Good morning from beautiful Hamburg. Gradually, the rate decision by the Bank of England and the European Central Bank, which are pending on Thursday, jiggle in the middle of the FOREXtraders interest. Economists expect for both decisions a cut of 50bps.
Market review
Yesterday the USD rose against a basket of major currencies after Federal Reserve Chairman Ben Bernanke said that policy makers may need to expand aid to the banking system. “Bernanke is telling the public that the Fed and the government will act to support the banking system, which is a support for the USD”, analysts an economist in Tokyo. In order of this, the Dollar Index increased near to its highest level since April 2006. For the second day the GBP declined versus the USD. This development based on speculation that the BoE will cut its key interest rates on Thursday and increases the supply of the currency through buying government bonds. Besides the U.K. consumer confidence slid close to its lowest level in at least four years in February and in this context the EUR/GBP rose as well near to a two-week high at 0.8996 from its opening at 0.8949.
Australia’s economy shrank unexpectedly in the fourth quarter in 2008 about 0.5 %, notwithstanding the most economists expected a growth of 0.2 %. It is the first cutback since eight years and crucial therefore is especially a slump in exports and housing. Hereupon, the AUD/USD declined 1.58 % to 0.6287.
The USD/CAD touched a three-month high at 1.2975 after the Bank of Canada reduced the borrowing costs on a record low. The BoC Governor Mark Carney had cut the target rate on overnight loans between commercial banks about 50bps to 0.5 %.
USD/JPY
The USD/JPY had quit its bullish trendchannel on February 27th and trades now in a small range between 98.59 and 96.92. At least we saw a long legged Doji yesterday, which could be a sign for a trend reversal and maybe the currency pair tries to test its support at 96.92 again. If this support-line breached it could be the activator for a bearish trend.
EUR/CAD
Yesterday the EUR/CAD lost its support of the bullish trend-channel after a long packing signalled a trend reversal. The MACD assist this trend reversal very well after the short-term line crossed the longterm line at the same time. Now it remains to be seen if the support-lines at 1.6205 rather 1.6156 hold or if the bearish movement will boost.
