The FOREX market continues to be governed by high volatility and fluctuations flared by the uncertainty and mixed sentiment! Haven assets dollar, yen, and franc were evident victors in early hour trading to only now change the trend with the dollar losing ground and majors recovering from early losses!
Commodities are also bouncing again, where gold returned higher off lows to limit some losses as crude oil reversed higher once again and stabilizing above $109 per barrel. Gold hovers around $1458.70 off recorded lows at $1453.65 per ounce.
Gold was supported as the dollar trended lower ahead of trade figures from the US today. The dollar index reversed to the downside despite prevailing jitters and haven demand, returning to its weak posture. The dollar index reversed with bearish tendencies for now ahead of the data and trading marginally flat around 75.00 down from the high at 75.19 and off lows at 74.89.
The euro on the other hand reversed to the upside after finding good support and gaining positive momentum. The EURUSD is hovering around 1.4450 after recording the low of 1.4375 and below the high of 1.4480. Despite the downbeat sentiment figures, rising inflation in Germany was a signal for consistent ECB hawkish rhetoric.
On the other hand, the IMF and EU scheduled meeting in Lisbon to prepare a bailout for Portugal estimated at 80 billion euros was seen as support to the end of the debt crisis and for the nation to be the last of the weak links in the area.
As for sterling, the common currency declined sharply after inflation unexpectedly declined in March and eased to 4.0% opposed to expected rise towards 5.0% restraining expectations for BoE move on rates next meeting in May, and back to June at least as they await the new projections from the May Inflation Report.
Sterling halted the decline at the lows recorded of 1.6225 and now hovering around 1.6257 below early highs at 1.6347. Still with the dollar weaker and good trade figures sterling might continue higher still for the rest of the day.
The market is jittery and the sentiment is mixed, especially as we can see demand on the yen and the franc. The Japanese crisis is returning center stage after the new earthquake and after Japan raised the severity rating on its nuclear crisis to match that of the Chernobyl disaster back in 1986.
Still, the yen halted the gains as the USDJPY remains within the same trading range and reluctant still to surrender the upside trend. The pair recorded the lows of 83.44 and rebounded off the 38.2% correction areas towards 84.19 where it is hovering at this time. The pair is still below opening and intraday highs recorded at 84.78 and still the market remains mixed over the outlook for the Japanese crisis, the economy, and the state of the global recovery amid fears of sudden G7 intervention which leaves the pair hovering in a hazy direction.