Overall, the dollar advanced against the major pairs during the Asian session. However, the currency market turned around very easily after the London open, in-line with the S&P futures. Ahead, the calendar is loaded with top-tier releases, which will certainly influence the currency market.
The Euro (Eur/Usd) is trading slightly above the Wednesday’s open price, after declining 70 pips during the Asian session. The euro may lose some of its steam later in the day, as tomorrow the ECB is expected to cut interest rates 25 basis points, to 1%. However, the euro may receive a strong upside boost if Mr. Trichet announces that this is the lowest threshold that interest rates can go.
The service side of the economy in the Euro-area has been in contraction for the last ten months according to the latest PMI release. However, the released number of 43.8 shows some improvements had been made lately. Retail sales in the Euro-area declined for a second month in March, following a 0.3% decrease the previous month. From one year ago, retail sales are down 4.2% in March, the largest drop since records first started.
The Pound (Gbp/Usd) declined 90 pips during the Asian session before recovering and moving above the opening price during the European session. Investors are preparing for tomorrow’s BoE interest rate decision. For now, the pound trades well below the 200-day simple moving average, an area seen by many investors as crucial.
The U.K. Service PMI beat analysts’ expectations for a fifth consecutive month. However, the release still shows the service side of the economy has contracted for more than twelve consecutive months, but things are starting to look better. In April, house prices continued to tumble in the U.K. by 1.7%. From one year ago, U.K. house prices have fallen by 17.7%, down to the same level as in 2004.
The Aussie (Aud/Usd) saw strong momentum during the overnight session. The pair declined 80 pips during the Asian session, but shortly after the London open, the aussie surged more than 100 pips higher. Yesterday, the aussie formed a doji-star, something that indicates market indecision.
Australia has posted a higher than expected trade balance for the month of March. Analysts were expecting a 1.73B reading when in fact; the country had a surplus of 2.50B. This is mainly due to the fall in goods and services debits, mainly in other goods and capital goods. Retail sales in Australia have increased by 2.2 percent in March which is higher than analysts’ forecasts of a 0.5 percent increase. In seasonally adjusted terms, all industries had an increase in March. Over half of the Australian economy is related to consumer spending.
The Cad (Usd/Cad) tested TheLFB R1 (1.1810) during the Asian session, as the dollar strengthened against the major currencies. However, as the market headed towards the European session, the cad started to retrace the movement and even decline below the opening price. Yesterday, the cad rose after four days of strong declines.
The Swissy (Usd/Chf) approached the 200-day moving average shortly before the London open, but the move was rejected. Currently, the pair trades just below the Wednesday open level, after advancing 50 pips in the early part of the day.
The Yen (Usd/Yen) fell sharply during the early part of the Asian session. The pair managed to break below a strong support area formed by the 20, 50 and by the 200-day simple moving averages. However, after the London open, the yen started, once again, to move higher, and retraced almost 50% of the declines.