The Dollar rebounded against the Yen on Wednesday for the previous session sharp decline, despite a series of soft US economic data. But comments from Federal Reserve Bernanke who �reasonably� expects stronger growth later this Year provided some support to the Dollar. Globally, Forex market has calmed down after a volatile session on Tuesday, but Dealers were closely watching other markets, especially stocks, for any further danger signals.
News and Events:
The Dollar rebounded against the Yen on Wednesday for only part of the previous session sharp decline, despite a series of soft US economic data. US Q4 GDP growth was cut to only 2.2% in the 2nd estimate, down from an initial estimate of 3.5%, leaving it broadly in line with market expectations. GDP growth accelerated only marginally to 2.2%, from 2.0% in Q3, despite the massive boost to consumption from lower energy prices and unseasonably warm weather at the end of the quarter. Analysts expect GDP growth to come in below 2.0% in Q1, with consumption moderating and investment contracting. Sales of New Home fell 16.6% in January, the largest decrease since January 1994. Despite those soft economic data, comments from Federal Reserve Bernanke who �reasonably� expects stronger growth later this Year provided some support to the Dollar.
Globally, Forex market has calmed down after a volatile session on Tuesday, but Dealers were closely watching other markets, especially stocks, for any further danger signals.
The Japanese currency’s rally strongly influenced Stock Markets as worries about rising defaults among high-risk borrowers in US mortgages and tensions over Iran prompted investors to cut exposure to riskier high-yielding currencies. Speculators had been funding purchases of these currencies by borrowing in Yen low-yielding currency.
UsdJpy was up 0.55% to 118.76, after having fallen to a 10-week low of 117.50 on Tuesday. Meanwhile, EurUsd was unchanged at 1.3229 not far away from two-month high 1.3260 hit on Tuesday.
Today’s Key Issues:
UK 9:30 GMT: February Purchasing Manager’s Index Manufacturing expected 53 vs 52.8
Euro 10:00 GMT: February Euro-zone Consumer Price Index estimate expected 1.9 unchanged (YoY)
UK 11:00 GMT: March CBI Distributive Trades Survey � expectation 18 vs 22 and February Realized 22 vs 30
CAD 13:30 GMT: 4Q Current Account expected $6.1B vs -$5.1B
USD 13:30 GMT: January Personal Income expected 0.3% vs 0.5%, Personal Spending 0.4% vs 0.7%, Personal Consumption Expenditure Core 0.2% vs 0.1% (MoM) and 2.3% vs 2.2% (YoY)
US 13:30 GMT: February 24th Initial Jobless Claims expected 328k vs 332k
US 15:00 GMT: February ISM Manufacturing expected 50 vs 49.3 and ISM Prices Paid 53.8 vs 53
JPN 23:30 GMT: January Jobless Rate expected 4.1% unchanged, Overall Household Spending -0.3% vs 1.9% (YoY), Tokyo Consumer Price Index seasonally adjusted -0.1% vs 0.2% (MoM), National Consumer Price Index seasonally adjusted 0.1% vs 0%
The Risk Today:
EurUsd outlook remains positive with strong support at 1.3074 where a break is required to undermine the bull trend. Until then market looks at 1.3250 (76.4% retracement of the 1.3368-1.2865 decline). Next target is 1.3290 trendline resistance. Initial support holds 1.3150. Failure to maintain actual level would unlock 1.2990 (61.8% retracement of the 1.2865 to 1.3191 advance).
GbpUsd is stabilizing despite an intraday drop to 1.9518 low. Only a breakout from 1.9403 � 1.9750 trading range would mark the next key directional trend. A break of 1.9750 resistance (61.8% retracement of the 1.9917-1.9482 decline) is required to confirm the return of the bull trend. For now, it’s playing with minor resistance 1.9650.
UsdJpy sharp decline to 117.96 Tuesday low confirmed the important 118 support. Monday lowest 117.50 was not far away from 117.44 strong support. 118 and 117.44 are major support level for this time. A break of 118 support will bring deeper pullback towards next foothold at 117.26 and 116.65. On the uptrend, 119.90 would mark the key resistance.
UsdChf consolidate near 1.2175, a step away form initial support at 1.2145 (61.8% retracement of the 1.1879-1.2575 rise). Penetration there would open the way for a deeper fall towards 1.2110 early January low and expose 1.1980 December low. Initial resistance holds 1.2340. On the upside rebound, 1.2228 would mark minor resistance as well as 1.2310.
Resistance and Support: