FOREX TRADING

• USD: Mixed, trade deficit widened more than expected, import prices rise less than expected
• JPY: Flat, BOJ may revise up its CPI forecast, corporate goods prices post a modest rise
• EUR: Lower, strong demand for today’s Greek T- bill auction
• GBP: Higher, trade deficit narrows as exports surge, retail sales and house prices rise
• CAD and AUD: AUD & CAD lower, Australia’s business conditions rise, Canada’s trade surplus improves

Overview

The USD traded mixed Tuesday with downside limited by report that the Fed may change its policy guidance. GBP traded higher supported by report of a narrowing of the UK trade deficit and a surge in UK exports. GBP was also supported by report of stronger UK retail sales, rising house prices and a pledge from the Conservative party to take quick action to reduce the UK deficit. EUR traded mixed with downside limited by strong demand for today’s Greek T-bill auction. The Greek bill auction was oversubscribed which is seen as an endorsement of yesterdays announcement of an IMF/EU rescue package for Greece. AUD opened higher supported by report that Australia’s March NAB business conditions rose to their highest level since January 2008. CAD traded mixed initially supported by report of a larger than expected improvement in Canada’s trade surplus. JPY traded higher supported by report that the BOJ may revise up its CPI forecast. US economic data was mixed. The US trade balance widened by slightly more than expected and import prices rose by slightly less than expected. Excluding oil prices import prices declined. US bond yields and the USD drifted lower after the release of the import price report. US trade gap with China held to its lowest level since March 2009. The narrowing of the trade gap with China may help to reduce some of the tensions over the value of the Yuan. USD downside was limited by weaker equity markets and weaker commodity prices. USD turned higher for the day in reaction to a Reuters report that an influential US think tank says the Fed may soon change its policy guidance. Focus turns to Wednesday’s release of US CPI and retail sales. (more…)