Overall, the market seems to be in risk-acceptance mode, as the higher yielding currencies post gains on positive equities. The only exception is the euro, affected by the upcoming interest rate decision. However, activity in the euro is expected to pick up during the press conference, in which Mr. Trichet will lay out the new monetary stance.
The Euro (Eur/Usd) advanced during the Asian session, but retraced a large portion of those gains as the European session started. In the last three days, the euro has traded sluggish, as the market expects the ECB to reduce the overnight rate by 50 basis points this morning.
The Pound (Gbp/Usd) rose as much as 150 pips during the overnight session, but gave up some gains as the Asian session concluded. The pound advanced against both the dollar and the euro, helped by a better than expected economic release from the U.K. housing market.
March’s U.K. Construction PMI rose more than expected, after last month the index fell to an all-time low. The U.K. Construction PMI was released at 30.9, while analysts forecasted a 27.6 read. Despite this month’s positive read, almost every sub-index of the release still points to a severe slowdown, as the British construction market has tumbled for more than a year. U.K. house prices rose unexpectedly in March, after declining for sixteen straight months. The average price for a U.K. house in March reached £150,946, up 0.9% from the previous month
The Aussie (Aud/Usd) gained 60 pips in the Asian session, testing TheLFB R1 (0.7030), but traded flat until the European session got under way. After the London open, the aussie advanced further, breaking above the 0.7050 area, where it topped in Wednesday’s trade.
Australia has posted a higher than expected trade balance for the month of February. Analysts were expecting a 0.70B reading when in fact; the country had a surplus of 2.11B. This is mainly due to imports of consumer goods declining while the price of gold surged higher. However, this may not be enough for Australia to avoid a recession, the nation’s first in two decades. This is the seventh consecutive month in which the Australian trade balance has been in the black.
The Cad (Usd/Cad) extended the decline, seen in the last U.S. session, during the overnight sessions. The cad fell an additional 80 pips, breaking below the 20-day simple moving average. Additionally, the cad is now trading just above the 50-day simple moving average.
The Swissy (Usd/Chf) moved somewhat lower during the Asian session, but hit a support trend-line that connects the lows of the last two days of trading, near the 1.1400 area. From there the swissy briefly reversed direction and returned to the opening price of the Asian session.
The Yen (Usd/Yen) is trading just below the 200-day simple moving average, helped by the gains seen in the overnight equity markets. The yen re-tested the 98.50 support level in the early Asian session, but failed to break anywhere lower. For the rest of the Asian session the yen traded flat.
The Japanese monetary base came in with a reading of 6.9 percent year over year in February. Banknote circulation in January was up 0.8 percent. Meanwhile, coins declined 0.1 percent.