Overall: The currency market moved strong in both the Asian and European sessions. In the Asian session, the dollar strengthened across the board, but this trend was easily reversed during the European trading hours. That trend continued as S&P futures improved and as Wall Street traded higher on the day. The only time that currencies seemed to move against equities was in the 30 minutes after the SNB's surprise announcement regarding its intervention policy on the franc.
In U.S. economic news, nominal retail sales declined 0.1% in February, the Census Bureau said today, but the January number was revised higher to an increase of 1.8% from the previously reported 1.0%. Ex-autos and gasoline, sales at all other retailers saw an increase of 0.5%. Also, the number of workers making claims for new unemployment benefits rose 9000 to 654,000 last week, the Labor Department said today. The number of workers continuing to claim benefits jumped 193,000 to 5,317,000, the highest level since the government started keeping track in 1967.
The Euro (Eur/Usd) tried and failed in the early part of the Asian session to break above the 1.2850 area. At that level, the euro encountered strong selling orders and dropped nearly 120 pips, dragging the whole market down with it. The pair bottomed during the European session, near the 1.2730 area, and rebounded to 1.2841 as stocks in the U.S. advanced.
The Euro-area PPI shows that the pace of inflation is dropping at a sustained pace. Producer prices fell 0.8% in January, following a 1.5% (revised) drop just one month prior. Industrial production continued to decline for the fifth month in a row. In January, industrial production was down by 7.5% from one month earlier, while from one year ago, production fell 19.3%. The previously released number of -4.6%, was revised higher, to -3.9%.
The Pound (Gbp/Usd) struggled to break above the 1.3900 area during the Asian session, but eventually bounced lower off the resistance area and fell nearly 150 pips. After the London open the pound started to head higher, and the move continued through N.Y. all the way to 1.3900 as U.S. equity markets advanced for a third day.
The Aussie (Aud/Usd) traded in the same fashion as the euro during the overnight session. The pair initially tried to break above the high of the last day of trading, but failed to. Traders soon started to sell the pair pushing the price point to the 20-day simple moving average. In the European session, the aussie regained some of the ground lost earlier and the trend continued in N.Y. as stocks improved, sending the pair above 65 cents for the second time this week.
Employment in Australia increased by 1.8K for February which is above expectations of 20.6K decrease. Full time employment decreased by 53.8K to 7,664K while part time employment increased by 55.6K to 3,146K. The unemployment rate in Australia increased by 0.4 percent to 5.2 percent in February which is slightly higher than analysts’ forecasts of an increase to 5.0 percent.
The Cad (Usd/Cad) managed to break above Wednesday’s high during the Asian session, but retraced the moves shortly after the European open. Similar with the swissy, the pair has developed a tight range during the overnight sessions and continues to struggle to move decisively in either direction ahead of the U.S. open. The pair plunged heavily in N.Y. as crude advanced over 10.5% on the day.
The Swissy (Usd/Chf) continued to trade without a clear direction during the overnight session. This has been the pattern of trading in the last few days, as the swissy trade in a 100-pip range. Additionally, the 20, 50 and 100-day simple moving averages are influencing the swissy. The pair exploded after the SNB announced its policy to intervene by selling francs, gaining nearly 300 pips in the first 30 minutes after the announcement.
The Yen (Usd/Yen) extended the declines seen in the last day of trading, and plunged another 160 pips. The pair was sold continuously during the overnight session, as the problems in the Japanese economy persist. In addition, during the overnight session, the pair broke below the 20-day simple moving average. The pair traded flat in N.Y. even as stocks enjoyed a strong rally, after gaining into the N.Y. session as S&P futures improved.
The Japanese economy has shrunk by an annualized 12.1 percent pace during the last quarter due to lowered business spending and a loss of exports as the global recession takes hold. In the three months to end December 31st the Gross Domestic Product (GDP) contracted less than the 12.7 percent which was reported by the Cabinet Office today.