Overall, the dollar was sold at a strong pace for a second consecutive day, as the optimism surrounding the global economy cause institutional traders to exit the dollar for higher yielding assets. For now, the major currencies seem to be laying the groundwork for further advances against the dollar, as most currency pairs broke important price points.
The Euro (Eur/Usd) advanced 100 pips since the Thursday session started and, more importantly, broke above the resistance trend-line that connects 03/23/09 and the 04/06/09 highs. However, the pair could not find enough momentum to break above the 1.3390 resistance area and retraced some of the gains during the European trading hours.
The unemployment rate in the Euro-area continues to rise. The latest release, for the month of March, shows that the unemployment rate reached 8.7%, more than was expected. The unemployment rate for the month of February was also revised higher, to 8.7%. About 14.158 million persons were unemployed in the Euro-area, up by a huge 419K from one month earlier. Euro-area April inflation, as measured by the Flash estimate, is expected to remain at 0.6%. Over the last few months, the inflation gauge has dropped sharply, reflecting tougher credit conditions and the rather huge declines in the commodity markets
The Pound (Gbp/Usd) gained another 160 pips during the overnight session, as the dollar was sold across the board. The currency advanced to TheLFB R1 (1.4835) in the Asian session with very little hesitation, but needed to wait for the European session to break higher. Currently, the pound is testing TheLFB R2 (1.4925).
U.K. house prices continued to decline in April, after rising unexpectedly in the previous month. The average price for a U.K. house in April reached £ 151,861, down 0.4% from March. Analysts believe the bottom in the housing market has not been hit, even though some improvements have been seen in the last few months.
The Aussie (Aud/Usd) traded side-ways during the Asian session, extending the range seen in the late U.S. hours, but literally jumped higher after the London open. The aussie gained 140 pips tonight, and managed to break above the 200-day simple moving average for the first time since August 2008. Currently, the aussie’s road looks clear on the upside.
The Cad (Usd/Cad) moved only lower during the Asian and the European sessions. In the last two days of trading, the cad has lost 300 pips, from which, half came tonight. Additionally, the pair reached the lowest point since January 12 tonight. The next important support area for this pair is the 200-day simple moving average.
The Swissy (Usd/Chf) found the strength to break below the 200-day simple moving average during the overnight session. The swissy broke under this important swing point for the first time since early January even though the pair spent a lot of time struggling to take out the 200-day SMA over the last month.
The Yen (Usd/Yen) struggled in the early Asian session to break above Wednesday’s high, but was unable to pull the move. The failed attempt pushed the yen some 60 pips lower, which were easily recovered during the European session. Tonight, the Bank of Japan announced its monthly monetary policy, but this had little effect on the financial markets.
In an unusual short statement, the Bank of Japan decided by a unanimous vote to maintain the Overnight Call Rate at 0.10%. Having the lowest rate amid industrialized countries, economists argued that the low interest rate will not provide strong enough relief to the Japanese economy, and that the central bank has mostly depleted its powers to influence the business cycle by using monetary policy