FOREX Trading Australia – Foreign Exchange Market Summary
Dollar
· Dollar couldn’t get the decisive push it was looking for as the Fed after raising rates by 25 bps kept its measured tone intact. Their tone became even more dovish when the Fed released a sentence that was omitted from the original text and read as “Long term inflation expectations remain well contained.” Thus in the end the Fed had to acknowledge the recent signs of slow growth with high energy prices to blame. The focus shifts to data outcomes with Payrolls eyed on Friday.
Euro
· The Euro after finding good bid interest on dips down towards 1.28 has broken back above 1.2950 following the FOMC’s clarification. However it remains at mercy on the general sentiment around the Greenback with each day building the bearish factors against the Euro. The unemployment rate, already at a high level, inched higher while IMF’s Rato said it was premature to rule out rate cuts by the ECB as the zone’s economy remains in a soft patch.
Yen
· The Yen remains well bid with each passing day’s silence on the issue of Yuan revaluation adding to the speculation of a move in the near term. In spite of volatile moves seen during the past week, Chinese officials haven’t been as vocal in their denial as they have been in the past which is taken as a sign by the market to prepare for the eventuality. Japanese markets remain close today with a decisive break below 104.55 targeting the strong support zone at 103.75-90.
Pound
· The Pound after dipping below 1.89 on below par data has broken back above 1.90 post FOMC. PMI manufacturing data was significant as it dipped below the key 50 mark signify contraction in activity. Also the CBI trades survey reported retail sales remain weak around levels last seen in 1992. This should make the MPC keep rates on hold next week with election results eyed as well.
Australian Dollar
· The Aussie after the initial disappointment of the RBA keeping rates on hold has inched higher on the general Dollar sell off at start of the Australasian session. Retail sales came in line with expectations also the likelihood of the RBA’s monetary policy statement on Friday having a hawkish tone is keeping it supported. It needs to clear the strong resistance zone of 0.7825-40 to break decisively higher.
Economic Data Released
|
GMT |
Release |
Region |
Previous |
Actual |
Outcome |
|
|
April CIPS PMI Manufacturing |
|
52.0 |
49.5 |
Suggests contraction in the sector as high raw material prices has had its effect. |
|
|
March PPI m/m |
Euro-Zone |
0.4% |
0.6% |
In line with expectations as high energy prices push inflation up. |
|
|
March Factory Orders |
|
0.2% |
0.1% |
Un expected rise largely due to the demand for refined petroleum. |
|
|
FOMC interest rate decision |
|
2.75% |
3.00% |
Accompanying statement has disappointed Dollar bulls with its dovish tone. |
Upcoming Economic Releases
|
GMT |
Release |
Region |
Previous |
Forecast |
Expectation |
|
|
April PMI Services |
Euro-Zone |
53.0 |
52.6 |
Should decline across the zone/ |
|
|
March Retail Sales m/m |
Euro-Zone |
0.3% |
-0.3% |
Consumer spending remains low as confidence fails to pick up. |
|
|
April ISM Non- Manufacturing |
|
63.1 |
61.0 |
Employment sub index will be eyed. |
*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.
FOREX Technical Analysis
EUR/USD – Yesterday’s low was 1.2828 and high was 1.2913.
The pair closed at 1.2877.
The pair has rallied towards 1.2955 post FOMC’s clarification with more volatile moves likely. Poor data from the zone and conflicting signals from the U.S. Fed are keeping the direction a bit mixed. Mild resistance exists around 1.3010-25 followed by a stronger one in the 1.3095-1.3115 zone. On the downside mild support exists around 1.2875 with a break below targeting the good buying zone of 1.27795-1.2815.
Key resistance is seen at 1.3015 followed by 1.3125 while support starts at 1.2875 followed by 1.2795.
USD/JPY – Yesterday’s low was 104.83 and high was 105.34.
The pair closed at 104.88.
Japanese markets remain closed while movements are directed by Dollar’s general direction. Decent Dollar bids exist in the 104.50-65 zone with a break below targeting the very strong support zone of 103.75-90. On the upside the Yuan story is keeping the Dollar well bid with decent offers around 105.50 for this pair. While any foray towards 106.25 should see strong selling interest.
Key Resistance is seen at 105.55 followed by 106.25 while support starts at 104.55 followed by 103.90.
GBP/USD – Yesterday’s low was 1.8885 and high was 1.8956.
The pair closed at 1.908924.
The pair has inched back above 1.90 post FOMC as it has overshadowed the recent stream of poor data from the
Key Resistance is seen at 1.9075 followed by 1.9125 while support starts at 1.8940 followed by 1.8875.
Australian Dollar
AUD/USD – Yesterday’s low was 0.7720 and high was 0.7795.
The pair closed at 0.7740.
The Aussie is back to square one as the RBA stays on hold while the Fed’s less hawkish tone as kept the pair above the 0.7755 support mark. It has strong support and buying interest on dips down to 0.77. While the market is eyeing the RBA’s monetary policy statement released on Friday. Commodity prices remain mixed with strong resistance in the 0.7825-40 zone for this pair.
Key Resistance is seen at 0.7840 followed by 0.7875 while support starts at 0.7725. followed by 0.7695.
Kunal ‘Kris’ Sharma
Forex Analyst
E-mail: kris@easy-forex.com
Australian Financial Services License 246566
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