• U.S. Dollar Trading (USD) strengthened on Friday as market sentiments drastically improved following Q1 results from Citigroup coming in better than expected, with a loss of US$5.1 billion, much lower than the US$10 billion loss during Q4. Based on this result, the market reacted as if it was an indication the worst of the credit turmoil may be over. Despite this positive sign, it is still widely predicted the Fed will cut rates by 25bps when it meets later this month. Contrary to this popular opinion, Philadelphia Fed President Plosser hinted that he felt the Fed had cut rates enough to promote economic growth. This saw the Swiss franc and yen being the most heavily sold off owing to a return to risk appetite amongst investors. The Euro was also much weaker against the greenback following more positive corporate profit results along with commentary coming out of the Euro Zone through the week indicating a strong Euro was not desirable. In share market news, the Dow Jones rose 228.87 points (1.8%) to 12,849.36, whilst the NASDAQ improved 61.14 points (2.6%) to 2,402.97. Oil prices increased US$1.77 to US$114.20 a barrel, as supply concerns remain. Looking ahead, Chicago Fed’s Evans speaks on Monday as does Federal Reserve minister Kroszner.
• The Euro (EURO) fell to 1 week lows against the dollar after U.S equity markets rallied on the heels of better than expected profit results from Citigroup. ECB Council member Liebscher prevented the Euro falling further against the dollar as his comments all but ruled out imminent rates cuts, going so far as to say, no room exists to cut Euro Zone interest rates. These comments come as no surprise to many traders who believe Euro selling would likely be short-lived, as ongoing inflation pressures will likely encourage the ECB to hold rates at 4% at least through autumn. The EURUSD traded at a high of 1.5956 and a low of 1.5711 before closing at 1.5801 in New York.
• The Japanese Yen (JPY) weakened sharply against the greenback following on from strong U.S equity markets, resulting in an increased risk appetite amongst investors. The yen has fallen to a 7 week low against the dollar. The USDJPY traded at a low of 102.25 and a high of 104.65, before closing at 103.86. Looking ahead, the Trade Balance for March is to be released on Tuesday.
• The Sterling (GBP) rose against the dollar due to short covering. Many investors have been shorting the pound on the back of a weakening UK economy but news that the BoE may be planning to support the mortgage market this week has caused them to change their sentiment. The GBPUSD traded at a low of 1.9884 and a high of 1.9998, before closing at 1.9941 in New York. Looking ahead House Prices for the month of April are to be released on Monday. On Tuesday, BoE Besley is to discuss financial market issues troubling the UK.
• The Australian Dollar (AUD) weakened slightly against the dollar as strength in the greenback and softer commodity prices prevented the Aussie reaching the US94c mark. The AUDUSD traded at a high of 0.9395 and a low of 0.9273 before closing at 0.9337 in New York. Looking ahead, Core PPI prices for Q1 is to be released on Monday. Later in the week, CPI for Q1 is to be released on Wednesday.
• Gold (XAU) prices fell on Friday as U.S investors’ risk appetite returned, seeing long gold positions unwound and put into equities. XAUUSD fell US$12.50 to US$916.80 an ounce.
• Euro – 1.5815
Initial support at 1.5712 (Apr 18 low) followed by 1.5659 (Apr 14 Low). Initial resistance is now located at 1.59858 (Apr 18 high) followed by 1.5983 (Apr 17 trend high).
• Yen – 103.90
Initial support is located at 102.26 (Apr 18 low) followed by 101.71 (Apr 17 low). Initial resistance is now at 104.44 (Apr 18 high) followed by 105.58 (76.4% retracement of the 108.61 to 95.76 decline).
• Pound – 1.9995
Initial support at 1.9882 (Apr 18 low) followed by 1.9692 (Apr 17 low). Initial resistance is now at 2.0000 (50% retracement of the 2.0398 to 1.9601) followed by 2.0048 (Apr 4 high).
• Australian Dollar – 0.9335
Initial support a 0.9250 (Apr 16 low) followed by 0.9206 (Apr 14 low). Initial resistance is now at 0.9403 (Apr 16 high) followed by 0.9473 (Mar 13 high).
• Gold – 918.10
Initial support at 903.40 (Apr 9 low) followed by 873.00 (Apr 1 reaction low). Initial resistance is now at 946.80 (Apr 18 high) followed by 953.00 (Apr 17 high).