FOREX Trading Australia – Market Summary
· Dollar remains under the spotlight ahead of the today’s Trade Balance release (). Expectations are for a new record high deficit with a number close to $65 Bn could see the Dollar slipping quickly while a decline towards $55 Bn is likely to witness a relief rally for the Greenback however tomorrow’s Retail Sales could be the real market moving data.. Meanwhile, last week’s downgrade by S&P for heavy weight stocks GM corp. & Ford motor co. led to abundant rumors of large Hedge Funds incurring huge losses which kept the Dollar under pressure.
· The Euro apart of having strong technical support in the 1.2790-1.2810 zone helping it inch higher, had for a change positive data to support it. German Trade Balance came in much higher than expected and this compared to record high deficits for the
· The Yen was supported by the strong offer zone of 105.95-106.10 with the general pullback by the Dollar leading it to stabilize around 105.50. Household spending came in line expectations by increasing after the steady decline of the last few months while Economic Minster Takenaka stated that “the nation’s economy will rebound after the mid-year”. While key sectors are bound to pick up, the refusal of oil prices to pullback in spite of burgeoning supplies would lead to long term repercussion for the economy.
· The Pound is suffering from a sudden bout of bad data which has led to profit taking on its recent rally on the main pair as well as the crosses. The sharp drop in retail sales is still fresh in the market’s mind who await today’s U.K. Trade balance figures with deficit expected to inch higher. BoE quarterly inflation report is eyed as well, as the economy looks like heading into the catch 22 situation of sharp slow down in growth but rising inflationary pressures. For now, bottom pickers have pushed it back above 1.88 on dips below that mark but it remains vulnerable.
· The Aussie was supported by a populist budget released by the Government which has granted tax cuts worth $22 Bn over four years bringing some relief in its high tax rate system as the Government is confident on the back of healthy surpluses. It continues to remain within its recent range as the market’s eyes
Economic Data Released
|
GMT |
Release |
Region |
Previous |
Actual |
Outcome |
|
|
March Household Spending |
|
-3.7% |
0.8% |
In line with expectations but could be a one-off as spending remains on the low side. |
|
|
March Trade Balance |
|
€13.2Bn |
Bn |
Higher than expected as drop in oil prices eases import costs. |
Upcoming Economic Releases
|
GMT |
Release |
Region |
Previous |
Forecast |
Expectation |
|
|
March Leading Economic Index |
|
18.2% |
30.0% |
Should rebound after last period’s sharp fall but would still be below the boom/bust mark of 50. |
|
|
March Industrial Production |
|
-0.5% |
-0.2% |
Cyclical demand patterns should help it inch higher but the sector remains on the weak side. |
|
|
March Trade Balance |
|
-4.8Bn |
-5Bn |
Deficit expected to increase as a stronger Pound is making imported goods attractive |
|
|
Match Trade Balance |
|
$61.0Bn |
$61.5Bn |
A new record high deficit is expected as imports continue to outweigh exports. |
*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.
Technical Analysis
EUR/USD – Yesterday’s low was 1.2814 and high was 1.2889.
The pair closed at 1.2876.
The pair has slowly inched higher as the market awaits U.S. Trade figures, strong support and buying interest continues in the 1.2790-1.2810 zone while a break below targets its yearly lows around 1.2750 where decent buying interest should come up. On the upside mild resistance exists around 1.2895 followed by strong resistance in the 1.2945-60 zone. Any break above 1.30 should bring in decent selling interest.
Key resistance is seen at 1.2895 followed by 1.2975 while support starts at 1.2795 followed by 1.2755.
USD/JPY – Yesterday’s low was 105.34 and high was 105.95.
The pair closed at 105.42.
The lack of any concrete news on the Yuan revaluation front has led the Dollar to break above strong offers around 105.40. But the Yuan story is still alive and selling pressure should intensify on the approach of the 106 levels with strong resistance in the 106.30-45 zone. On the downside mild Dollar bids lie around 105 with very strong support around the 104.55 mark.
Key Resistance is seen at 105.85 followed by 106.45 while support starts at 104.95 followed by 104.45.
GBP/USD – Yesterday’s low was 1.8761 and high was 1.8862.
The pair closed at 1.8840.
Key Resistance is seen at 1.8925 followed by 1.9005 while support starts at 1.8805 followed by 1.8755.
AUD/USD – Yesterday’s low was 0.7719 and high was 0.7771.
The pair closed at 0.7767.
The budget had a positive effect on the Aussie but it remains in a technically mixed zone within the 0.77 region. Good support and buying interest persists in the 0.7705-20 zone while mid resistance continues around 0.7790 followed by very strong resistance in the 0.7825-40 zone. Data outcomes from both sides are eyed for further direction. A break below 0.77 targets the 0.7675 support mark.
Key Resistance is seen at 0.7795 followed by 0.7845 while support starts at 0.7715. followed by 0.7655.
Kunal ‘Kris’ Sharma
Forex Analyst
E-mail: kris@easy-forex.com
Australian Financial Services License 246566
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