Overall, The small gains seen in the early part of the Asian session were transformed into huge gains for the majors. The only exceptions were the aussie, and the cad - which usually move less during the Asian session. Currently, there are no precise fundamental reasons behind these strong moves; rather the dollar hit a strong swing point.
The Euro (Eur/Usd) rose 170 pips and broke above the high seen during the last four days of trading, but as soon as it hit the 20-day simple moving average the euro started to reverse the earlier gains and move lower. During the Asian session, the euro and the swissy were the pairs that led the majors higher.
The Pound (Gbp/Usd) gained 160 pips, but retreated as it approached the 20-day simple moving average. In addition, the pound managed to break above the 1.4200 area, something that the pair has not succeeded in doing in the last three days of trading. Yesterday, the BoE reduced the monetary policy by 50 basis points.
Factory prices increased for a second consecutive month, after plunging lower for six months. The input prices, or the price at which producers and manufacturers buy materials and fuel, rose in February by 0.6%, much more than expected. The output price, or the prices at which manufacturers sell, gained 0.1% for a second consecutive month. Input prices are up 0.5% from one year ago, but down from 1.5% in January, while output prices reached 3.1% in February from one year earlier.
The Aussie (Aud/Usd) and the cad had the smallest gains against the greenback in the Asian session. During the European session, the aussie bounced, again, from the same 20-day simple moving average and erased almost every gain made earlier. The 20-day SMA has become an extremely important swing points lately.
The Australian construction sector contracted again in February to 29.5 from a 34.1 reading seen during January. The index fell at a fast pace as weak market demand and diminished confidence led to further cutbacks in new project work. The seasonally adjusted rate fell 4.6 points and remains below the crucial 50 level which denotes expansion from contraction. The worst conditions were faced in the apartment and commercial construction sectors
The Cad (Usd/Cad) fell 100 pips overnight, but retraced half of the move back during the European session. In the last few days, the cad has traded between 2 very important areas, the 1.3000 resistance and the 1.2700 support. Most likely, the cad will need to gain momentum in order for it break either area decisively.
The Swissy (Usd/Chf) fell 220 pips and broke briefly below TheLFB S3 (1.1515) during the Asian session. However, the European traders erased some of the declines, helping the swissy recover as much as 50 pips. In the Asian session, the swissy broke below both the 20 and the 100-day simple moving average, and touched 2 week low.
In February, the Swiss CPI rose for the first time since December. The released number of 0.2% is higher than the forecasted rate of -0.1%, while the year-over-year read rose to 0.2%. Inflation is set to continue its decline even more in the coming months, as the huge drop in energy prices and the lower demand should dampen price increases.
The Yen (Usd/Yen) plunged 90 pips in the overnight session, down to TheLFB S1 (97.30). The pair moved lower as the entire market sold dollars, and U.S. futures traded mostly flat. Tonight was the second consecutive day that the yen declined.