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Daily FX Report

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NZD/USD hit hard

Thu, May 8 2008, 09:21 GMT
by Varengold Bank Research Team

Varengold Wertpapierhandelsbank AG

Employee: “Chief, our investment banker jumped out of the window” Executive: “Unbelievable, one hour before evening!” Current news makes people made, asking themselves: What comes up next?

Markets review

NZD/USD hit hard with -1.16% on rising speculations the RBNZ will cut cash rates after weak economic data later this year. New Zealand’s employment posts the steepest quarterlies fall in 20 years. A poll of 15 economists shows a median expectation that the bank will cut the official cash rate by 25 basis points to 8% in September, falling further to 7,5% by the end of December.

The EUR/USD slid to a two-month low at 1,5285 as a sharp drop in euro zone retail sales raised worries about the region’s economic outlook and revived expectations for possible rate cuts. The European Central Bank is expected to repeat its concern over inflation and that she will keep the interest rates steady at 4% later this day. But traders said mounting signs of slowing growth suggested the ECB may lower rates before the year ends.

The USD rose against the GBP sharply, which tit a 11-week low at 1,9504 after weak consumer sentiment and employment data kept investors focused on slower UK growth. Economists expect the BoE to hold interest rates steady at 5% when it meets today.

Australia employment blew past expectations in April, pointing to a still-healthy labor market even as other parts of the economy buckle before higher interest rates and rising living costs. Unemployment rate ticked up to 4,2%, but only because more people were looking for work, lifting the participation rate. AUD/USD vaults from around 0,9375 before the data to 0,9420.

Technical analysis

EUR/CAD

At the end of March there was a break through the bullish trend line and it followed a side movement with ups and downs until the end of April. After touching a third time the support line at 1,6234 it dropped down and crossed the support at 1,5674.

GBP/JPY

In this market a horizontal trend channel was born in the middle of April. Since this time it touched three times the upper resistance at 208,93 and two times the support at 203,31. In this big range the market is back on the way to this lower level. If it would break sustainable through this support it could develop a new down trend.

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Published on  Thu, May 8 2008, 09:37 GMT