FOREX TRADING

• USD: Higher, jobless claims unexpectedly rise, manufacturing sector improves
• JPY: Higher, industrial production revised higher, Reuters Tankan mfg. index highest since April 2008
• EUR: Lower, cost of funding Greek debt rises, skepticism about the viability of the Greek rescue package
• GBP: Higher, Conservatives expand their lead over Labor, consumer confidence drops
• CAD and AUD: AUD & CAD lower, accelerating Chinese growth may encourage China to hike rates

Overview

The USD traded higher Thursday supported by concern about Greek fiscal troubles and in reaction to strong economic data from China. EUR traded sharply lower pressured by widening of Greek bond spreads and in reaction to report that Greece may cancel its latest bond issue. GBP outperformed supported by the latest UK election polls which show the Conservatives have expanded their lead over Labor. GBP gains were limited by report of a sharp fall in UK consumer confidence. China reported a sharp acceleration in growth with Q1 GDP rising by 11.9%, retail sales up 18% industrial production rose by 18.1%. The acceleration of growth in China may prompt China to tighten monetary policy and revalue the Yuan. Commodity markets and equities traded lower pressured by the threat of a tightening of monetary policy in China. AUD and CAD traded lower tracking the decline in commodities and pressured by the Chinese rate hike speculation. JPY traded higher supported by gains in cross trade to the EUR and Yuan revaluation speculation. US economic data was mixed with jobless claims posting an unexpected sharp rise and the Empire Manufacturing survey improving by nine points. The Labor Department said the unexpected rise in jobless claims may reflect the impact of the Easter holiday. It may take a couple more weeks before seasonal factors are no longer impacting the jobless claims data and the trend becomes clearer. Industrial production came in below expectation and capacity utilization was a slightly above expectation. The Philly Fed survey posted a modest improvement. Focus turns to Friday’s release of US housing starts and Michigan consumer sentiment. (more…)

The market showed a tendency to move higher against the U.S. dollar during the Asian and the European sessions, but so far, the major pairs have failed to break out of the range of the prior few days of trading. One exception was the pound, which advanced 90 pips overnight, but even so, this is below the pair’s ATR for this time of the day. Unless something happens during the U.S. session, the trading range is expected to remain subdued. The macroeconomic calendar is relatively light this Wednesday ahead of the Fed Beige Book, which does not necessarily help the currency market ahead of historically slow dollar index movement in Wall Street trade.

Dollar Index Technical View: TheLFB Member Charts

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