Forex Market Update
This morning, the greenback is trading mostly higher against its major peers. The Federal Reserve reiterated its aggressive monetary easing stance in its two-day policy meeting that ended yesterday.
The Euro is trading lower, as markets anticipate an interest rate cut from the European Central Bank (ECB) in its policy meeting scheduled later in the day. Also PMI in Europe confirmed that manufacturing activity continue to be weak across the region despite being revised higher. In France borrowing costs fell after a successful bond auction, with the yield for its benchmark 10-year bond slipping to 1.81%.
Meanwhile, the Organisation for Economic Cooperation and Development stated that Italy's economy would contract by more than expected this year and its public finances would deteriorate in 2013 and 2014. On the other hand, the newly appointed Italy Prime Minister, Enrico Letta stated that Italy will maintain its deficit commitments.
The Bank of Japan (BoJ), in its minutes for the recently held monetary policy meeting, indicated that there was a broad consensus among board members that it was necessary for the central bank to take more aggressive monetary policy measures to stimulate the economy. However, the policy makers also expressed concerns that such a bold move would obliterate the functioning of financial markets.
The Australian Dollar registered losses after manufacturing data in China came in less-than-expected in April, confirming a fragile recovery in China. Also, data revealed that, the number of building permits in Australia dropped in March, indicating a bleak forecast for construction activity in the nation.
EUR USD
This morning at 09:40 GMT, the EUR is trading at 1.3166 against the USD, 0.17% lower from the New York close, as investors exercise caution ahead of the ECB’s interest rate decision. In the economic news, Euro bloc’s manufacturing PMIs were all reported below 50.0, though the reading came in better than flash estimates. During the session, the pair traded at a high of 1.3192 and a low of 1.3147. Yesterday, EUR traded 0.28% lower against the USD in the New York session, and closed at 1.3189.
The pair is expected to find its first support at 1.3127 and first resistance at 1.3224.
GBP USD
At 09:40 GMT, the GBP is trading at 1.5568 against the USD, 0.06% higher from the New York close, after the UK purchasing managers’ index for construction activity rose to a six month high reading of 49.4 in April, from a reading of 47.2 in March. During the session, the pair traded at a high of 1.5581 and a low of 1.5541. Yesterday, GBP traded 0.15% lower against the USD in the New York session, and closed at 1.5559.
The pair is expected to find its first support at 1.5537 and first resistance at 1.5604.
USD JPY
The USD is trading at 97.24 against the JPY at 09:40 GMT this morning, marginally lower from the New York close. The minutes of the Bank of Japan’s latest monetary policy meeting released this morning indicated that there was a broad consensus among board members that it was necessary for the central bank to take more aggressive monetary policy measures to end the long spell of deflation. During the session, the pair traded at a high of 97.44 and a low of 97.08. In the New York session yesterday, the USD traded marginally higher against the JPY, and closed at 97.28.
The pair is expected to find its first support at 96.95 and first resistance at 97.61.
USD CHF
This morning at 09:40 GMT, the USD is trading at 0.9283 against the Swiss Franc, 0.18% higher from the New York close. In Switzerland, the SVME PMI increased to a reading of 50.2 in April, from a reading of 48.3 recorded in the previous month. Market had expected the index to rise to a reading of 49.0. During the session, the pair traded at a high of 0.9298 and a low of 0.9264. In the New York session yesterday, the USD traded 0.06% higher against the CHF, and closed at 0.9266.
The pair is expected to find its first support at 0.9253 and first resistance at 0.9305.
USD CAD
At 09:40 GMT, the USD is trading at 1.0078 against the CAD, marginally lower from the New York close. Markets await the release of exports and imports data from Canada later in the day. During the session, the pair traded at a high of 1.0090 and a low of 1.0070. Yesterday, the USD traded 0.09% higher against the CAD in the New York session, and closed at 1.0081.
The pair is expected to find its first support at 1.0051 and first resistance at 1.0104.
AUD USD
The AUD is trading at 1.0224 against the USD, at 09:40 GMT this morning, 0.55% lower from the New York close. In Australia, building permits dropped 5.5% (MoM) in March, compared to a revised 3.0% increase recorded in the previous month. Separately, export prices rose 2.8% (QoQ) in the first quarter of 2013 (1Q 2013), compared to a 2.4% drop in the prior quarter. However, import prices remained unchanged in 1Q 2013, against market expectations for a 3.0% increase. During the session, the pair traded at a high of 1.0286 and a low of 1.0221. AUD traded 0.46% lower against the USD in the New York session yesterday, and closed at 1.0281.
The pair is expected to find its first support at 1.0174 and first resistance at 1.0321.
Gold
At 09:40 GMT, Gold is trading at $1455.92 per ounce, 0.23% lower from the New York close, after the Federal Reserve announced that it would remain committed to maintain the interest rates and continue buying bonds to support the US economy. This morning, Gold traded at a high of $1460.52 and a low of $1448.93 per ounce. In the New York session yesterday, the yellow metal traded marginally higher, and closed at $1459.25.
Gold has its first support at $1440.30 and first resistance at $1471.80.
Silver
Silver is trading at $23.64 per ounce, 0.09% higher from the New York close, at 09:40 GMT this morning. This morning, Silver traded at a high of $23.72 and a low of $23.41 per ounce. Silver traded 0.09% lower against the USD in the New York session yesterday, and closed at $23.62.
Silver has its first support at $23.21 and first resistance at $24.10.
Crude Oil
At 09:40 GMT, Oil is trading at $91.43 per barrel, 0.50% higher from the New York close, after downbeat Chinese manufacturing data dampened demand prospects for the fuel. This morning, Oil traded at a high of $91.49 and a low of $90.65. Yesterday, Oil traded 0.60% lower against the USD in the New York session, and closed at $90.95, after the Energy Information Administration (EIA) reported that, US crude inventories rose by 6.7 million barrels to 395.3 million barrels in the week ended April 26.
It has its first support at $90.11 and first resistance at $92.74.
Economic Snapshot
UK’s construction PMI climbed in April
In the UK, the construction PMI jumped to a reading of 49.4 in April, higher than the expected reading of 48.0 and compared to a reading of 47.2 registered in the previous month.
Euro-zone’s manufacturing PMI improved compared to flash estimate in April
The manufacturing PMI in the Euro-zone rose to a reading of 46.7 in April, above the flash estimate of a reading of 46.5 and compared to a reading of 46.8 in March.
German manufacturing PMI came in better than flash estimate in April
In Germany, the seasonally adjusted manufacturing PMI came in at a reading of 48.1 in April, higher than the flash estimate of 47.9 and following a reading of 49.0 recorded in March.
French manufacturing PMI rose in April
In France, the manufacturing PMI advanced to a reading of 44.4 in April, in line with expectations and following a reading of 44.0 in March. This matched the preliminary PMI reading.
Switzerland's manufacturing PMI expanded unexpectedly in April
In Switzerland, the seasonally adjusted manufacturing PMI climbed to a reading of to 50.2 in April, against the expected reading of 49.0 and following a reading of 48.3 in March.
Italy's manufacturing activity improved in April
On a seasonally adjusted basis, manufacturing PMI in Italy climbed to a reading of 45.5 in April, from a reading of 44.5 in March. Market had expected a reading of 45.0.
Italy’s producer prices increased in March
In Italy, the Producer Price Index (PPI) registered a flat change in March, against the market expectations of a decline of 0.1% and compared to a rise of 0.1% recorded in February. Annually, the PPI eased 0.1% in March, in line with market expectations and compared to a rise of 0.3% in February.
Spanish manufacturing PMI increased in April
In Spain, manufacturing PMI edged up to a reading of 44.7 in April, compared to a reading of 44.2 recorded in the previous month. Market had expected a reading of 44.5 in April.
Australia's building approvals declined unexpectedly in March
On a seasonally adjusted monthly basis, building permits in Australia dropped 5.5% in March, against the expected 1.0% rise and compared to a revised 3.0% rise recorded in the previous month. On an annual basis, building permits rose 3.9% in March, compared to a revised 12.7% rise recorded in the previous month.
China HSBC manufacturing PMI retreated in April
In China, Markit Economics reported that the final reading of the HSBC manufacturing PMI fell to a reading of 50.4 in April, below the flash estimate of 50.5 and compared to a reading of 51.6 recorded in March.
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