Good morning from wonderful Hamburg. We hope you enjoyed your weekend and you can start relaxed into a new successful week. Again we expect a week with many interesting economic news which culminate in the rate decision of the ECB on Thursday.
Market review
Today a Japanese government report showed that its domestic industrial production shrank for the fifth month in a row and the JPY went straight to the worst quarter since 2001 against the USD. Today the EUR as well extended its losses versus the USD as industrial orders in the 16- nation region plunged in January. Also the Citigroup Inc. said it ended a bet that the EUR will strengthen against the USD as pressure mounted on the ECB to follow the FED in buying bonds to lower interest rates, a policy known as quantitative easing. The USD rose against the GBP to its highest level since six days after a U.K. government report showed a deeper slid into the recession last year than the economists forecast. Furthermore, negative affected it also the fact that the U.K. failed to find buyers for all of the £1.75bln of bonds which were offered on March 25th.
The AUD and NZD fell for the second day as future markets signaled stocks will decline after global equities posted its biggest monthly gain since 1990. The CAD fell on Friday to its lowest level in a week as declines in stocks and commodities signalized diminishing investor’s appetite for risk.
USD/CAD
The USD/CAD has been trading close to a bearish trend line since the beginning of March 2009. After the currency pair touched its lowest level at 1.2193 it seems that this level could serve for a support and testing the downward trend. Certainly on Friday the market closed by a Doji with a long packing which could be a sign for a further trend reversal as also the Oscillator MACD shows.
EUR/JPY
Since two weeks the EUR/JPY has been trading in a bullish trend-channel. On Friday the EUR crossed the trend formation and entailed losses down to its new support at 129.39. On this low level the RSI demonstrated a surplus sale and in order of that, we saw a small countermovement. If the support-line at 129 is strong enough, that could be the origin for a new bullish trend.
