• U.S. Dollar Trading (USD) strengthened against the bulk of the majors on Wednesday as poor economic data coming out of the Euro Zone and slightly more dovish comments from ECB officials pushed the greenback higher, causing a flow on effect against other currencies. The U.S dollar gained further ground after Luxembourg’s Finance Minister Jean-Claude Juncker expressed concern over the pace of the greenback’s decline suggesting it wll hurt Euro economic growth. U.S stocks gained on Wednesday following a number of companies bettering expected earnings. This saw the Dow Jones rise by 43 points (0.3%) and the NASDAQ increase 28 points (1.2%). Oil prices remained strong, seeing only marginal gains as a weekly U.S inventory report showed an increase in stock by 2.4 million barrels. As a result, prices only rose US23c a barrel to US$118.30. Looking ahead, weekly Jobless Claims is to be released on Thursday with forecasts of little change from last week’s 372k.
• The Euro (EURO) retreated on Wednesday as poorer than predicted economic data released out of the Euro Zone saw PMI Manufacturing Index drop to 50.8 in April, its lowest level in nearly three years. Whilst this still represents an expansion in the industry, it came in lower than the forecasted 51.7. ECB Governing Council member Noyer virtually did a back flip from yesterday’s hawkish outlook for the Euro Zone, stating he would never engage in a discussion about the future path of interest rates, simply because nobody knows and it would be dangerous to make predictions in either direction. These comments combined with the soft economic data results perhaps limit the Euro’s upside potential going forward. The EURUSD traded at a high of 1.6000 and a low of 1.5860, before closing at 1.5892 in New York. Looking ahead, February’s Current Account is to be released on Thursday following January’s deficit of -$19.1bn. Investment flow for February is also to be released on Thursday with January’s results indicating a flow of $22.1bn.
• The Japanese Yen (JPY) weakened against the greenback as risk appetite saw the return to carry trades. The market continued its focus on the high yielding currencies like the Aussie and Kiwi, pushing the yen lower. The USDJPY traded at a high of 103.79 and a low of 102.75, before closing at 103.47. Looking ahead, core CPI is to be released on Friday with forecasts predicting an increase from 1% in March to 1.2%.
• The Sterling (GBP) strengthened against the dollar after the BoE minutes showed two votes against easing policy this month. However, gains were short-lived as the news did not change expectations of another rate cut in June by the BoE. Furthermore, BoE policymaker, Andrew Sentence commented on the weakness of the pound and its undesirable impact on oil and commodity prices, adding to the inflationary pressures being felt by the British economy and highlighted reservations about easing interest rates too quickly. The GBPUSD traded at a high of 1.9970 and a low of 1.9776 before closing at 1.9795 in the New York session.
• The Australian Dollar (AUD) had a historic day on Wednesday as it broke through the US95c mark for the first time in 24 years as a strong CPI figure of 1.3% m/m and 4.2% y/y for Q1 fuelled the surge. However, this rise lost steam as the USD gained on the back of weak Euro economic data, which saw the Aussie fall back below US95c.The AUDUSD traded at a high of 0.9541 and a low of 0.9447, before closing at 0.9495 in New York. No data is to be released out of Australia.
• Gold (XAU) softened owing to weaker commodity prices and a stronger dollar. Prices fell US$16.20 an ounce to US$909.00.
• Euro – 1.5880
Initial support at 1.5835 (Apr 22 low) followed by 1.5712 (Apr 18 Low). Initial resistance is now located at 1.6019 (Apr 22 high) followed by 1.6022 (Open this week + range last week).
• Yen – 103.45
Initial support is located at 102.68 (Apr 22 low) followed by 102.06 (Apr 18 low). Initial resistance is now at 104.07 (Apr 21 high) followed by 104.65 (Apr 18 high).
• Pound – 1.9790
Initial support at 1.9747 (Apr 22 low) followed by 1.9692 (Apr 17 low). Initial resistance is now at 1.9974 (Apr 23 high) followed by 2.0027 (Apr 21 high).
• Australian Dollar – 0.9480
Initial support a 0.9450 (Apr 23 low) followed by 0.9391 (Apr 22 low). Initial resistance is now at 0.9544 (Apr 23 high) followed by 0.9657 (Open this week + range last week 1.618).
• Gold – 904.60
Initial support at 903.40 (Apr 9 low) followed by 873.00 (Apr 1 reaction low). Initial resistance is now at 946.80 (Apr 18 high) followed by 953.00 (Apr 17 high).