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Daily FX Report

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The deficit climbed from A$282mln in April to A$556mln in May

Thu, Jul 2 2009, 10:45 GMT
by Varengold Bank Research Team

Varengold Wertpapierhandelsbank AG

Good morning from sticky Hamburg and welcome to our Daily FX Report. The FOREX market keeps on doing to trade very volatile, which could be further enforce by the rate decision of the European central bank today. However, we wish you a successful trading day.

Market review

The JPY rose against 14 of the 16 most-traded currencies on concern that a report may show today that U.S. unemployment rate climbed for the 18th month, increasing demand for the relative safety of the JPY. The JPY strengthened versus the EUR from a two-week low to 136.65 at the highest level in the early Tokyo trading hours. While the EUR/USD rose 0.77 %, close to a three-week high, on prospects that the ECB will refrain from cutting interest rates at its meeting today. A survey showed that the most of the economists expect that the ECB keep the rate at 100bps until the last quarter of 2010. Furthermore the decline in spending on U.S. construction projects in May, the fourth decline in the last five months, was a strain for the USD. The spending fell 0.9 % and followed a revised 0.6 % gain in April, said the Commerce Department in Washington today. On the other hand, the manufacturing in the U.S. shrank at the slowest pace since August 2008 and the pending home sales advanced for the fourth month in a row.

Today the AUD fell after a national report showed that Australia’s trade deficit widened more than expected in May. The deficit climbed from A$282mln in April to A$556mln in May. Here upon the AUD/USD weakened 0.29 % today.

USD/CAD

The USD/CAD traded close to a bearish trend-line until a hammer heralded at the end of May a trend-reversal. Since that time, the currency pair has been trading in a bullish trend-channel. In considering of the declined Momentum indicator, it seems for a test on the downside of the channel. Though if the support will be strong enough, it could boost the bulls and may lead to cross the resistance at 1.1825.

NZD/JPY

The currency pair has been trading near to a bullish trend-line, though now it seems that the upward trend is losing its drive having the crossing of the resistance at 63.40 failed for several times. The doji in combination with the tumbled Momentum indicator may suggest a downturn. It remains to be seen, if the bullish trend-line could get further support otherwise it could assist the bears.

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Published on  Thu, Jul 2 2009, 13:29 GMT