Tuesday provided smiles on the face of USD Bull as the greenback rallied towards testing its pre-NFP levels in hurried bargain hunting by the market players. The rally was neither supported by any economic details nor the debt yields responsible for the same and the greenback only witnessed a pullback that could be tepid. The Australian Dollar strengthened after no action by the RBA while the GBP remained upbeat with better than forecast UK Services PMI. Crude oil prices rallied to its February highs on the concern that decline in US Rig counts would provide some relief to the decline in black gold prices. However, the Crude prices again decline on Wednesday as higher US stockpiles by API and the forecast of EIA that Iran nuke deal would cut the Crude prices by $5 to $15, provides Crude bears an advantage to sell.
During early hours of the day, Bank of Japan refrained from altering its current monetary policy, as expected, saying that the drop in inflation and soft manufacturing activities are helping to extend the current monetary measures while there seems lesser needs to alter the same unless the situation worsens further.
For the rest of the day, German factory Orders and Press Conference by the BoJ Governor are likely to provide intermediate flows to the Forex market ahead of the FOMC meeting minutes, scheduled to release during the later part of the day.
As the recent hike in USD was ephemeral a dovish tone in FOMC meeting minutes, as expected, could magnify the greenback losses while improvement in EU releases could support the troubled region even though Greece is on the verge of getting lesser emergency lending than it has demanded.
Even with the US FOMC meeting minutes, published later Wednesday, continued supporting its view of later interest rate hike and support for weaker USD, split amongst the policy makers fuelled the greenback on Wednesday. The US Dollar tested the highest level in a week as influential Federal Reserve officials, New York Fed President William Dudley and Fed Governor Jerome Powell, continue supporting the interest rate hike during the current year; however, the follow-up will be slower than expected. Euro region currency remained lackluster with lesser than expected German Factory order and nearness for the Greece to pay IMF trace continue weakening the regional currency. The GBP, JPY, AUD, NZD and CAD strengthened against its US counterpart during Wednesday even with no economic readings to support while major part of the gains were reversed during later hours of the day.
Thursday becomes an important for the Euro region as Greece is schedule to deliver $450 billion of tranche to IMF, failing which the chances of Grexit strengthen. Moreover, UK Trade Balance, Canadian Building Permits and US Jobless Claims some other details to take care during the day.
As the greenback finally extended its up-move, with bulls supporting the rise, it is expected that this would be stretched till the weekend unless the Jobless Claims disappoints; however, medium-term view still remains weaker until there are sharp positives.
Thursday became another positive day for the Greenback as market players kept supporting the USD advance post FOMC minutes. The US Dollar rallied considerably against majority of its counterparts, except NZD & AUD, and is likely registering considerable weekly gains. The Euro region currency remained negative even after the Greece made its payment to IMF and German numbers remained positive. GBP plunged across the board after the nation’s trade deficit widened to record highs while pessimism at Japan hurt the JPY. Crude oil price remained firm as uncertainty over the Iran output coupled with stronger Dollar and improved German numbers provided mixed cues to the oil market.
On early Friday, the Chinese CPI remained intact at 1.4% while the PPI number registered lesser decline than forecast.
However, there was little reaction from the market players as China is already in the process of fighting the crisis. UK Manufacturing Production and Canadian labor market details are some of the important details that are likely fueling volatility into the forex market for the rest of the day.
Given the USD comeback, even without strong fundamentals, markets could continue favoring the greenback for the rest of the day and result a positive weekly closing unless there are negative remarks into the speech by the FOMC member, Federal Reserve Bank of Richmond President Jeffrey Lacker, during the later hours of the day. Hence, market players should wait for the weekly closing to take any short trades for the greenback.
Even if the recent FOMC remained a big drawback for USD Bulls, minutes of the same meeting, released on Wednesday last week, fuelled USD strength as some of the FOMC members were in support of June interest rate hike. Moreover, the New York Federal Reserve President William Dudley also signaled that the June hike is more expected given the labor market details prints strong numbers again. The greenback gained heavily against majority of its counterparts during last week with US Dollar Index registering first weekly advance in four weeks. The Euro weakened as the uncertainty over the Greece continues to hurt the regional currency. On Saturday, German Newspaper reported that the euro zone officials were shocked at Greece’s failure to outline plans for structural reforms at last week’s talks in Brussels. The GBP also weakened heavily against USD and tested five year low as the weaker-than-expected UK industrial output and concerns about political uncertainty after a British election next month. Traders were more bearish on Euro as speculators’ net short position against the euro remained near record high. Crude Oil prices also extended its Friday gains as speculators’ bets on rising prices of oil rose to four year highs expecting that the US crude production is peaking and there are chances of lesser oil supplies in near future.
During the Monday, the Chinese trade details remained weaker than expected as the exports fell 14.6% last month from a year earlier in yuan value, compared with the median estimate for an 8.2% rise. Imports slid 12.3%, leaving a trade surplus of 18.16 billion yuan ($3 billion). Moreover, the World Bank downgraded growth forecast for the East Asia and Pacific (EAP) region, which includes China, to grow 6.7% in each of 2015 and 2016, down from 6.9% growth in 2014. It also said that the China’s economy is likely to slow to 7.1% in 2015 and 7.0% in 2016, from 7.4% in 2014. The previous forecast was for growth of 7.2% in 2015 and 7.1% in 2016.
With the recent jump in USD, strengthening the greenback against majority of its counterparts, the US CPI, PPI and the Retails, also including the housing market details, scheduled during the week, are likely to become key points to determine near-term USD strength. Should these data points linger to provide support to the USD, the greenback could liquidate its gains. For the rest of the day, there are lesser economic to track except eh NZIER Business Confidence, affecting the GBP, while the global economic calendar is silent and expected to continue hurting the commodity currencies. Moreover, the USD could also witness a decline with the sellers getting higher prices to sell.
Even with no economics to track during the first day of the week, the US Dollar extended its last weekly gains against majority of its counterparts as market players remained optimistic ahead of today’s Retail Sales and PPI readings. The JPY remained a bit stronger across the board as the Bank of Japan, in its minutes for recent monetary policy meeting, said that the benefits of excessive monetary easing have started coming in and there are lesser chances to infuse more. Moreover, Koichi Hamada, a consultant to Shinzo Abe on economic policy said that the JPY has already weakened considerably and now there are chance to see the Yen stronger, near 105 level. The UK Currency gained a bit as polls three weeks ahead of the general election signaled that the rulin party is getting popularity ahead of its rivals. Commodity currencies remained weaker as negative readings from China continue spreading pessimism; however, Chinese GDP and Industrial Production, scheduled for release on early Wednesday, is an important to determine the strength of Dragon economy. Oil prices continue their gains on Monday as The U.S. Energy Information Administration expects U.S. shale production to fall by 45,000 barrels to 4.98 million barrels per day in May from April.
Having witnessed no major changes on Monday, the second day of the week provides important reading to market players for being busy. Amongst them, UK Inflation readings, US PPI and Retail Sales, coupled with US Business Inventories are some of the important readings that could become important to fuel market volatility.
Should the UK Inflation continue maintaining its grounds the GBP could decline again with the considerable weakness; however, a positive reading could extend yesterday’s gains. On the US side, the Retail Sales and PPI are likely to reverse their initial losses and an actual figure matching the forecasts could provide considerable strength to the greenback. Alternatively, a consecutive negative readings could ward-off speculations for near-term interest rate hike and could become derail the recent gains.
With the Retail Sales and the PPI printing lesser than forecast readings, coupled with the downgraded forecast for 2015 & 2016 US growth by the IMF, the US Dollar registered a negative closing majority of its counterparts as market players expected the Fed to wait before hiking the interest rate. At the Euro-zone, The Governing Council decided on Tuesday to increase the cap on emergency cash available for Greek banks by 800 million Euros to 74 billion Euros; however, the Greek and the EU are still on different platforms to get the Greek request of emergency funds releases. Moreover, the UK CPI matched forecast of testing the record low levels but with the failure to weaken the GBP and the JPY remained firm as market players still expect the currency to regain its strength amidst uncertainty over the Greece and middle east, coupled with different views on Fed’s interest rate hike, continue supporting the safe haven demand. Commodity currencies strengthened at a later part of the day as IMF remained unchanged on Chinese economic growth numbers.
During the early part of the day, Chinese GDP growth rose with the weakest pace since 2009 last quarter while Industrial Production and Retails Sales also lag behind their pessimistic forecasts, providing additional weakness to the commodity currencies and the Industrial world. Moreover, the Australian Westpac Consumer Sentiment also plunged more than previous release.
Market players are likely to await monetary policy meetings of BoC and ECB in order to determine market moves for the rest of the day. ECB President is expected to be asked on whether the QE has benefited the economy and by providing the positive clues, as he is famous for, the Euro is likely to benefit post announcements. The BoC is also not expected to alter their current monetary policy and could continue maintaining sideways to negative view for the CAD; however, a surprise rate cut and/or the pessimistic comments by the BoC Governor, in the press conference following the meeting, is likely to become fuel for the CAD volatility.
With the weaker-than-expected Empire State Manufacturing, Industrial Production and Capacity Utilization, the US Dollar registered its second consecutive daily decline on Wednesday as market players assumed soft economics would continue deterring the FOMC from increasing their benchmark interest rate soon. The ECB meeting couldn’t provide much of the Euro strength even if the ECB President, who was interrupted by the protester during press conference, said there are “clear evidence” that the QE working and tempered the cap of September 2016 as an end to the QE saying the inflation should reflect to end the QE. The BoC provided considerable strength to the CAD as the central banker, which did surprise the market in January by cutting down the benchmark interest rate, said that no further “Easings” are imminent. Moreover, the Brent Crude Oil prices rallied to the highest level in 2015 as the drop in US Crude inventories and talks between global oil producers continue fueling the black gold. The GBP, AUD, NZD and the JPY also kept rallying against its US counterparts as rise in commodities fueled ex-US currencies.
During the early part of the day, the Australian labor market details rallied considerably, as Unemployment dropped to 6.1%, testing the January lows, from a revised 6.2% in February while the number of people employed rose 37,700, more than twice the median estimate. Us Building Permits, Jobless Claims, Housing Starts and the Philly Fed Manufacturing
Index are some of the details that are likely to fuel the forex market during the rest of the day.
Should the scheduled US details continue printing softer numbers the USD cold extend its declines and ward off the speculations for early interest rate hike while a strong reading could help the greenback cover its early week losses.
The US Dollar languished for one more day on Thursday after lackluster U.S. economic data blurred near-term interest rate hike expectations. Majority of economists who were supporting the first fed rate hike since 2006 to take place during June are now expecting that weaker economics could hurt the near-term interest rate hike and the Fed could enact the same during last September. Hence, with economics aren’t supporting some of the hawkish FOMC members and is likely to become a drag for the US Dollar. However, today’s CPI release for the month of March could become important information to support the same view. The Euro region currency, even after registering gains against broadly weaker USD, is likely to continue witness fears of Grexit as German Finance Minister continue saying that now it becomes impossible to save the Greece before the April 24 deadline and higher the chances of Grexit appears. However, the Greek PM continued spreading optimism that they will reach to an agreement for getting emergency funds before the deadline. Crude Oil prices reversed its early week gains as OPEC said that its output surged in March by 810,000 barrels per day (bpd), to 30.79 bpd which is equivalent to a third of global supply.
With the Japanese Consumer Confidence testing highest level since August 2014, and the Swiss Retail Sales are on the way, market players could take intermediate moves before the UK labor market details, CPI releases from US and Canada and the US Prelim UoM Consumer Sentiment release provide considerable market volatility.
Following the recent trend of weaker economic details, soft inflation reading could continue restricting the USD up-move and can provide considerable downside while the an improvement could reverse its early week losses. Moreover, the UK labor market details are likely supporting the GBP up-move; however, uncertainty ahead of the general election could restrict the GBP gains. Moreover, the CAD is likely extending its winning streak except the CPI reading prints a pessimistic reading.
Once again lackluster U.S. economics hampered prospects of an early interest rate hike by the Federal Reserve and provided a negative weekly close to the US Dollar Index. The Euro region currency registered its longest winning streak against majority of its counterparts as improvement in economics, coupled with the optimistic tone of the ECB President, Mario Draghi, fuelled the Euro. However, concerns over the Greek bailout terms continue remain sluggish and market players await Friday’s Eurogroup meeting in order to witness the Greece existence into the Euro-zone. ECB President Mario Draghi and the US President Barack Obama said during weekend that the Greek government should do more to resolve their standoff in cash crunch situation. The Chinese Central Bank (PBOC), on Sunday, announced another rate cut into the amount of cash that banks must hold as reserves (RRR) by 1% point effective April 20. That’s the second reduction this year and the most since November 2008. Oil maintained its up-move after the US reduced the number of active rigs to the fewest since November 2010 while the stimulus measures by the world’s largest industrial player, China, also supported the Oil price up-move. Moreover, New Zealand CPI posted the slowest reading in more than 15 years in the first quarter by plunging -0.3% while the yearly figure rose 0.1%, the smallest increase since the third quarter of 1999.
During the early part of the day, UK Rightmove HPI and the Japanese Tertiary Industry Activity m/m lagged behind their consensus while market players are likely to extend last weekly trend in dearth of any important economic details except speeches by the Central Bank Governors of BoC and RBA during the later part of the day.
As US economics continue hurting the USD while there are less damages to the Euro even after Greek problems, chances are higher that the Euro could rally during the later of the week on the EU agreement over the Greek cash release. However, a failure to agree on the Greek demand would become serious threat to the Euro-zone and to the Euro as well. With no major US economics during the rest of the week, market players are advised not to put their longs on USD except these numbers, namely Durable Goods Orders and housing market details provide beneficial details.
Monday provided a smile on the face of USD trades as comments from the New York Fed President, William C. Dudley, signaled that the recent weakness in US growth is less likely to prevail in the longer-term and the economy will grow in better way, supporting the Fed to hike interest rate during later part of the day. However, the FOMC member denied chances of an interest rate hike during its upcoming meeting. Moreover, the RBA, in its monetary policy meeting, released on Tuesday, said that the economy hasn’t revealed any reactions of its stimulus measures and is restricting the central banker from announcing anything else in near-term. Moreover, the minutes also said that even after the recent improvements, the AUD isn’t likely to strengthen further. Speech from the BoC Governor also signaled that their January cut was appropriate and there are brighter spots into the economy to strengthen further; however, the news failed to support the CAD.
Having seen the RBA meeting minutes during the early part of the day, ZEW Economic Sentiments for Germany and Euro-zone as a whole are likely to become attention centers before the Canadian wholesale sales release during the later part of the day.
Even though, the comments of the FOMC members rejuvenated the USD, the greenback is less likely to sustain the strength unless any strong economic detail and hence it would be better to wait for the positive readings before supporting the long on USD.
The Greenback, US Dollar, posted one more positive daily close on Tuesday even in the absence of major economic releases as market players kept unwinding last week’s shorts ahead of today’s Existing Home Sales. Euro remained weaker as worries about the Greek default continue weighing down the currency while the Australian Dollar remained weaker with the RBA meeting hurting the Aussie. Moreover, the CAD witnessed a bit of negatives as Wholesale Sales plunged to negative 0.4% against the expectations of 0.5% increase while the forecast by Canada’s federal government to post a weaker budget surplus provided additional declines to the Loonie. Crude oil prices decline on Tuesday after Saudi Arabia’s announcement that it would end its three-week operation against Iran-allied Houthi rebels in Yemen again pressed concerns for increased oil supply.
During the early part of the day, Inflation readings from the Australia matched forecasts and signaled that the RBA could cut down their interest rate during its May meeting as official were waiting for the figure to witness effects of its Feb interest rate cut. The yearly figure of the inflation dipped to 1.3% while is lesser than the central bank’s target range of 2 to 3%. Moreover, the Japanese Trade Balance printed the highest number since April 2011.
BoE Meeting minutes and the US Existing Home Sales are the rest figures that could provide fuel to the Forex market. However, it is expected that the US detail could observe its lower than forecast trend and may hurt the greenback in reversing its early week gains.
Better than expected HPI and the Existing Home Sales number helped US Dollar Index register one more positive day on Wednesday while the Euro region currency remained in trouble ahead of crucial Eurogroup meet on Friday. The JPY liquidated some of its gains as strong USD curbed safe haven demand of the Japanese currency. New Zealand Dollar declined heavily as Reserve Bank of New Zealand Assistant Governor John McDermott said monetary policy will remain stimulatory while the AUD remained a bit supported with better than expected CPI numbers. The GBP rallied considerable after the BoE meeting kept supporting the current monetary policy and the CAD strengthened with no major news.
During the early part of the day, Chinese HSBC Flash Manufacturing PMI plunged to the lowest level in nearly a year by testing 49.2 mark while Japan’s PMI slid to 49.7 from 50.3 in April. Hence, the AUD, NZD, CAD and JPY are trading weaker since the start of the day. Further, comments from the BoJ Governor, during early Thursday, signaled that the central bankers is likely to continue supporting existing policy and expects the inflation to meet 2.0% target in fiscal 2015. Moreover, Swiss Trade Balance printed better than expected reading while the GfK German Consumer Climate climbed to record highs.
As market turned negative to the commodities and focus is shifted back to the USD and EUR, higher chances support continuation of USD gains as EUR could continue weighing down with Grexit on the cards. However, weaker flash manufacturing PMI and New Home Sales could provide considerable damages to the Greenback. Moreover, the UK Retails Sales and Flash PMIs for Manufacturing & Service sectors from EU are some other important details to take care during the rest of the day.
Thursday became a nightmare for USD traders as larger-than-expected 11.4% plunge in new home sales, coupled with disappointing Manufacturing PMI and higher Jobless Claims, fuelled concerns that the US economy isn’t strong enough to enact interest rate hike in near future. However, the Nasdaq rallied to its seven year highs amidst better than expected earnings reports. The Euro region currency strengthened across the board as German Chancellor, Angela Merkel, who was against Greece emergency austerity demand, signaled readiness to do everything it takes to support the Greek existence into the Euro-zone. Moreover, Greek Prime Minister, Alexis Tsipras, also spread optimism of reaching a deal with the country’s creditors sighting significant progress in negotiations. Dovish comments from RBNZ kept hurting the NZD while weaker Chinese details kept pulling the AUD gains. Oil prices rallied again on Thursday as Saudi Arabia and its allies continued bombing missions in Yemen fueling Geo-political tensions again. One more important thing was the SNB move to take another measure of strengthening CHF by cutting down the number of accounts from no charges list. Hence, additional accounts need to pay charges for their funds into the SNB.
With BoJ Governor signaling strength of the Japanese economy and strong chances of the inflation to test central banker’s target, the JPY strengthened after the news. Today’s market is largely affected by the Eurogroup meeting and any discrepancies between the EU and Greece could become detrimental for the Euro. Moreover, US Durable Goods Orders, German Ifo Business Climate Index, and speeches by the heads of BoC and SNB could provide intermediate liquidity to the Forex market.
Even if the US Durable Goods Orders rallied to highest since August 2014, the Core reading declined for second consecutive month, and for fifth time in last six month, fuelling concerns that the Fed would stay away from signaling rate hike timings in its meeting on April 29. Pessimist run of economic details continue hurting the US Dollar Index for consecutive second week that registered lowest weekly close since late March. Euro region currency, even after witnessing another failed talks between the EU and Greece to avail emergency funds, registered positive weekly close against majority of its counterparts as improvements into the economic readings kept supporting the regional currency. The GBP also weakened during last week with Retail Sales plunging to the lowest level since June 2014 while the commodity currencies gained with Chinese stimulus, rise in commodity price and some positive data points.
With absence of major economic readings on Monday, except UK CBI Industrial Order Expectations and US Flash Services PMI, this week’s economic calendar is full of important readings that could fuel the forex market in a considerable way. Amongst them, monetary policy meetings of BoJ, FOMC and the RBNZ, GDP readings from US & UK, Euro-zone Flash CPI and Manufacturing PMIs from UK & China are some of the crucial releases that are likely making traders busy during the week.
As recent flow of economic numbers continues hurting the USD, chances are higher that Fed would avoid signaling interest rate hike; however, absence of press conference after the FOMC could dilute the importance of the meeting. However, RBNZ and BoJ are likely to provide considerable information to fuel NZD & JPY respectively. It would be in the best interest of the market players to avoid having positions in USD unless there are some strong data points trigger greenback reversal.
The US Dollar witnessed another negative day on Monday as market players increased bets that the Federal Reserve isn’t likely to shore their benchmark interest rate earlier than September. Moreover, expectations concerning the Q1 215 Advanced GDP number also support pessimism and as recent down-ticks into headline numbers could pullback the GDP growth. The Euro remained on a positive side as troubled nation, Greece, reshuffled its negotiating team that talks with international creditors, raising hopes for the solution for the cash strapped economy. The JPY liquidated some of its gains as Fitch downgraded Japan’s credit rating by one notch to A; however, this move was largely expected and market players’ gave only a knee-jerk reaction to the news. The Crude Oil prices declined on Saudi Arabia’s comments that it would hike its crude supplies to China, if needed; moreover, expected hike in US Crude Oil supplies cold also provide additional weakness to the black gold backed by supply glut. The AUD remained on the higher side with rest of the commodity currencies as RBA Governor, Glenn Stevens, said he would not comment on monetary policy ahead of the meeting scheduled for May 05. Market players are largely divided over the chances of whether the central bank will cut the interest rate or not.
Having witnessed record plunge in Japanese Retail Sales during early part of the day, preliminary reading of UK GDP, speech by the BoC Governor, New Zealand Trade Balance and the US CB Consumer Confidence, are some of the crucial details that could continue fueling forex market for the rest of the day.
As market players await two-day monetary policy of Fed, in addition to US GDP number, higher chances support continued USD weakness; however, optimistic forecasts of US Consumer Confidence could retrace some of the recent losses by the greenback. Moreover, alteration in Greek negotiating team supports chances that the Greek will be able to acquire needed emergency lending ahead of its next meeting with May 11, a day earlier than the Greece needs to pay another tranche to IMF.
Tuesday was one-more bad day for USD bulls as on-going decline in greenback, ahead of the crucial GDP & FOMC, kept magnified with four month low CB Consumer Confidence print, throwing away possibilities for an interest rate hike sooner than later this year. The Euro region currency remained on the positive side as Greek PM said he is optimistic for the EU-Greek deal to take place after next two week’s meeting while there was mixed repercussions for the UK GDP which rose at the slowest pace since April 2013. Moreover, the AUD, NZD and CAD rallied considerably with better economic readings. The oil prices declined even as the Saudi Arabia shuffled some of its top positions in oil economy due to overall supply glut continue hurting the black gold.
During the early part of the day, New Zealand’s ANZ Business Confidence plunged to the lowest level in five months while comments from the Goldman Sachs that the Australia might lose its status of AAA credit gained from S&P, held for last 10 years, as government finances signal weakness. Today becomes an important day when the US FOMC and the Advance reading of Q1 2015 GDP is likely to flourish the economic calendar while the RBNZ will also play an important role to help determine near-term NZD moves.
Given the weakness in headline US economic readings, FOMC isn’t expected to utter optimistic words, needless to say the monetary tightening; however, a positive GDP reading could become a fuel for the USD to recover some of its recent losses otherwise the USD is likely to extend its downturn.
During the BIG day for Forex market, that carried FOMC, USD GDP and RBNZ, the US Dollar maintained its extensive declines against majority of its counterparts as the Advance reading of Q1 2015 GDP rallied with the slowest pace in a year to 0.2% against the 2.2% noted in Q4 2014 and 1.0% expectation. Moreover, the FOMC also signaled on-going limitations that the world’s largest economy but said to overcome the barriers to hike interest rate in near-term. The RBNZ remained a bit of dovish as the central bankers refrained from altering their benchmark interest rate and said lower dairy incomes, lingering effects of drought, fiscal consolidation, and the high exchange rate are weighing on the outlook for growth. Greece took another leap in acquiring emergency funds as the country prepared a new list of reforms and the European Central Bank provided more support to the troubled banks.
During the early part of the day, Bank of Japan also refrained from altering their current monetary policy while market players await the banker’s economic outlook and the press conference by the BoJ Governor. Going forward, EU Flash CPI, German Unemployment Change, Spanish Flash GDP & CPI, Canadian GDP and the US Jobless Claims are some of the important details that could fuel forex market during the rest of the trading-day.
Even if the US GDP number plunged to the lowest in a year and the FOMC cited weakness, the statement was a bit hawkish and chances of June rate hike can’t be denied. Hence, inflow of better economics could provide sharp pullback in USD while weaker readings are less likely to provide much of the greenback declines unless being drastically passive. Moreover, progress at Greece and inflow of positive economics from EU could also help the Euro to extend its gains; however, Greece could provide damages to the regional currency. The commodity currencies are likely to remain in pressure with no more cues and pessimism on China.
After not so hawkish FOMC and weaker GDP reading, US personal income stalled in March and spending grew lesser than the forecast while the jobless claims decreased to the lowest level in 15 years. Weaker economics continue hurting the greenback on Thursday and supported to register heavy declines during the month of April. In other releases from US, concerning labor market, Private Wages and employment cost index printed better numbers, signaling improvement in US labor markets; however, being not the headline numbers failed to support the USD. The Euro region currency traded near two month highs against USD & JPY as fears of deflation started fading after the latest reading, the regional currency registered biggest monthly gain in 4.5 years against USD during April as ECB’s QE seems supporting the some upheaval into the troubled economy. The commodity currencies pared some gains as speculations concerning further rate cuts by the RBA & RBNZ coupled with weaker Crude prices hurt their demand. The GBP remained a bit in tension ahead of general election next week as opinion polls continue supporting dearth of clear majority.
During the early part of the day, China’s factories stayed stuck in the slow lane in April while Japanese output went into reverse, providing weakness to AUD, NZD, CAD and JPY. The Australian PPI, even after printing better numbers, couldn’t help the AUD. For the rest of the day, UK Manufacturing PMI and the US ISM Manufacturing PMI are likely to provide volatility to the forex market while majority of the EU markets will remain closed due to labor-day holiday.
With the renewed concerns for the RBA to cut down their benchmark interest rates on May 05 meeting, AUDUSD is likely to heavily pulled-back from the 0.8000 level; however, failure to practice the same could fuel the pair towards surpassing 0.8200 mark in a quick rally. The USD is likely to reverse its monthly losses during the early part of the day when the labor market details are likely to signal some improvement while the EU could be constrained with the Greece talks.
For the day, GBPUSD is likely reversing from 1.5330 horizontal market should the UK PMI supports the up-move while EURUSD is more likely witness a pull towards 1.1110 as it failed to break the 1.1250 horizontal resistance. NZDUSD could re-test 0.7530 horizontal mark while the AUDUSD is likely re-testing 0.7830 levels.
Even if the positive comments from two Fed officials, namely John Williams, chief of the San Francisco Fed and a voting member of the FOMC and Cleveland Fed President Loretta Mester, who doesn’t vote this year, strengthened US Dollar during Friday, the greenback remained broadly on a negative side against majority of its counterparts as dismal economics continue dragging the currency. The US Dollar Index (I.USDX) registered its third consecutive weekly decline while the EURUSD secured highest gains in seven weeks as market players expects ECB’s QE is paying out the troubled region. On a monthly basis, the Euro, gained for the first time in nine months and gained with the largest share against USD since September 2010. The Aussie remained in a weaker zone with NZD as talks about the RBA’s interest rate cut pressured market players to liquidate these antipodean currencies. Moreover, the JPY also weakened heavily during last week with the Bank of Japan continue becoming dovish and signals a late reach to the target inflation. Moreover, the GBP also weakened with less than forecast GDP Manufacturing PMI pulling back the UK currency ahead of the general election, during this weekend, which signals no clear majority of the constants and support political uncertainty. The Oil prices were lackluster during weekend as U.S. drillers reduced the number of active rigs for the twenty first week, as per data from Baker Hughes Inc. However, Iraq increased exports in April to the most in three decades, according to an Oil Ministry spokesman Iraq in the OPEC updates. The troubled region, Greece, continued supporting the optimism that the country is near to solve its standoff with international creditors ahead of its May 11 meeting.
During the early part of the Monday, the Australian Building Approvals erased its previous decline with 2.8% gain while the Final reading of Chinese HSBC Manufacturing PMI fell to the lowest in a year by trailing economic forecast of 49.4 and prior 49.2. Manufacturing PMIs from the European nations, coupled with the US Factory Orders are some of the details that market players are likely to concentrate during the rest of the day.
Given the recent downturn in US economics, expectations of interest rate hike have already vanished, hurting the USD, while this week’s NFP will become important for the forex market players to determine the strength US labor market and the chances of the early interest rate hike. Moreover, the RBA has already signaled that the central bank is likely going for the rate cut in its meeting on Tuesday after failing to alter the current interest rate during its early April meeting. Should these things settle and the RBA cut its interest rate, together with weaker China, the AUD could plunge against majority of its counterparts.
With the Reserve bank of Australia (RBA) meeting market consensus of cutting down their benchmark interest rate to record low of 2.0%, economically packed Tuesday started with heavy volatility. The AUD strengthened after the release, signaling the news has already been priced. Moreover, the updated quarterly economic forecasts will be released Friday, which the board members would have already seen at today’s policy meeting. The US Dollar gained for the Monday as US Factory orders rallied by 2.1% gains, matching expectations; however, the Orders excluding transportation were flat in March and fails to provide considerable support to the FOMC to reveal better prospects of interest rate hike. Manufacturing PMIs from Germany, Italy and Euro-zone surpassed expectations but the regional currency remained weaker as market players kept supporting chances of Grexit ahead of May 11 meeting.
During the fully packed economic day, there are many releases, like UK Construction PMI, EU Economic Forecast, New Zealand labor market details, Trade Balance from US and Canada and US ISM-Non Manufacturing PMI, which could help making traders’ schedule more busy during the day.
As the AUD has moved according to the Rate cut, chances are higher that it would liquidate today’s gains during its labor market details, scheduled for Thursday. For the time being, it is expected out of a trader not to approach the Aussie. Moreover, the USD could continue extending its yesterday’s gains ahead of economic numbers but is advisable to trade with cautions as the details aren’t supporting too much optimism for the greenback.