FOREX Trading Australia – Market Summary
- Dollar maintained its bid tone as the minutes of the Fed’s May 3rd meeting reveal that they remain wary of inflationary pressures and believed that the soft patch to the economy is transitory. In hind sight given the strong rebound in retail sales and Payrolls outcome after May 3rd justifies the Fed’s faith in the growth potential of the economy. Thus the ‘measured pace’ language remains intact with strength of data outcomes to determine the pace of Fed’s future rate hike stance.
- The Euro continues to hover around 1.26 on profit taking, strong hedge fund bids below 1.2550 as well as the market not too excited by Fed’s meeting minutes. However, fundamentally the Euro is slipping into deep negative territory as data continues to disappoint. German ZEW economic sentiment survey was much lower than expected in spite of easing in oil prices. Meanwhile in another sign of the growing rift in policies between the ECB and regional institutes, German IFO President has asked the ECB to cut interest rates to spur growth.
- The Yen has broken below mild Dollar bids around 107.55 as the Yuan revaluation story continues to be in the news.
- The Pound like the Euro failed to break beyond its first resistance line at 1.8355 and for now has stabilized around 1.83. Quarterly Business Investment recorded its first fall since Q3 2003 largely due to the decline in manufacturing and construction while the services sector has held steady. GDP released today should reflect the recent slowdown in the economy and should continue to keep the Pound under pressure.
- The Aussie’s fundamentals unlike European currencies has remained firm while further speculation on the Yuan issue as well as commodity prices inching higher helped the Aussie break back above 0.76. This morning’s leading index for economic activity came in lower than expected as the economy moderates and RBA’s inflationary concerns should ease further.
Economic Data Released
|
GMT |
Release |
Region |
Previous |
Actual |
Comment |
|
|
April Consumer Spending |
|
-0.5% |
1.0% |
Slight pick up in domestic demand but overall trend remains weak. |
|
|
Q1 Total Biz Investment |
|
0.2% |
-0.1% |
First fall in 2 years due to low construction spending. |
|
|
May ZEW Economic Sentiment survey |
|
20.1 |
13.9 |
Has come in much lower than expected as political uncertainty has added to economic woes. |
|
|
Minutes of FOMC’s May 3rd meeting |
|
_ |
_ |
Inflationary pressure remain a concern and rates still accommodative |
Upcoming Economic Releases
|
GMT |
Release |
Region |
Previous |
Forecast |
Comment |
|
|
May IFO Biz climate survey |
|
93.3 |
93.3 |
Should stay steady but current assessment is expected to be weak. |
|
|
Q1 GDP |
|
0.7% |
0.5% |
Low consumer spending would drag GDP down |
|
|
April Durable Goods Orders |
|
-2.8% |
1.2% |
Orders should remain at a healthy level as domestic demand remains steady |
*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 1.2556 and high was 1.2627.
The pair closed at 1.2560.
The Euro losses accelerated after the recent strong support around 1.26 gave way. Bottom pickers failed to push it higher and promptly liquidated their positions. For now support exists in the 1.2525-45 support zone. With a break below 1.25 likely to accelerate losses as sentiment has turned against it in a strong way with
Key resistance is seen at 1.2645 followed by 1.2715 while support starts at 1.2525 followed by 1.2475.
USD/JPY – Yesterday’s low was 107.22 and high was 107.76.
The pair closed at 107.51.
The Yen managed to break back below Dollar bids around 107.55 with mild resistance around 108.25 and strong resistance exists around 108.75 for this pair with any break above 109.25 to lead to strong offers. On the downside, mild Dollar bids lie around 107.25 followed by decent buying interest on any move towards 106.75.
Key Resistance is seen at 108.25 followed by 108.75 while support starts at 107.25 followed by 106.75.
GBP/USD – Yesterday’s low was 1.8253 and high was 1.8358.
The pair closed at 1.8255.
The Pound’s fundamentals remain on the weak side thus it continues to be offered on any minor rallies with mild resistance around 1.8355 and very strong resistance around 1.84. On the downside, bottom pickers are keeping it around 1.83 with support in the 1.8225-40 region. Distant support is seen in the 1.8140-50 zone with mixed technical interest above that area.
Key Resistance is seen at 1.8355 followed by 1.8405 while support starts at 1.8245 followed by 1.8175.
AUD/USD – Yesterday’s low was 0.7580 and high was 0.7638.
The pair closed at 0.7590.
The pair targeted the strong support zone at 0.7530-45 but failed to break below as strong bids lie in that zone. A break below 0.75 pivot mark could accelerate losses. On the upside, 0.7625-40 now holds strong resistance with a break above bringing strong resistance around 0.7695
Key Resistance is seen at 0.7645 followed by 0.7695 while support starts at 0.7555. followed by 0.7495.
Kunal ‘Kris’ Sharma
Forex Analyst
E-mail: kris@easy-forex.com
Australian Financial Services License 246566
Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products
