The investors are going crazy because of positive signals from the bank industry. According to the latest developments, is it nice to see that markets don’t go in just one direction.
Market review
The USD fell against a basket of currencies as Asian and US stocks rallied on hopes that Citigroup Inc. will deliver a first quarter profit. The bank, whose share price traded below $1 for the first time last week, was profitable in the first two month of 2009, the bank’s chief executive said in a memo to the employees. Also a comment from an US congressman regarding a new ban on short selling supported the equity market. A trader mentioned that the rebound in global equities encouraged investors to trim “safe-haven” and especially USD positions. On Tuesday the EUR/USD rose from 1.2641 at its opening to 1.2822 at its high, but it declined to 1.2700 in the early Tokyo trading.
Orders for Japanese machinery fell 3.2 % in January. This is the fourth drop in a row and therefore the longest losing period for at least 20 years. The data was slightly better than a median forecast for a 4.5 % fall. But there was only little reaction in the currency market because the analysts don’t see that the corporate sector is pulling out of its slump. Yesterday the JPY rose 0.2 % against the USD and was able to extend the gains to 0.6 % in Tokyo trading.
The AUD and NZD reached a one-week high against the USD as stocks rallied worldwide. Both could benefit from rising speculation that investors will buy riskier assets. They also climbed as Australian home-loans approvals rose and New Zealand’s home sales reached a 12-month high. The AUD/USD jumped 2.2 % to 0.6474 and the NZD/USD increased 2.1 % to 0.5053.
EUR/JPY
Since January, the EUR/JPY has been trading in an upward trend channel. At the end of February the currency crossed the upper line of the channel and resisted at 126.08. It seems that this level developed to a strong resistance, because the currency touched it twice afterwards. At the moment the EUR is back in the bullish trend duct and is quoted in the near of the resistance. We have to pay attention if the pair bounce off the level again.
USD/JPY
Since the beginning of February we could see a bullish trend movement in the USD/JPY. In March the USD rebounded from a six month high and crosses for a short period the lower line of Andrew’s pitchfork. But the lower Bollinger band gave the pair a support and it recovered. Now it is back in the trend formation and is trading along the lower pitchfork. If this support is strong enough, we could see further USD increases.
