney
The Bank of England Governor, Mark Carney, stated that the exact timing of an interest rate increase will be dependent on macroeconomic data and once initiated the rate increases would be limited and gradual.
German Ifo business climate declined more than expected in June
The Ifo business climate index in Germany dropped to a level of 109.7 in June, compared to a reading of 110.4 reported in the previous month. Market had expected the index to decline to a reading of 110.3. Additionally, the Ifo business expectations index in Germany fell to a level of 104.8 in June from a reading of 106.2 reported in the previous month. Meanwhile, the Ifo current assessment index in Germany remained steady at a level of 114.8 in June.
Italian wage inflation rose in May
On a monthly basis, the wage inflation in Italy rose to 0.1% in May, compared to a steady rate recorded in the previous month.
Italian trade surplus widened in May
The (non-EU countries) trade surplus of Italy widened to €2.4 billion in May from a revised surplus of €1.7 billion recorded in the previous month.
Swiss trade surplus widened more than expected in May
Switzerland’s trade surplus widened to CHF2.8 billion in May from a revised surplus of CHF2.5 billion recorded in the previous month. Markets had expected Switzerland’s trade surplus to widen to CHF2.7 billion in May.
Chinese CB leading index rose at a slower pace in May
The Conference Board leading economic index in China rose 0.7% in May, compared to a revised 1.0% rise in the previous month.
Good trades.
