Overall, the dollar saw another day of declines, as the major pairs were pulled higher by rising S&P futures. The only exceptions were the euro and the swissy which traded side-ways, probably affected by the upcoming interest rate decisions. The recent positive news had a strong effect in the currency market, so far, as the pound, aussie and the cad trades near multi-month highs, in a sign that the credit crisis is easing. Ahead, the release calendar is loaded with important releases both in the European and in the U.S. sessions.
The Euro (Eur/Usd) was unable to develop a proper trend on Wednesday, and moved only in large swings around the 1.3300 level. This consolidation comes ahead of the ECB interest rate meeting, where the bank is expected to reduce the interest rate by 25 basis points and announce a new quantitative easing method. In the Asian session, the euro dropped 30 pips.
The Pound (Gbp/Usd) closed the Wednesday trading session higher for the seventh day in a row. However, the pound lost 20 pips during tonight’s Asian session, after it failed a test at the 1.5150 area, the resistance area of the last three days of trading. Later in the day, the BoE is expected to keep rates on hold at 0.50%.
The Aussie (Aud/Usd) declined 70 pips in the early part of the overnight session on Wednesday, but started to head higher shortly after the London open. At the end of the day, the aussie gained 70 pips, which set a new high for the last six months of trading. During the Asian session, the aussie broke above the high of the last day of trading and above the 0.7500 resistance area only after a release showed that the unemployment rate fell unexpectedly in Australia.
Employment in Australia increased by 27.3K for April which is above expectations of 24.9K decrease. Full time employment Increased by 49.1K to 7,672,700 while part time employment decreased by 21.8K to 3,126,200. The unemployment rate in Australia decreased by 0.3 percent to 5.4 percent in April which is better than analysts’ forecasts of an increase to 5.9 percent
The Cad (Usd/Cad) fell almost 90 pips on Wednesday, extending the trend saw in the last period of trading. The cad traded mostly side-ways in the overnight session, but declined strongly in the U.S. session in-line with the crude oil market. On Wednesday, the cad reached the lowest value since November.
The Swissy (Usd/Chf) traded again in a similar fashion with the euro on Wednesday. The pair finished the last day of trading forming a doji-star, after it failed a test at the 200-day moving average. In the Asian session, the swissy rose 25 pips, ahead of a release that is expected to show that the inflation gauge rose 0.6% in April.
The Yen (Usd/Yen) traded volatile in the last few trading sessions. The pair plunged 100 pips during Wednesday’s overnight session, but completely retraced the move back during the early part of the U.S. session. Shortly after, the yen started again to move lower, and finished the day some 40 pips lower. The yen’s volatility may come as the pair is trading above an important support area formed by the 20, 50 and the 200-day moving averages.