Forex News and Events:
The Japanese govenerment announced that it had revised export numbers – positively – for the first time in a year as conditions improved. This comes as a ray of light amidst a flurry of weak data and in total contradiction to the downgrading of regional economic strength within Japan. The Yen declined slightly as this hit the newswires but resumed it's gains against the dollar and Euro.
The focus today is on the earnings data that will come out shortly (12:30 CET) from Citi, GE & GM. Any surprises on this front will be market moving. A better than expected number (especially from Citi) will benefit the dollar, while a significantly weaker that expected (-$0.34/share against -$1.02/share for last year) number would weigh on the dollar, despite JP Morgan Chase' and Goldman Sachs' strong reports.
The dollar has benefitted from the recent earning's season which have been surprisingly positive, however picking a bottom is premature as many underlying fundamentals are weak. Yesterday's -610K Initial Jobless claims in the U.S shows that while certain aspects of the markets seem to be improving, the economy at large is still hurting.
Trichet's comments about the Euro not being weak saw the single currency decline in early morning trading. Trichet also elaborated on the fact that a rate cut at the next ECB meeting should not be discounted however he refused to encourage speculation of “non-standard monetary measure”. Mounting concerns of the very apparent deflationary risk in Spain, Ireland and Portugal adding to the very pressing issues that are currently plaguing the ECB. Trichet also commended the U.S for backing a “strong dollar” policy. The EURUSD is expected to test the psychological 1.3000 level in weeks to come as the dollar reasserts its haven status.
Today's Key Issues (time in GMT):
14:00 USD U. of Michigan Confidence (APR)
16:30 USD Chairman Bernanke Speaks at Fed Conference in Washington
The Risk Today:
EurUsd Mounting pressure breaks 1.3118 support as dollar continues to rise, new initial support at 1.3056. General bearish trend continues and even accelerates. Next support at 1.2988 (start of March 18th rally) would allow for a test of crucial level of 1.2517 (historical fair-value). On the upside 1.3136 stands as an initial soft resistance (23.60% on recent dollar bull trend), but crucial 1.3224 level would initiate a turnaround trend that would retest the upper limit of current broad trend at 1.3400.
GbpUsd Head and shoulders formation completes with a head at 1.5069 and neckline at 1.4946. Sterling has risen 1.7% in the last 5 trading sessions against the dollar as the UK's QE kicks in and the Sterling returns from it's over-sold status. Retracement would have to confirm Initial support at 1.4755 (today's low) to re-focus strong floor at 1.4607.
UsdJpy Yen strength can be seen as a momentary retracement in the broad scheme of things a continued dismal data out of the land of the rising sun supports a weak currency. Changing dynamic in currencies will refocus a bullish stance on the pair, initial support at 99.13. On the upside a push past 99.66 would set the tone for 100.00.
UsdChf SNB's President Roth spoke today saying he saw some signs of economic stabilization but that near term outlook remained bleak – saying a turnaround not to be expected before 2010. This sent the pair on a rally (which started April 13th at 1.1313). The pair will continue to be volatile as the balance of haven status continues. Initial support at 1.1564 with resistance at a.1.1642.
Resistance and Support:
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot|