MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
We have been seeing some good buying of currencies, particularly against the USD on dips today, with the Euro and Swissie tracking higher in New York. Sterling however remains a relative underperformer and is heavily weighed down on strong cross currency related demand in Eur/Gbp. The market could also be growing increasingly concerned with the ramp up in the BoE's APS (Asset Purchase Scheme) last week. On the data front, the only release this morning has come out of Canada, with March new house prices coming in bang on expectations at -0.5%. This is the 6th consecutive monthly decline in the data series. The White House has released their revised forecasts for the economy, with a much rosier picture than some of the other mainstream projections. Also this morning, the Bundesbank said that Germany's budget deficit could grow to some 6% of GDP by 2010, while the public debt ratio could rise to 80% of national income. The PBOC has been in the news, suggesting that China's stimulus measures are helping to produce better than expected H1 results. Many traders will be focused in on Bernanke who is scheduled to speak later in the day at 23:30GMT on the bank stress test results. The S&P and DJIA are down by more than 1% on the day while commodities are also weaker. It is however worth noting the relative strength in the Nasdaq, which still sits in positive territory, though only marginally. The Yen crosses have also taken center stage today with many of the major cross rates putting in bearish outside days (see Eur/Jpy) to potentially foreshadow a more significant rise in risk aversion and negative equity sentiment.
ANALYSIS OF SELECTED RATES
Nzd/Usd: Earlier today, in our Indicator of the Day report we discussed the gravestone doji setup in Kiwi and the potential for the pair to reverse course sharply over the coming days. The commodity bloc currencies are looking a little overbought of late and the NZD has been the weakest of the three, despite the rally to fresh 2009 highs by 0.6128 today. As such, we would be looking for a close at or near opening levels by 0.6025 to signal an end to the recent strength and open the door to a short-term corrective pullback at a minimum. Look for a break back below 0.6000 to accelerate declines towards the 0.5800-0.5900 area initially. We will not issue a sell recommendation because we are already well exposed to these currencies with open positions in Aud/Usd and Usd/Cad.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel's reports in a more timely fashion, e-mail email@example.com and you will be added to the distribution list.
Joel Kruger publishes 6 daily pieces:
Tech Talk - A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
Morning Slices - Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes Trade of the Day).
Monday-Friday (between 6:30am-7:30am EST)
Indicator of the Day - A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
Cross Country - A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
Scandi Daily - A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
Daily Classical - A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)