Overall: The market traded in risk-acceptance mode overnight, as traders took heart in better-than-expected economic data from the U.S. on Wednesday and after the G20 announced it was expanding the amount the IMF would have available to help poorer nations to about $1 trillion. The move continued in N.Y. as factory orders (Actual 1.8%, Expected 1.5%, Previous -3.5% (Revised from -1.9%) in February continued the recent pattern of data which seems to be implying that the worst of the contraction which began in December 2007 will be seen this quarter. News that unemployment levels (Actual 669K, Expected 649K, Previous 657K) worsend to record levels didn't seem to do much to dampen the sentiment.
The Euro (Eur/Usd) advanced during the Asian session, but retraced a large portion of those gains as the European session started. The ECB today lowered their main policy rate by 25 basis points to 1.25%, less than the 50 basis points many observers had expected, but left the door open for further reductions. As far as quantitative easing is concerned, the board decided to table a judgment on that to the May meeting, and ECB President Trichet said at the press conference that a decision regarding unconventional measures would be made at the last minute. The pair rose from the Wall Street open until about 13:30 EDT, where it peaked at 1.3483.
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. The pair has been in a strong up-trend since March 30, with the last top reaching 1.4748 early this afternoon.
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. The pair did very well in N.Y. as stocks advanced, finding resistance only at .7198 in N.Y., the highest level made since Jan. 07.
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 overnight as crude advanced in Globex trading off the $47.50 handle. The cad fell an additional 80 pips, breaking below the 20-day simple moving average, and the move continued well into N.Y as front-month oil advanced over 8.6% to $52.54.
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 to the 1.1400 area. The pair advanced in the afternoon as stocks pulled back from their earlier 4% gains, with support in N.Y. seen at 1.1307.
The Yen (Usd/Yen) came within 42 pips of triple-digits about 2 hours before Wall Street opened, but couldn't find enough buyers to sustain a further upside move. The pair still looks set to make its highest close since Nov. 04 after the rally in global equity markets.
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.