U.S. Dollar Trading (USD) was stronger on Tuesday as concerns about the spread of the U.S downturn could warrant rate cuts from central banks around Europe and Asia when they meet this week. The U.S gain has come on the back of calls from the International Monetary Fund (IMF) for global intervention to tackle the global credit crisis. Tuesday saw the release of the FOMC minutes from the Feds March meeting which highlighted the likelihood of a contraction in GDP for the first half of 2008 along with thoughts that a prolonged and severe economic downturn could not be ruled out. It also noted there were no signs the U.S housing sector is anywhere near stabilizing as credit woes still continue, this is supported by a worse than expected drop of -1.9% in U.S pending home sales for the month of February after initial forecasts estimated a drop of only -0.7%. The share markets ended slightly down on Tuesday with the NASDAQ dropping 7 points (-0.5%) and the Dow Jones shaving 36 points (-0.3%). Oil prices moderated on Tuesday falling US80c to US$106.34 a barrel. A fairly quiet day is expected on the data release front as we wait for the central bank rate announcements in Europe and the G7 meeting later this week
The Euro (EURO) fell slightly against the USD overnight but rose to a record high against the sterling as poor housing figures and possible rate cuts overshadow the UK currency. The market is seemingly reluctant to heavily buy the Euro as they wait for the ECB rate announcement on Thursday where expectations are ECB President Trichet is to sound a little more dovish in his economic outlook for the Euro Zone in his press conference although rates are widely expected to remain unchanged at 4.0%. The EURUSD traded at a high of 1.5798 and a low of 1.5675 before closing at 1.5710 in New York.
The Japanese Yen (JPY) rose to a three month high against the Euro, whilst it lost ground against the U.S dollar as Japanese investors continue to look towards high yielding assets. The USDJPY traded at a high of 102.68 and a low of 101.78, before closing at 102.55 in New York. The BoJ is widely expected to hold rates at 0.5% on Wednesday.
The Sterling (GBP) was sold off throughout the New York session which saw it hit a record low against the Euro as data released on UK housing prices indicated a drop in prices by -2.5% for the month of March, its worst decline since September 1992. Added to this, investors have been factoring in the growing likelihood of a rate cut when the BoE meet this week. The GBPUSD traded at a high of 1.9926 and a low of 1.9667 before closing at 1.9675 in New York.
The Australian Dollar (AUD) grinded higher tracking equity markets in the Asian session, before poor U.S data saw it rise up above the key US93c level. The Aussie Dollar also rose after reports of Mergers & Acquisitions pipelines, that China was interested in purchasing a larger stake in BHP Billiton. Overall, the AUDUSD traded at high of 0.9322 and a low of 0.9245 before closing at 0.9309 in New York. Looking ahead, consumer sentiment is to be released on Wednesday for the month of April with previous figures seen at -9.1%.
Gold (XAU) eased on profit-taking falling by US$8.80 an ounce (1.5%) to close at US$918.00.
Initial support at 1.5628 (Apr 7 low) followed by 1.5510 (Apr 3 Low). Initial resistance is now located at 1.5779 (Apr 8 high) followed by 1.5787 (Apr 1 high).
Initial support is located at 101.27 (38.2% retracement of the 98.56 to 102.95 advance) followed by 100.24 (61.8% retracement of the 98.56 to 102.95 advance). Initial resistance is now at 102.95 (Apr 3 high) followed by 103.59 (Mar 11 high).
Initial support at 1.9607 (76.4% retracement of 1.9363-2.0398) followed by 1.9410 (Feb 21 low). Initial resistance is now at 1.9928 (Apr 8 high) followed by 2.0048 (Apr 4 high).
Australian Dollar 0.9320
Initial support a 0.9177 (Apr 7 low) followed by 0.9100 (Apr 4 low). Initial resistance is now at 0.9312 (Apr 8 high) followed by 0.9354 (Mar 19 high).
Initial support at 900.50 (Apr 4 low) followed by 888.20 (Apr 3 low). Initial resistance is now at 929.40 (Apr 7 high) followed by 940.60 (Mar 31 high).