Good morning from beautiful Hamburg and welcome to Varengold’s Daily FX Report. Some better than expected economic data raise hope again that the recession may be easing. Let’s wait and see. However, we wish you a nice day and successful trading.
Market review
Reports on the U.K. and U.S. housings raised optimism that the worst of the recession is over. U.K. mortgage approvals increased more than expected, to the highest level in almost a year and due to this fact, the GBP scaled a seven-month high against the USD at 1.6596. In the early Tokyo trading hours the GBP was assists by a report, which showed that the national consumer confidence rose in May two points to 53, the highest level since six month. The JPY gained versus a basket of major currencies after the Russian President, Dmitry Medvedev, go along with China’s criticism on USD as the world’s reserve currency and said that a new supranational currency could lay the foundations for a future financial system. The USD/JPY declined 0.85% and the EUR/USD rose to 1.4331 at its high and the Dollar Index, a Future used to track the USD against major currencies, weakened for the fourth day in a row.
Australia impeded, unexpected, sliding into the recession as a report showed today that the economy rose. The national GDP rebounded from a revised 0.6% decline in the last quarter of 2008 and grow 0.4% in the three month to March. Yesterday Australia’s central bank decided to leave the key interest rate unchanged at 300bps. In order of this, the AUD extended its gains against the USD and increased 1.33%.
EUR/GBP
The currency pair has been trading close to a bearish trend-line since the end of March. At least we saw on Monday that the Bollinger Bands contracted as a bottleneck and due to this fact, the EUR/GBP slid again and broke through its S1 pivot point. It seems that downward trend will be continue and may stop at the second pivot support level at first.
CHF/JPY
The CHF/JPY traded in a bearish environment until the middle of May, as we saw a reverse H+S formation, which heralded the trendreversal. Since that time, the currency pair trade close to a bullish trend-line and crossed its resistance level at 89.54. Now it seems, that the CHF/JPY try to build a basement above this level to resume its upward trend, assist by an increasing Momentum indicator.
