Overall, the currency market saw a relatively weak dollar overnight. After the majors saw some rather modest gaps at the beginning of the new week, traders sold the dollar both in the Asian and European sessions helped by the positive equity markets. Ahead, the calendar holds one important release, the Tic-data which could show if China continued (or not) to buy U.S. Treasuries.
The Euro (Eur/Usd) rose approximately 100 pips in the overnight session, as the dollar was sold across the board. For now, the euro is sitting just above the 50-day simple moving average, where it also topped in the last two days of trading. Tonight was the fifth consecutive day in which the euro strengthened.
Inflation rose in February to 1.2% from one-year earlier, in-line with the Flash CPI forecast. The strong declines in CPI sub-indexes helped the inflation gauge reach the 2% target much earlier than forecast. However, the core CPI rose more than expected, 1.7% vs 1.6%. In February the inflation gauge rose for the first time in the last six months.
The Pound (Gbp/Usd) is currently sitting directly below the 20 day simple moving average, after gaining almost 250 pips from the session’s low. The pound advanced tonight for the fourth day in a row, as the positive European markets pulled the currency’s valuation higher.
In the previous quarter, U.K. residential mortgage backed bond markets may remain shut throughout the rest of the year. This is mainly due to banks having to regain their footing amid the large losses they have faced. Meanwhile, the average asking price for a home has declined 9 percent this month from one year earlier. Buyers are struggling just to be able to obtain a home loan as the economy heads towards the worst contraction seen in the past 30 years.
The Rightmove house price index for the month increased to 0.9 percent, month over month, to an average asking price of 218,081 pounds in March. This follows a 1.2 percent increase seen during January. On an annualized basis, house prices have come down 9.0 percent, which is slightly lower than the 9.1 percent seen during February.
The Aussie (Aud/Usd) closed the Sunday gap with ease during the first part of the trading session, but then was reluctant to move anywhere higher. In order to move higher, the aussie will have to break above the 50 and the 100-day simple moving averages, something that might prove hard to achieve.
The Cad (Usd/Cad) traded on light volume in the Asian session, but picked up momentum and managed to break below the neutral pivot point (1.2725) around the London open. In the first few days of the week, the cad has a relatively light economic calendar.
The Swissy (Usd/Chf) was very reluctant, in the overnight market, to move anywhere lower, even though the rest of the major currencies posted strong gains against the dollar. This happens, as the Swiss National Bank is trying to devalue the currency.
The Yen (Usd/Yen) extended the range developed on Friday, during the overnight session. The pair was unable to develop a decent move, and traded side-ways since the Sunday session started. In the last two days of trading, the yen formed two doji-stars.