Currency Pair Overview: Majors Rise As Market Tolerates More Risk

The Euro (Eur/Usd) The euro moved higher on the day as the dollar weakened in the broad market. The pair gained 120 pips after trading in a wide range of 220 pips and broke above the 20 and 100 day simple moving averages. The pair advanced overnight as the market adopted a more risk tolerant stance. Consumer confidence, in the euro-area, improved in April, coming in at -31 after analysts had expected a -34 read. The euro-zone M3 number came in at 5.1% much lower than had been anticipated. Euro-zone CPI flash estimate and German unemployment change will be released in the morning.

The Pound (Gbp/Usd) The pound rose overnight and the pair continued to rise during the U.S. session, gaining 140 pips on the day and closing above the 20 day simple moving average. The pair is now trading a weekly high, near the 1.4770 level. There were no U.K. economic reports this morning, but the Nationwide house price index will be released tomorrow.

The Aussie (Aud/Usd) The aussie moved higher on Wednesday, gaining more than 200 pips and closing above the 200 day simple moving average. Dollar weakness coupled with higher equity markets and rising gold prices helped the Australian dollar strengthen against the dollar. Australian CB leading index and NAB quarterly business confidence will be released tonight but are mid-tier releases and may not affect the Australian dollar as traders will be looking to the Asian equity markets to see if the trend of higher markets continues.

The Cad (Usd/Cad) The cad dropped on Wednesday as the Canadian dollar strengthened to the highest level in almost two weeks as growing optimism that the worst of the global economic downturn may be over, moving equity markets and commodity markets higher. The pair dropped more than 160 pips on the day and closing just above the 1.2020 level. Activity in the pair may be somewhat muted overnight as traders await the Canadian GDP numbers tomorrow morning.

The Swissy (Usd/Chf) The swissy moved lower on Wednesday as the dollar weakened in the broad market, but closed off the lows of the day. The pair had broken below the 200 day simple moving average, hitting 1.1300 but retreated after the Fed statement and closed just above the 200 day SMA. There are no economic releases from Switzerland for the remainder of the week which means the pair will move on the strength/weakness of the dollar and on Treasury yields.

The Yen (Usd/Jpy) The dollar strengthened against the Japanese yen after the Federal Reserve left rates on hold and held back from increasing purchases of Treasuries and mortgage securities. Stronger equity markets, reacting to positive earnings reports, helped the pair move higher and close at the highest level of the week. Movement in tonight’s Asian equity markets may influence the pair, however, the Bank of Japan will release its Monetary Policy Statement and announce its interest rate decision tonight, followed by the BOJ outlook report and press conference tomorrow morning. On the day, the pair gained 120 pips and tested the 50 day simple moving average.