On Tuesday, US Dollar gained during early trading sessions but drifted lower during the later part of the day, with trade deficit rallying in March to its highest level since May 2012 and summed the day in a red zone even with the ISM Non-Manufacturing PMI unexpectedly rallied to the five month high. The Federal Reserve should not raise interest rates until at least next year, Minneapolis Federal Reserve Bank President Narayana Kocherlakota said on Tuesday and provided additional weakness to the Greenback. The Euro gained considerably as the EU economic forecast, published thrice in a year, signaled 1.5% growth for the euro-zone in 2015, up 0.2 percentage point from the previous forecast in February. However, pessimism surrounding Greece talks continue weighing the regional currency as Greece government kept blaming its international creditors for delaying the emergency funds. Wednesday’s ECB Governing Council meeting in Frankfurt becomes an attention of the market as it will discuss emergency funding for Greek lenders ahead of May 11 meeting between the Greece and its international creditors. Moreover, Canadian Dollar gained considerable even with higher than expected Trade Deficit as Crude prices rallied to 2015 highs on supply concerns from Libya and weaker USD spurred crude demand while the New Zealand Dollar declined with the Employment rose 0.7%, or by 16,000 jobs, in Q1 2015 after a 1.2% gain in the previous quarter. The jobless rate was unchanged at 5.8% against the expectations of printing 5.5% reading.
During the early part of the day, Australian Retail Sales grew at a least pace, 0.3%, in three months while the HSBC Services PMI for China missed the forecast but remained ahead of its previous release to print four month high. UK Services PMI, EU Retail Sales, US ADP and speech by the Fed Chair and the Canadian Ivey PMI readings are likely to create headlines for the rest of the day.
As the USD again started drifting lower, with negative comments from FOMC and weaker Trade Deficit supporting later Fed rate hike, today’s speech from the Fed Chair, coupled with the ADP reading, become critical to determine USD moves ahead of Friday’s NFP while GBP could print gain numbers give the growth of Services PMI; however, tomorrow’s General Election will be crucial to determine the near-term moves of the GBP.
The US Dollar kept trading water during its Wednesday trading sessions as weaker than expected ADP number, coupled with weaker Prelim Nonfarm Productivity q/q. Moreover, comments by the Fed Chair, at the Institute for Economic Thinking conference on Finance and Society, that the equity is overvalued. The Euro region currency remained upbeat after the German and Euro region bond yields rallied after Services PMIs beat estimations. The ECB Meeting, to discuss the Greece haircuts, remained dependant on the final verdict of May 11 talks between the Greece and the International creditors. The GBP languished ahead of its General election as none of the major parties are expected to gain clear victory and the coalition party is likely to hurt the UK growth. Oil prices reversed its Wednesday’s gains, that fuelled the Crude prices, as an OPEC spokesman signaled that the group won’t alter its output in next month’s meeting and higher prices lured investors to book some profits.
The Australian labor market details, published early in the morning, lagged behind market expectations and pulled back recent AUD gains. The Employment Change fell by 2,900 from a month earlier, compared with forecasts for a 4,000 gain while the jobless rate rose to 6.2% from 6.1%. With no major releases, except Canadian Building Permits, market players are likely to concentrate more on the UK election releases. Should any of the parties fail to get considerable majority, during its result announcement on Friday the GBP could decline considerable while the re-election of the current party could become a strong positive for the UK currency. Moreover, the USD is likely to trade sideways with Jobless Claims reading and will await tomorrow’s labor market numbers.
With fewer than expected Jobless Claims, the US Dollar registered its first daily positive close on Thursday as market players expected the Friday’s NFP could also surpass the expectations and will reveal US job market strength. However, the show stealer was the GBP that rallied the most since 2009 as the U.K. Conservative Party, the ruling party, seems again gaining the UK parliament as majority of the results (around 80%) announced till now supports the same. The AUD weakened against majority of its counterparts as weaker Chinese Trade Balance and the downgraded growth forecast by the RBA, in its monetary policy statement released today, signaled more room for the RBA to further ease their monetary policy even if they cut their benchmark interest rate in Tuesday’s meeting. The Euro region currency also weakened against majority of its counterparts as Greek FinMin said that the country is likely to get its emergency funds soon; however, it is difficult to say that the May 11 will be final talks to get it. Crude prices extended its decline and hurt the CAD as well. Moreover, the NZD extended its losses, triggered by Wednesday’s weaker labor market details, while the CHF, which gained heavily, lost some of its grounds during later part of the trading day as profit booking and the strength of USD spurred CHF bears.
With the UK election results announcements keep making market players on edge, the US NFP is surely going to fuel considerable liquidity into the forex market. However, it should be noted that it is better not to trade during the day as wild swings may end-up eating the account balance. Though, the Euro could extend its decline while the USD and the GBP are likely contestants for the bulls.
Even with the US labor market details printed welcome numbers, by NFP showing 223K and the Unemployment testing near seven year lows of 5.4%, the US Dollar couldn’t register a weekly advance as the March figure for the NFP was revised down considerably and the wage growth was also softer than expected. The Euro region currency remained in trouble ahead of the crucial debt talks between the Greece and its international creditors, on Monday, as majority of the policy makers expects another failed attempt to help the troubled economy. The GBP remained quite upbeat as the ruling UK party won the 2015 general election, supporting the existing policy framework to boost GBP. The NZD remained a bit lower with expectations supporting dovish comments by the RBNZ Governor in bi-annually Financial Stability Report. Moreover, the Chinese central bank provided another push to its lose monetary policy on Sunday, third time in a year, by reduced cutting down the benchmark one-year lending and deposit rates by 0.25% to 5.1% and 2.25% respectively.
With the Eurogroup meeting taking the center stage of the today’s market, the BoE is less likely to have an effect and there are likely chances that the US D could recover a bit during post announcement of expected fall in the discussion. However, critical announcements from UK, Quarterly inflation report, labor market details and Manufactruing production are some of the details that could help determine near-term GBP moves and are likely to become key events of the week.
Even with no major releases from US, the US Dollar stretched its weekend gains on Monday and the greenback closed again in a positive region as a stalled deal talks between the Greece and its international creditors is pushing the market players to liquidate their EUR longs. The regional currency traded near a week’s low against USD on the same fears; however, optimistic expectations from the Flash GDP reading for Q1 2015, scheduled to publish on Wednesday, could become a strong push to the EUR buying. The GBP rallied considerably, marking fresh 2015 high again USD, as optimism surrounded after the UK election kept fueling the currency against majority of its counterparts. The NZD was a worst hit, tested two month low and registering the largest one-day decline since late 2011, as speculations mounted that the RBNZ would hint a rate cut in its Financial Stability Report, scheduled for release during the later part of the day. Moreover, the AUD and the JPY were also weaker against majority of its counterparts while the CAD traded weaker crude oil prices as a reason to register a decline.
With the on-going Greek talks, market players are likely to keep supporting the EUR bears while there are other events, namely UK Manufacturing Production, Australian Annual Budget and the RBNZ Financial Stability Report, that could provide considerable volatility into the Forex market.
Although, the Greek talks continue progress in desired direction, chances are higher that the Greece will fail to acquire its emergency funds at the end of the meeting. Moreover, it has already paid its scheduled tranche to the IMF but concerns about the run out of liquidity could continue supporting the Euro weakness. The USD is less likely to extend its rally once the economics start flooding in while the GBP becomes a good contestant for buying ahead of tomorrow’s QIR release. AUD and NZD could recover a bit of their losses on the back of short covering while the JPY is less likely weaken further and would continue observing its 120.80 as a strong resistance.
The US Dollar liquidated some of its gains on Tuesday as dearth of economics continued luring market players to sell the USD. The GBP was a clear winner of the day after its Industrial output climbed the most since six months in March and the Manufacturing Production beat expectations. The Euro region currency remained lackluster as talks between Greece and its international credits seems going nowhere. Moreover, the NZD climbed heavily after the bi-annually RBNZ announcement that avoid spelling anything relating to interest rate cut or hike and asked for some time to analyze the economy. Moreover, the central bank mentioned measures to control Auckland’s housing market. The Chinese Industrial Production printed 5.9%, better than previous 5.6% release while lagging behind the expectations of 6.1% and helped AUD to gain a bit recently while CAD kept witnessing gains due to improvements in Crude prices. Also, the JPY gained with current account surplus rallying to seven years high.
Having witnessed Japanese Current Account and Chinese Industrial Production during the early part of the day, crucial economic details from Europe and UK are likely to keep fueling the global forex market. Amongst them, Flash version of German and EU GDP, UK Labor market details and the Quarterly Inflation Report by the BoE, also the US Retail Sales are likely to become headlines of the day.
As important headline numbers are scheduled to present considerable forex market volatility, it would be better not to trade during the announcements; however, the GBP is likely to extend its gain should the BoE spells positive words and the labor market details spreads optimism. Moreover, the EU GDP and US Retail Sales are likely to become important to foresee EURUSD moves, mostly the EU is expected to extend its advance after the GDP release while the recent pattern of lower than forecast US readings could hurt the USD.
With the US Retail Sales posting 0.0% figures, expectations concerning the strong growth number for Q2 2015 witnessed disappointment, pulling back the US Dollar index towards testing three month low. The Euro region currency witnessed mixed reaction to its highest GDP growth rate since May 2011, at 0.4%, as the German figure weakened. Moreover, the stalled talks between the Greece and its international creditors, that are to re-start today, also dragged the gains by regional currency. The GBP extended its considerable upside even after the BoE cut its growth forecasts and signaled less support for the interest rate hike this year, as the labor market details revealed considerable strength in the UK job world. The JPY remained a bit of strong with uncertainty over the Fed interest rate hike and the Greece continued supporting safe haven demand. Moreover, the antipodean currencies, namely AUD and NZD, were also amongst the big gainers of the day as hawkish tone of RBNZ, coupled with record high New-Zealand Retail Sales since May 2007, and improved Chinese numbers kept supporting these currencies’ up-move.
Having witnessed the busy day yesterday, that fueled GBP, AUD and NZD, economic calendar is on the silent mode today with only US PPI & Jobless Claims being the indicators to release while Switzerland and Europe is on bank holiday.
As there are no other releases, chances are higher that the USD could trim some of its recent losses should the scheduled details prove to be of good sign; however, consecutive weakness into the details could reflect larger magnitude of decline for the USD.
Although, the weekly Jobless Claims remained near 15-year low, with the four week average weekly jobless claims testing the lowest level since the year 2000, the US dollar traded water as the PPI reading again plunged to the negative for the fifth time in last six reading. The Euro region currency remained on a bit upside as the ECB President, Mario Draghi, in a speech in Washington, said to continue supporting QE and that the efforts have started gaining considerable economic improvements. The GBP also extended its rally with no major releases while the JPY liquidated some of its gains during the early Friday as the BoJ Governor continued supporting lose monetary policy and said to do whatever it takes to reach 2.0% Inflation target by 2017. Antipodean currencies, namely AUD and NZD, remained a bit lower during later day trading on Thursday and on Friday as well as market players kept liquidating buying bets with no major economics. The Gold rallied to three month high and is on the way to register biggest weekly gains in four months as weaker USD kept supporting safe havne demand of the yellow metals.
With the speech by BoJ Governor already out during the early part of the day, Manufacturing details from US and Canada coupled with the Preliminary reading of UoM Consumer Sentiment are likely to fuel volatility into the forex market.
Having witnessed considerable declines during the current week, the USD is likely to witness a positive closing on Friday; however, should the economic details continue printing weaker readings, the greenback can’t be saved from witnessing weaker trading.
With raft of weaker economic indicators, started with lesser than expected Retail Sales and stretched towards the consecutive fifth weaker industrial production and the seven month low of consumer confidence, dragged the US Dollar down for one more time during last week. Moreover, better than previous GDP reading from Euro-zone helped market players neglect another failed talks between the Greece and its international creditors while improvement in UK labor market readings helped push the GBP higher against majority of its counterparts. The commodity basket was also on the positive side with weaker USD while uncertainty relating to Greek deal and Fed’s interest rate hike kept supporting the JPY. Crude Price was higher as tensions in Iraq and Yemen continued progressing and signaling serious threat to the crude supply.
During the current week, there are many important readings, meeting minutes by the FOMC and the monetary policy meeting by the BoJ, are the most important while today’s Swiss Retail Sales, US NAHB Housing Market Index and the New-Zealand PPI are some of the important details to take care of for the rest of the Monday.
With the on-going raft of USD weakness, backed by weaker economic details, it would have been prudent to avoid supporting the greenback bulls while it would be better to support GBP buying.
Even with continuous flow of weaker than expected US economics, this time with NAHB Housing Market Index on Monday, the US Dollar registered considerable gains as US Bond yields rallied on the hope extensive loose monetary policy. The Euro region currency remained a bit lower against majority of its counterparts after fears emanating from failed talks between Greece and its international creditors continue supporting the chances of Grexit. Moreover, the IMF also said that there are lesser chances that Greece will be able to pay its June 05 tranche and won’t be allowed further help unless submitting the same. Moreover, the weakness in New-Zealand PPI, published on Monday, was erased after the RBNZ Inflation expectations supported the hint for no further interest rate cut as The expected rate of inflation two years ahead rose to 1.85% from 1.8% three months ago while the year-ahead expectation rose to 1.32% from 1.11%. The NZD positively reacted to the news and strengthened against majority of its counterparts. The AUD, remained weaker as minutes of its recent RBA meeting signaled that there isn’t any cap that could restrict the central bank from further cutting down the interest rates should the economy weakens further. Moreover, it also said that pessimistic Chinese outlook, mainly the housing sector, forces the AUD to be lower in order to sustain the growth.
With the Australian and New-Zealand releases infusing liquidity into the forex market during early hours of trading, UK CPI, German & Euro-zone ZEW Economic Sentiment, EU Final CPI, US Building Permits and housing Starts and the speech by the BoC Governor could continue making forex traders busy for the rest of the day.
Although, the USD witnessed a pullback on Monday, smaller are the chances that it’ll continue its up-move unless the housing market details print a welcome number, which is least expected. Moreover, the EUR is likely to remain sideways while GBP could gain a bit more if the Inflation reading expands further and the NZD could retrace some of its early gains.
Comments from the ECB policy makers, namely, Christian Noyer and Benoit Coeure, to fasten its 1 trillion euro QE over the next two months yesterday provided considerable weakness to the regional currency. The same worked like a fuel for the USD to rally the most in two month against EUR and register considerable across the board gains. The GBP also plunged with the negative CPI number while JPY weakened heavily as comments BoJ members kept supporting the loose monetary policy. The Greece talks provided additional damages to the EUR German Chancellor warned Greece to solve their issues during final meeting this week, the ECB will discuss Greek bank aid on Wednesday. Adding to the USD strength was eight year high Housing Starts and higher than forecast Building permits. The Crude oil prices also declined heavily on Tuesday as fears emanating from extra supply via US and Iraq continue hurting the energy market; however, with the rally in Japanese GDP and the Australian Westpac Consumer Sentiment, the black gold reversed its declines on early Wednesday.
During the early part of the day, preliminary reading of Japanese Q1 2015 GDP expanded for the second consecutive quarter by printing 2.4% yoy gains against the 1.6% growth registered in the previous quarter. However, adjusting to inflation, the GDP numbers isn’t that positive and hurts the JPY. As per the Australian Westpac Consumer Sentiment Index, the Aussies were most confident in 16 months after the central bank cut interest rates and the government announced a A$10 billion ($7.9 billion) boost for families and small businesses.
Considerable gains in USD almost changed the greenback outlook and market players are now looking for the FOMC meeting minutes, scheduled for release later today, in order to determine near-term USD moves. The meeting resulted in a dovish tone by marking slow growth hindering interest rate hike. Moreover, Canadian wholesale sales and the BoE meeting minutes are some other details that may make the market players busy during the day.
As the greenback rallied considerably on yesterday, everybody have started putting their bets on USD long but one should be cautious enough as the headline economics are still more on the negative side and it would be better to consider this opportunity as only a small cashing out incidence unless strong numbers run consecutively.
Even with the FOMC minutes dashed expectations of interest rate hike in June, the US Dollar managed to close a day into positive region as the possibilities of the June hike were already negated and the hawkish tone of policy makers to witness a growth revival during Q2 supported the greenback. Moreover, fears emanating from Greece continue weigh down the Euro. During early Thursday, a spokes person from ruling party of Greece said that the nation won’t be able to pay next IMF payment, due on June 05, if the emergency aid isn’t available soon. The Crude prices remained a bit upside as US crude stocks declined for third consecutive week supporting the CAD gains. Moreover, the UK currency remained strong against majority of its counterparts as minutes of recent BoE meeting kept supporting the hawks.
Thursday is another important day for the forex market that has many manufacturing details that started with Chinese HSBC Flash Manufacturing PMI, that legged behind 49.3 consensus by registering decline for the third consecutive month to 49.1. Moreover, the Japanese Flash Manufacturing PMI surpassed expectations and rallied to 50.9 mark and supported the JPY.
Even after the yesterday’s gains, the USD started losing a bit of strength during early part of the day and it would benefit traders to avoid buying USD unless the US Existing Home Sales, Flash Manufacturing PMI and the Philly Fed Manufacturing Index register considerable gains. Moreover, Manufacturing and Services PMIs from the Euro-zone, coupled with the UK Retail Sales & US Jobless Claims, are some of the important details that could maintain the forex market liquidity.
On Thursday, weaker-than-expected existing home sales, manufacturing details and a four month high Jobless Claims pulled back the US Dollar gains against majority of its counterparts. The Euro region currency also sagged due to mixed PMI details and fears from Greece while the GBP gained considerably after UK Retail Sales grew by the most in five months. JPY was also strong ahead of the BoJ meeting that supports optimism built into the policy makers. The Crude prices remained sideways while the antipodean currencies strengthened across the board.
During the early part of the day, the Bank of Japan refrained from altering their current monetary policy as the Governor expects the recent growth pick-up will continue. Market players will now await press conference by the BoJ Governor, in addition to the speeches by the heads of ECB, BoE and Fed, scheduled during the later part of the day. Moreover, final reading of German GDP and Ifo Business Climate, CPI numbers from US & Canada, coupled with the Canadian Retail Sales, are likely to make the Friday a busy-day.
As Monday will be a holiday for major global markets, it would be in the best interest of the market players not to let their trade positions open during the weekend. Moreover, chances are higher that the USD could liquidate some more gains during the rest of the treading-day.
With better than expected Building permits and Housing Stat triggering US Dollar up-move during early days of last week, the greenback index (I.USDX) closed the week at the highest level in three weeks as core CPI rallied by the highest levels since January 2013.Moreover, hawkish of the Fed Chair, in her speech in Providence, Rhode Island, said that the economy has already started gaining expected benefits and the interest rate hike could be by this year if the current recovery meets forecast. She also said that the labor market is almost fully recovered and there are chances of growth and inflation numbers to follow the trend soon. The Euro region currency remained weaker as Greece against failed to convince its international creditors and it said running out of cash to pay monthly salaries and pensions by May 29 and repay about 300 million euros ($330 million) to the IMF a week later. The GBP also remained weaker with the negative CPI hurting central bankers’ optimistic expectations while the antipodean currencies shed heavy weights even with better numbers as weaker economics from China kept hurting their economic outlook. The JPY, even after registering strong growth numbers, remained weaker as easing uncertainty for the US Fed rate hike curbed safe haven demand of the JPY; moreover, technical break of 121 fueled the USDJPY bulls.
Even as UK and U.S. markets are shut on Monday, for the Spring Bank Holiday and Memorial Day respectively, in addition to the German close due to Whit Monday holiday, the Japanese Trade Balance, that signaled exports surpassed the important for the second time since three years, provided some sort of JPY strength. During the rest of the day, New Zealand Trade Balance, will entertain the market players.
As there are no more economic details, and the USD is on its fully charged mode, chances are higher to witness considerable volatility with some small players taking control of the later day trading of the forex market. Moreover, it is advisable not to trade during the day, in support of USD as it has already breached the support levels against majority of its counterparts and its likely to witness a bit, or probably considerable reversal, due to holiday trading.
During the holiday thinned Monday trading, with majority of US, EU & UK markets observing closes, the US Dollar extended its Friday gains due to market players kept supporting the Fed Chair’s comment, on Friday, to expect interest rate hike during the current year. However, the Fed Vice Chairman, Stanley Fischer, said on Monday that the Fed rate hike isn’t stipulated by date it will be driven by the data and a hike is the most crucial place to take as reversing the hike in future will be difficult and hence the Fed will be cautious to take such move. The Euro region currency kept lingering with losses as Greek spokes person signaled that the nation’s ability to pay pensions is expected while there is trouble with the IMF payment in June and the Greece is in dire need to get the aid as soon as possible. Greece seems unable to meet its May 31 deadline, as set by the German Chancellor, Angela Merkel and French President, Francois Hollande, for reaching an agreement on aid, as there are no intermediate meetings between the Greece and its international creditors, market players are on alert till then. The USDJPY rallied to more than two month high and could break its 122.10 as the current USD rally becomes likely to extend a bit; however, with holiday restricting trading on Monday, market players will be waiting for the US details, namely Durable Goods Orders and CB Consumer Sentiment to foresee immediate USD moves ahead of Friday’s GDP.
With the Chinese Premier also supporting the forecast of 7.0% GDP rate for 2015, the weakest in 25 years, commodity currencies, AUD, NZD & CAD, are likely to witness a hit while better than expected New Zealand Trade balance restricted further declines of the NZD. The Swiss Employment Level is also likely to become an important detail, other than the US ones, to help determine the market moves, mainly driven by the CHF, and hence it is important for the market players to expect considerable volatility on the Tuesday. It would be better to wait for tonight’s US details before buying the greenback as weaker economics could provide considerable USD damages.
With the nine month high Core Durable Goods Orders, coupled with better than forecast & prior Consumer Confidence and New Home Sales, the US Dollar rallied considerably across the board on Tuesday. Moreover, comments by some of the FOMC members echoed Friday’s hawkish tone of Fed Chair and provided additional strength to the greenback. The USDJPY advanced to near eight-year high while the USDCAD broke its critical resistance, signaling trend change. The GBPUSD also plunged; though, early month horizontal support restricted heavy decline. On the European side, the Greek woes continue hurting the regional currency even if some of the policy makers said they would try making next IMF payment and will be able to tackle the deal before the deadline. Crude Oil prices also registered noticeable declines as stronger dollar and dovish comments by the Iraq ahead of OPEC meeting on June 6 weighed down the black gold; although, market players will await today’s US crude inventories to better forecast the crude prices.
After the considerable data driven rally by the USD, there are no major releases to fuel volatility into the forex market during the Tuesday, that in-turn can lead to trim some of the yesterday’s USD gains. However, start of the G7 meeting and the BoC could provide meaningful information to determine forex moves. The US is likely to force Germany to complete the Greek aid procedure while the BoC is likely to remain intact. However, a surprise action by the BoC could become important for the CAD pairs. Hence, it would be better to cash out of the markets in the positions wherein the USD is on the buy side as higher prices could lead to profit booking and a extensive correction can’t be negated.
Agree with you that the EURUSD lacks major support ahead of 1.0540; however, Greece is about to get its much awaited funds and the news could pullback some of the EURUSD losses. Although, overall view remains bearish unless the pair against breaks 1.1200 region.
Have a nice-trading… Keep following the updates here.
On Wednesday, the USD kept maintaining its strength during early hours of trading without any fundamentals to releases; however, during the later part, rumors of the Greece being able to draft the reform list to its international creditor helped the Euro and provided counter weakness to the greenback, resulting into the first daily decline in four. The EC later on rejected the rumors by saying there are still lot more to do before the Greece gets its required funds. Moreover, the USD tested highest level in 13 years against JPY as dovish outcome of the recent monetary policy, revealed during the minutes of Wednesday, coupled with stronger expectations of Fed rate hike kept fueling the USD against its Japanese counterpart. GBP remained weaker against USD as market players remained worried ahead of UK GDP, scheduled to release later today. Antipodean currencies remained weaker as Chinese economy lacked momentum towards optimism. Moreover, monetary policy meeting by the Bank of Canada matched expectations of remaining at hold; though, the tone of the statement was quite dovish and helped the CAD extended its losing streak. The Crude Oil prices registered a bit of advance during early Thursday after weakening heavily during last two days on the back of profit booking; however, higher than forecast US crude oil inventories and the strong USD continue hurting the Crude price which in-turn could weaken the CAD.
During the early part of the day, Japanese Retail Sales rallied to more than a year’s high while the Australian Private Capital Spending plunged to the record lows, hurting the AUD. After the lacklust economic calendar yesterday, the UK GDP, US Pending Home Sales and the weekly jobless claims could continue fueling forex market volatility in addition to the on-going G7 meetings. Should there be continuation of improvement US readings, the USD is more likely to extend its up-move while a weaker reading is less likely to provide larger declines ahead of the US GDP, scheduled to publish tomorrow. Market players are advised to stay away from the GBP ahead of UK GDP readings while USD can continue its up-move as far as there is absence of pessimistic details.
Even after registering the highest level of pending home sales since June 2014, the US Dollar Index registered its second consecutive daily decline on Thursday as market players continue chasing out the gains ahead of Q1 2015 GDP reading, scheduled to publish today. Market consensus support a downward revision of second estimate to -0.8% against the 0.2% gain noted in the initial forecast. The Euro region currency kept jumping between the gains and losses as the Greek talks are still no where ahead of its June 05 payment to IMF, failing to pay could trigger Greek default. The ECB, in its bi-annual financial stability report, published yesterday, said that the failure to reach an agreement on Greek aid program soon may drive yields on bonds issued by other euro-area countries higher and could trigger the contagion risk. The US is also concerned off-late about the Greek issue in G7 meeting and asked the EU to fasten the aids as a default could provide negative effects outside the EU. Moreover, the fall in Chinese major equity indices with mixed fundamentals, coupled with the weaker economic readings by AU and NZ weakened the AUD and NZD against majority of its counterparts. The GBP registered considerable declines as the GDP reading missed forecast and matched the initial estimation of 0.3% growth during Q1 2015.
Japanese details, published during the early part of the day, provided additional weakness to the JPY as Core CPI failed to grow and remained stagnant while Household spending unexpectedly fell 1.3% and industrial production was lower than a year earlier. The ANZ Business Confidence from New-Zealand also noted the weakest reading since September. Even if the GDP numbers from Switzerland and the Canada are scheduled for today’s publish, market attention is likely to remain centered on US GDP reading, should the actual reading favors the optimism by posting higher than expected number, the USD will be set to register considerable highs. Hence, it would be better to remain away from trading unless the actual numbers from US comes out and on the positive print buy the USD to have relaxed weekend while negative reading should also be traded with USD short; though, it should be only a day trade.