Good morning from Hamburg and welcome to our Daily FX Report. The FOREX market is still very volatile, which could be further enforced by the rate decisions by the Bank of England and European Central Bank today. However, we wish you a successful trading day.
Market review
In the early Tokyo trading hours the JPY fell versus the EUR and USD after Fitch Ratings reconfirmed its confidence about the U.S. and U.K.’s triple A credit ratings. Due to this fact, the demand for the JPY as a refuge from the global financial crises declined. “Fitch has confidence in the ability and track record of the U.S: and U.K. to do the right thing”, said David Riley, head of sovereign ratings at Fitch Ratings. Also a report which showed that Japanese companies cut spending by 25.4% in the first three months to the end of March, the fastest pace in 54 years impinges upon the JPY. Today the USD/JPY rose to 96.37 at its high and the EUR/JPY to 136.64. The EUR weakened against the USD 0.98 % to 1.4162, on concern that the ECB will decide today to expand its quantitative easing money policy to keep down the borrowing costs in the 16-nation region, having a report showed that the European consumer spending and exports contracted by the most in at least 14 years in the first quarter of 2009. The GBP/USD slid 1.58 %, the most in six weeks as U.K. stocks index dropped. Australia’s trade balance fell unexpected into a deficit of A$91mln in April and forced the AUD/USD down to 0.7830 at its lowest level yesterday. Due to this fact, the NZD/USD weakened as well and closed with a deficit of 3.35%.
NZD/USD
The currency pair has been trading in a bullish environment and pointed on Tuesday a new multi-week high. Though the NZD/USD failed to cross its R2 resistance, the NZD rebounded and it seems that at the pivot point, coincided with the second Fibonacci Fan, a basement was built. If this support may be strong enough, it could be a sign to affront the R1 again.
USD/CHF
The USD/CHF has been trading close to a long-term bearish trend-line and it seems that the bears primary around the 1.0600 level encounter resistance. For the time being, the currency pair recovered and try to cross its resistance at 1.0744, but the Bollinger Bands contracted like a bottleneck, what caused several slump previously.
