Good morning, Guten Morgen, Buenos días, Доброе утро, 早上好… to a new exciting FX week!
Market review
On Friday the USD fell against the EUR and the JPY. Investor’s trimmed safe-haven buying of the USD after last week’s US payroll data showed that job losses were less high than the market had feared. Previously, there were rumors about a loss of 1 million jobs. But on Friday data showed that the US unemployment rate rose to a 25-year high of 8.1 % in February as employers cut 651,000 jobs. At the moment the USD is still viewed as a safe-haven currency and tends to attract buying when worries about the global economy rise. But it can come under pressure when such concerns reduce. On Friday the USD/JPY closed 0.6 % lower at 97.80 and the EUR/USD rose 1.1 % to 1.2676. The EUR could also benefit from speculations that the European Central Bank policy makers will slow the pace of interest rate cuts. An ECB Executive Board member said that reducing borrowing costs wouldn’t remove the financial crisis. Quite the contrary, he warned against too low interest rates. By now investors raised bets that the ECB will keep its benchmark rate at 1.5 % at its April meeting. On Monday the EUR/JPY increased 0.2 % and is now trading at 124.27. In early Tokyo the EUR/USD is trading quite unchanged at 1.2673.
The AUD and NZD gained as the UK government said it will cover 260 billion pounds of assets at Britain’s biggest mortgage lender. The currencies also rose against the JPY after Japan posted its first account deficit in 13 years for January. The market is looking forward to Australia’s unemployment rate on Thursday. It is expected to rise to the highest level since April 2006. One day before, the Reserve Bank of New Zealand is may be going to cut key rates to 2.75 %.
AUD/USD
Since the mid of February, the AUD/USD traded in an upward trend channel. However, it crossed the lower line and left the trend formation. The AUD decline finished at the strong support level, curtly below 0.6300. Now we could see that it has the form of a new bullish trend channel. The currency is trading with a significant zigzag movement between the limits. If the formation persists, the AUD will increase to the upper part of the channel.
USD/JPY
Since the beginning of the year, the USD/JPY is trading in a bullish trend channel. Last week the USD crossed the support level of the channel the first time but rebounded into the formation afterwards. On the basis of the MACD analysis the upward trend could continue. The MACD is on a deep level and the short-term MA is going to cross the red signal line. Additionally, we have to pay attention to a price above the middle Bollinger MAvg.
