FOREX TRADING

Asian markets were firmer today after a lackluster performance in US equities. Concerns about debt laden Greece continue to weigh heavily on the euro while commodity currencies continue to gain on improving global economic outlook. Crude oil continued to climb, testing 17 month highs at $87-per barrel with gold bettering $1137.00 late in the Tokyo session. Copper prices hit levels not seen since August of 2008, topping $7990.00-per metric ton. The loonie and the aussie continued their assault on the dollar with the loonie breaking parity to .9983 at market open in London.

The Greek Contingency

Markets remain fixed on the Greek sovereign debt crisis, as mixed reports continue to weigh on the euro. Greek officials denied reports made yesterday about a potential amendment to the proposed EU aid package, excluding IMF involvement. Lack of clarity regarding how the Greeks will pay off maturing debt continues to fuel bearish sentiments. On one hand, the Greeks say they cannot continue to finance their debt at such high rates for long. The yield spread between Greek and German 10-year bonds reached their widest since the euro’s inception, peaking just over 4%. On the other hand, finance minister Giorgos Papakonstantinou stated yesterday that they had no intention of using the IMF backed aid package just yet. It is this uncertainty that has traders adding to shorts on the single currency. Targets are set at the 1.33 handle followed by 1.3280 and 1.3240. Subsequent floors are seen at the 1.32 figure, backed by 1.3130 and 1.3110 which represents the 61.8% Fibonacci extension taken from the Jan 13th and March 17th highs. Upside potential strengthens with a breach of 1.3450 with resistance levels eyed at the 1.35 handle followed by 1.3540 and the 1.36 figure.

Aussie Holds Gains

The aussie trade has played out well, reaching our limit at the 61.8% Fibonacci extension taken from the Feb 25th a March 26th lows at .9275, late in the US session. Positive economic data combined with the RBA’s recent rate-hike and climbing commodity prices will continue to provide support for the aussie. Resistance rests at the R1 monthly pivot just above the .93 figure and is backed by .9320. Additional targets are eyed at the .94 handle and at the 100% Fibonacci extension at .9450. Supply is seen at .9480. Short-term pullbacks could see the aussie test the .92 figure with subsequent support levels eyed at .9170, .9130 and .9090.

Today’s economic calendar includes PMI reports from the Eurozone, Germany, and the UK. Eurozone and German services PMI are seen to hold steady at 53.7 and 54.7 respectively with the UK seen slightly lower at 58.0 from 58.4. Later in the day, Eurozone PPI is seen to fall to 0.2% from 0.7% m/m and GDP is expected to hold at 0.1% q/q. From the US, MBA mortgage applications are scheduled to be released at 7am in New York with consumer credit expected to show a fall of some $700 million at 3pm. Canadian building permits and the Ivey purchasing managers index are both seen stronger m/m at 8:30am and 10am respectively. European markets are weaker across the board with US equity futures also pointing to a negative open early in London trade.

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