[B]MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES[/B]
We have been seeing some good buying of currencies, particularly against the[B] USD[/B] on dips today, with the[B] Euro [/B]and[B] Swissie[/B] tracking higher in New York. [B]Sterling [/B]however remains a relative underperformer and is heavily weighed down on strong c[B]ross currency related demand in Eur/Gbp[/B]. The market could also be growing increasingly concerned with the ramp up in the BoE’s APS (Asset Purchase Scheme) last week. On the data front, the only release this morning has come out of [B]Canada[/B], with [B]March new house prices coming in bang on expectations at -0.5%[/B]. This is the 6th consecutive monthly decline in the data series. The [B]White House[/B] has released their revised forecasts for the economy, with a much rosier picture than some of the other mainstream projections. Also this morning, the [B]Bundesbank said that Germany’s budget deficit could grow to some 6% of GDP by 2010[/B], while the public debt ratio could rise to 80% of national income. The [B]PBOC[/B] has been in the news, suggesting that [B]China’s stimulus measures are helping to produce better than expected H1 results[/B]. Many traders will be focused in on[B] Bernanke [/B]who is scheduled to speak later in the day at 23:30GMT on the [B]bank stress test results[/B]. The [B]S&P[/B] and [B]DJIA[/B] are down by more than 1% on the day while [B]commodities[/B] are also weaker. It is however worth noting the [B]relative strength in the[/B] [B]Nasdaq[/B], which still sits in positive territory, though only marginally. The [B]Yen crosses[/B] have also taken center stage today with many of the major cross rates putting in bearish outside days (see[B] Eur/Jpy[/B]) to potentially foreshadow a more significant rise in risk aversion and negative equity sentiment.
[B]
ANALYSIS OF SELECTED RATES[/B]
[B]Nzd/Usd:[/B] Earlier today, in our “Indicator of the Day” report we discussed the gravestone doji setup in Kiwi and the potential for the pair to reverse course sharply over the coming days. The commodity bloc currencies are looking a little overbought of late and the NZD has been the weakest of the three, despite the rally to fresh 2009 highs by 0.6128 today. As such, we would be looking for a close at or near opening levels by 0.6025 to signal an end to the recent strength and open the door to a short-term corrective pullback at a minimum. Look for a break back below 0.6000 to accelerate declines towards the 0.5800-0.5900 area initially. We will not issue a sell recommendation because we are already well exposed to these currencies with open positions in Aud/Usd and Usd/Cad.
[B]Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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