Riskier Assets in Demand; Europe Debt Worries Remain.
Investors raised their appetite for riskier assets during yesterday's trading, but still avoided European and British currencies because of debt worries. The big gainers yesterday were the AUD and CAD, both currencies are linked to commodities, in particular crude oil. Crude oil had recently gained in positive momentum, although it closed slightly lower yesterday. The question remains whether the EUR and GBP will attract some of the appetite for riskier assets.
Economical News
USD
The U.S. Dollar remained strong against the Pound and the Euro yesterday. Credit downgrade warnings by rating agencies regarding some European countries such as Greece, Portugal and the UK continued to worry investors. The EUR/USD traded low for most of the day, as a result. Currently the pair is trading at 1.3600.
The USD did decline against the Australian Dollar and the Canadian Dollar, however. These pairs are currently trading at 0.9154 and 1.0267 respectively.
Wholesale Inventories is expected to be published later today. Although, this is not a significant parameter, investors will look at the result as a sign of the U.S. fiscal health. A lower than expected inventories reading might boost the USD higher against the other major currencies.
The most anticipated data from the U.S. will be published on Friday: Retails Sales, and the University of Michigan (UoM) consumer confidence survey. Traders are advised to build their positions tomorrow and Thursday while trade is still relatively calm.
EUR
The EUR continued to be influenced by debt worries. The currency is slowly declining against the Yen and the USD. Although during trading it managed to visit the green territory, both Monday and Tuesday it failed to finish higher against the JPY or the greenback.
The EUR/USD is trading in a narrow range around 1.3600. Appetite for risk might benefit the EUR in the coming trading days if data from Europe published today and tomorrow prove that the economy is indeed expanding.
No significant data was published yesterday. Today, better than expected news from the UK and Germany should send the EUR higher against safe haven currencies such as the USD and JPY. Manufacturing Production from the UK is expected to rise 0.3%, German Final CPI is forecasted to rise 0.2% and the regional Trade Balance forecast stands at a potential 16.4B surplus.
JPY
The JPY continued its bullish movement against the EUR and GBP yesterday; although, toward the end of trading both currencies pared some of their losses. Currently the pairs are trading at 122.39 and 134.69 respectively.
The Yen declined significantly against the AUD, which is currently trading at 82.40. It is also declining against the CAD, currently trading at 87.65. Good economic data from china or the U.S., or continued strength in commodities, should support this most recent trend.
Core Machinery data published last night in Japan fell 3.7%. The data is a leading indicator of corporate capital spending. The fall in machinery orders is evidence for a slow economic growth. The publication may lead the Bank of Japan (BOJ) to issue further economic easing programs to increase demand by Japanese consumers, and push the economy higher.
Technical Analysis
EUR/USD
The 4-hour chart is showing that the pair is still floating within its bearish channel. However, the RSI on the 4H chart is bellow the 30 line, indicating that the market is oversold. The Slow Stochastic is also showing a fresh bullish cross, suggesting that an upward move is imminent. Going long with tight stops appears to be preferable.
GBP/USD
The pair is in the middle of a strong downtrend, and is testing fresh lows on a daily basis. The very important key support level of 1.4935 has been breached and the pair is likely to continue is bearish trend. Next target price might be around 1.4800
USD/JPY
For the past few days the pair has been floating around 90.00 with no apparent breach. Now, however, new signs for a bearish move are given in the form of a bearish cross on the Slow Stochastic of both the daily and the hourly charts. Traders are advised to wait for the break and swing.
USD/CHF
The pair continues to provide exclusive bullish signals, and is now traded around the 1.0750 level. All oscillators on the daily chart are pointing up and further bullishness will probably take place, with potential target price of 1.0825.
Wild Card
Silver
The 4H chart's Bollinger Bands appear to be tightening on this commodity as prices prepare for a volatile jump. With bearish crosses on the hourly and daily Slow Stochastic, as well as an over-bought indication on the 4-hour RSI, the next major movement may indeed be in a downward direction. Forex traders involved in commodity trading can take advantage of this knowledge by going short on Silver and riding out what appears to be building up to be a sharp movement in price.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3740 | 1.5170 | 90.75 | 1.0850 | 0.9250 | 0.9175 |
| 1.3695 | 1.5115 | 90.50 | 1.0825 | 0.9200 | 0.9150 | |
| 1.3650 | 1.5030 | 90.20 | 1.0800 | 0.9165 | 0.9105 | |
| Support | 1.3575 | 1.4935 | 89.70 | 1.0730 | 0.9110 | 0.9045 |
| 1.3540 | 1.4880 | 89.50 | 1.0685 | 0.9080 | 0.9015 | |
| 1.3500 | 1.4785 | 89.25 | 1.0670 | 0.9055 | 0.8980 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 2010-03-10 | 00:30 | AUD | Home Loans | m/m | -5.1% | 2.1% |  |
| Home Loans This report measures the number of commitments for owner occupied home financing. A bettern than expected result has a positive impact on the local currency because large purchases are usually made by consumers that are confident in their financial position. | |||||||
| 2010-03-10 | 07:00 | EUR | German Final CPI | m/m | 0.2% | 0.2% |  |
| German Final CPI The German Final Consumer Price Indicator measures the change in price of goods and services purchased by consumers. Frequency Released monthly, about 15 days after the month ends; FF Notes The 'Previous' listed is the 'Actual' from the Preliminary release and therefore the 'History' data will appear unconnected. There are two versions of CPI released about 15 days apart - Preliminary and Final. The Preliminary release is the earliest and thus tends to have the most impact; Acronyms Consumer Price Index (CPI); | |||||||
| 2010-03-10 | 07:00 | EUR | German Trade Balance | 16.6B | 16.4B | | |
| German Trade Balance This indicator measures the difference between imported and exported goods and services from Germany. A Rising trend tends to have a positive impact on the EUR. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers; | |||||||
| 2010-03-10 | 07:45 | EUR | French Industrial Production | m/m | -0.2% | 0.3% |  |
| French Industrial Production This is a report which measures the total value of output produced by factories, mines, and utilities in France. A rising trend has a positive effect on the EUR because high levels of production are a sign of a healthy economy. | |||||||
| 2010-03-10 | 09:00 | EUR | Italian Industrial Production | m/m | -0.2% | 0.7% | |
| Italian Industrial Production This indicator provides a general measure for the value of all output produced by factories, mines, and utilities in Italy. | |||||||
| 2010-03-10 | 09:30 | GBP | Manufacturing Production | m/m | 0.9% | 0.3% | |
| Manufacturing Production This is a report which measures the total value of output produced by manufacturers. Manufacturing industries make up about 80% of total Industrial Production. | |||||||
| 2010-03-10 | 09:30 | GBP | Industrial Production | m/m | 0.5% | 0.2% | |
| Industrial Production This report measures the change in the total inflation adjusted value of output produced by manufacturers, mines, and utilities. When the actual result is higher than forecasted, it tends to have a positive impact on the local currency. | |||||||
| 2010-03-10 | 15:00 | USD | Wholesale Inventories | m/m | -0.8% | 0.2% | |
| Wholesale Inventories Alteration in the value of goods, which are stored by wholesalers in the U.S. The data release is published monthly. | |||||||
| 2010-03-10 | 15:30 | USD | Crude Oil Inventories | 4.1M | 1.9M | | |
| Crude Oil Inventories This report measures the change in the number of barrels of Crude Oil held in inventory on a week-by-week basis. It is also called Crude Oil Stocks. | |||||||
| 2010-03-10 | 18:00 | EUR | ECB President Trichet Speaks | * | * | | |
| ECB President Trichet Speaks Due to testify before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels; | |||||||
| 2010-03-10 | 19:00 | USD | Federal Budget Balance | -42.6B | -207.5B | | |
| Federal Budget Balance This is a report which measures the difference in value between the federal government's income and spending during the previous month. | |||||||
| 2010-03-10 | 20:00 | NZD | Official Cash Rate | 2.50% | 2.50% | | |
| Official Cash Rate Measured value of interest rate at which banks lend balances to other banks. Interest Rates are a key component in currency valuation. | |||||||
| 2010-03-10 | 20:00 | NZD | RBNZ Press Conference | * | * | | |
| RBNZ Press Conference The press conference is held by the Reserve Bank of New Zealand (RBNZ) and is about 30 minutes long. The conference is open to press questions. Unexpected questions sometimes lead to unscripted answers that seldom create heavy market volatility. | |||||||
| 2010-03-10 | 20:00 | NZD | RBNZ Rate Statement | * | * | | |
| RBNZ Rate Statement The Reserve Bank of New Zealand (RBNZ) releases this statement in connection to its recent decision on short-term interest rates. Interest rates are a primary determinant of a currency's value and these statements are used by traders to determine future monetary policy decisions. | |||||||
| 2010-03-10 | 20:00 | NZD | RBNZ Monetary Policy Statement | * | * | | |
| RBNZ Monetary Policy Statement The RBNZ is issued regarding the recent decision on interest rates and is required to include all details on how the bank will achieve its inflation targets and how it intends on achieving its recent monetary policy decisions. | |||||||
| 2010-03-10 | 21:30 | NZD | Business NZ Manufacturing Index | 52.0 | - | | |
| Business NZ Manufacturing Index An important measure of New Zealand manufacturing industries. | |||||||
| 2010-03-10 | 21:45 | NZD | FPI | m/m | 2.1% | - | |
| FPI The Food Price Index (FPI) measures the rate of inflation for food products and services. It provides a glimpse into the upcoming CPI figures to be released soon thereafter. | |||||||
| 2010-03-10 | 23:50 | JPY | Final GDP | q/q | 1.1% | 1.0% | |
| Final GDP This report is the primary measure for the change in the value of all goods and services produced by an economy. It is a leading indicator of economic health. | |||||||
| 2010-03-10 | 23:50 | JPY | Final GDP Price Index | y/y | -3.0% | -2.9% | |
| Final GDP Price Index This index is the final measure for the change in the value of all goods and services included in the country's GDP. | |||||||
