Friday 8 April 2011

Bonds volume picking up post ECB rate hike

Sources pointing out Spain doesn't need bail out, Greece will not need to restructure and Portugal needs reforms.

PGBs 3bp better, Ireland 5bp better and Greece flat.

EUR/USD sees decent rally in Asia


As the dollar sees general weakness (USD/JPY exception), underminned by the spectre of a US government shutdown.  Interesting to see that the Big German we mentioned scooping up overnight 1.4400 EUR/USD calls yesterday has hit pay dirt.  Clever Big German. Euro zone data today: 06:00 GMT: German trade balance for February expected 13.0 bln; current account 12.0 bln.  Exports +2.0%. Imports +1.0% 06:00 GMT: Bank of France business sentiment for March 06:45 GMT: French central govt balance for February European stocks set to open firmer; DAX and FTSE around +0.5%. 

Economic Calendar - 8th April 2011

Good Morning Traders,

Key events due at:

11:00GMT Canada Unemployment Rate (Mar) Consensus 7.7% Previous 7.8%
and Canada Net Change in Employment (Mar) Consensus 32.4K Previous 15.1K

12:15 GMTCanada Housing Starts s.a (YoY) (Mar) Consensus 180.0K Previous 181.9K

All eyes on the canadian dollar today! 

Forex: AUD/USD - holding above 1.0450, correction looms (Barcelona) - The Aussie hit 1.0507, new all-time high in its flotation era, before sinking 100 pips on Japan’s earthquake; despite the sell-off that was driven mostly by profit taking, a recovery to higher levels was seen in late US trade. Current price stays at 1.0450.

"Hourly chart has turned bearish with price capped below 20 MSA and momentum heading south, advancing a probable bearish corrective movement. 4 hours charts show 20 SMA still strong around 1.0400 now, with indicators aiming to regain the upside yet lacking definitions right now: pair needs to recover at least above 1.0470, to extend its bullish trend to fresh highs" said Valeria Bednarik, Chief Analyst at

Support levels: 1.0420 1.0370 1.0340, Resistance levels: 1.0470 1.0500 1.0550

Day Wrap-Up: Euro firm on ECB rate hike; Stocks struggle (Barcelona) - Asian session – Aussie strengthens as jobless rate falls below 5%

The Aussie roared ahead on encouraging jobs report. Unemployment rate fell to 4,9% after the economy added 37,800 new jobs. Broad-based gains were printed against all rivals, versus the Dollar, closing in on 1.0500, against the Kiwi, recovering 1.3450, while the Euro also pulled back wildly to 1.3650. EUR/USD tested 1.4300 on profit taking. USD/JPY was faced with heavy selling at 85.50. BoJ announced loan program for banks to lend to companies for post-quake reconstruction. Nikkei +0.5%, HK -0.25%.

European session – As expected ECB hikes, BoE holds

EUR/USD wobbled between 1,4260 and 1.4320 while Trichet came on stage to explain the ECB rate decision of hiking rates by 25bp to 1,25% as widely expected. He sounded slightly more hawkish, with analysts hinting the next 25bp hike to be in June. Traders read from his words more moderate further rate “normalization” going forward. GBP/USD found support at 1.6260 following a rate hold by the BoE. AUD/USD rallied to kiss 1,0500. USD/JPY held above 85.00. European stocks fell 0.50% on average.

American session – Japan quake, US budget standoff main focus

EUR/USD recovered 1,4300 handle. GBP/USD rose back above 1,6300. AUD/USD retreated off 1,0500. USD/JPY fell as lo as 84.60 only to regain 85.00. US weekly jobless claims fell to 382,000 from 392,000. The US Government resumed negotiations on the new budget, no agreement was reached. The House prepares a stopgap bill to allow funding to continue while talks unfold. A 7.4 magnitude quake hit Japan (Sendai), no new damage to nuclear plants reported. This latest natural disaster sent stocks lower, S&P 500 closed down 0.2% , while providing some minor relief to the Dollar. WTI oil broke $110/bbl. Gold made new record highs at $1,465/oz. US 10-year note 1 bp up at 3.55%. 

Forex: EUR/USD, resting at 1.4300 after ECB (Barcelona) - Almost unchanged since past Asian session update around 1.4300, pair fell following Trichet statement, exacerbating the fall on some risk aversion triggered by a second earthquake in Japan.

Bulls were able to regain the bid tone from lows at 1.4240, forcing a rebound late US trade towards the mentioned round number handle. “Slightly bullish yet with no enough momentum according to the hourly chart, pair needs to overcome 1.4330 to resume its bullish trend” commented Valeria Bedanrik, Chief Analyst at

Support levels: 1.4280 1.4250 1.4210, Resistance levels: 1.4330 1.4350 1.4385

Forex: GBP/USD, upticking still firm, rate above 1.6300 (Barcelona) - GBP/USD recovered from a low at 1.6250 after the BoE decided to leave rates on hold. Pair remains trading in a quite limited range between 1.6250 and 1.6340 with hourly indicators flat, giving no clues of further direction. Current quoting in the Asian session settles at 1.6315.

"4 hours chart shows indicators heading lower still above their midlines" points Valeria Bednarik, Chief Analyst at Adding that "while 20 SMA holds a strong bullish slope currently around 1.6280, lose of this last, could anticipate a break below mentioned 1.6250, pointing for a bearish extension towards 1.6200 price zone".

Support levels: 1.6300 1.6250 1.6220, Resistance levels: 1.6365 1.6400 1.6440

Forex: EUR/USD rallies to 1.4350; EUR/JPY up at 122.30 (Barcelona) - The European shared currency is flying higher in recent trade, testing key levels against its most direct competitors. It had been a quiet session so far, yet post fixing spikes have fortunately animated the velocity of printing.

EUR/USD has been able to kiss 1.4350 after surpassing marginally its former 20111 high at 1.4347. Selling orders were seen at the peak, forcing a quick retreat towards 1.4335/40.

EUR/JPY is another pairing reacting ferociously to the upside, moving from a low at 121.30 to make fresh session highs at 122.30. “Technical resistance at yesterday’s 122.55 high and stops are reported above 122.70" said Sean Lee at Forexlive.

USD/JPY has also been sent to higher ground, stalling at 85.30. GBP/USD trades near 1.6340.

Forex: USD/JPY on limited corrective movements (Barcelona) - Slightly lower, bearish corrective movements in the cross are still seen limited, after the pair fell to 84.50 strong static support zone yet managed to rebound towards 85.00 handle before the NY close. Presently price is unchanged in a slow Friday.

"Hourly chart shows price below 20 SMA that’s gaining bearish slope, while indicators are flat yet also below their midlines. 4 hours chart shows price testing 20 SMA just around current levels, with indicators heading also slightly lower. Risk to the downside after the latest earthquake, will depend on Nikkei movements" said Valeria Bednarik, Chief Analyst at

Support levels: 84.85 84.50 84.10, Resistance levels: 85.05 85.30 85.60 

Forex: EUR/USD makes it to 1.4400, up 0.70% (Barcelona) - Asian investors have turned their full attention to the Euro as the buying mood gathers momentum, riding prices higher to the extent that EUR/USD just touched the next big round number at 1.4400 after a sizeable barrier option at 1.4375 was pierced minutes ago.

So far in Asian trade, the Euro has completed a 100 pips upswing, taking the price from an open at 1.4300 all the way up to mentioned highs, presently consolidating gains at 1.4390. The slight hawkish comments from Trichet after the ECB rate hike along with fears of a Govt shutdown in the US have fueled the enthusiasm.

On the upside, next resistance is seen at 1.4440, while on the downside, 1.4350 should act as a value are to buy on dips. 

Forex: EUR/AUD trimming losses, away from 5-week low (Barcelona) - After being unable to make fresh new lows at 1.2900 vicinity early this year, EUR/AUD rallied strongly on anticipation of the rate hike campaign the ECB seems to have embarked upon, with April 7th marking the first of what may be a series of hikes this year.

The wild uplegs seen faltered abruptly mid last month around 1.4300 amid investor's incredulity to the large reversal from the Aussie, that sent price back towards 1.3600 support early this month.

In recent days, range bound conditions have prevailed yet since the bright jobs report released by the Australian Government yesterday, with unemployment rate falling to 4.9%, risk has shifted to the bottom side again, where the Aussie tested levels below 1,3600 briefly yesterday before being snapped back up into the range. Pair is on bullish tone at 1.3700 now in Asia.

From a daily perspective, a clear break to the downside may expose 1.3500 support ahead of 1.3400. Meanwhile, on the upside 1.3800/50 seems to be the next solid resistance.  

Forex: Asia sends Dollar south as US Govt shutdown is priced in (Barcelona) - With the option of having a US government shutdown being priced in by Asian traders, the Dollar was prompted by heavy selling over the past few hours. The latest reports are suggesting that the budget impasse between Obama, Reid and Boehner has failed after long talks. Euro is the major beneficiary.

EUR/USD remains trading at fresh 2011 high just below 1.4370, GBP/USD is picking up momentum towards 1.6360, USD/CHF dipped to 0.9130, AUD/USD is approaching 1.0500. USD/JPY is the only exception where dollar continued to add in recent gains, although the pair is off its highs now. Metals are also driving through new highs too. 

The German Trade Balance surplus tightens (Barcelona) - Destatis reported the German Trade Balance surplus was €11.4 bln in February whilst the Current Account surplus stood at €8.9 bln.

January's Current Account figure was revised to €7.1 bln. The Trade Balance surplus was recorded at €11.8 bln, market analysts anticipated an increase to €14.2 bln.

Forex: GBP/USD rally, might cap at 1.6400/40 - CharmerCharts (Barcelona) - Pound recovery from 1.5940 low last week has extended to 1.6400 where, according to Carol Harmer, technical analyst at CharmerCharts, the pair is likely to be capped by march high, at 1.6400 and trendline resistance at 1.6440.

The current rally is likely to be capped at 1.6400/40 resistance area, says Harmer: "Cable is in a good position to trade higher this morning, but we are looking limited initially to 1.6400 which is the previous March highs. We Also have a small trendline resistance point coming in at 1.6440 which should be the top of this immediate rally."

The potential corrective reaction, according to Harmer, should be contained by 1.6205/25 support zone: "We look for correction to hold between 1.6225 and 1.6205 over the next few sessions and this would give buyers a chance to come back into the market looking for further moves higher." 

Forex: GBP/USD, pushing against 1.6400 resistance (Barcelona) - The Pound has retraced the whole decline from March 22 to March 28, bouncing from 1.5930 to reach to 1.6400 resistance area, - 2011 high- under pressure ahead of the London session opening, as the Sterling reached 1.6405 high so far.

Above 1.6400 (March 22 high), the Pound night find resistance at 1.6460 (Jan 2010 high) and then 1.6500 (Psychological level). On the downside, support levels are 1.6315 (day low), and below here, 1.6255/60 (Apr 6/7 lows) and 1.6215 (intra-day level).

GBP/JPY retreat from 139.60/70 highs earlier this week found support at 137.85 low yesterday, and the pair bounced up on Asian session to pare loses and return to 139.60/70, 11-month highs, under pressure at the moment.

Asian markets up, Nikkei shudders after a new quake (Barcelona) - Asian markets have mostly gone higher on Friday with the Nikkei Index shaken after a new earthquake hit Japan, triggering panic on investors with the country still struggling to take control over troubled Fukushima nuclear complex.

The Nikkei Index dropped 0.6% on early trade, right after a 7.1 magnitude earthquake hit the North East area of the country, and bounced to 1.5% positive on afternoon trading in Japan, favoured after Fast Retailing Co revised upwards its net profit outlook after heavy losses over the last two quarters.

Australia, the ASX index advanced 0.4%, while Hong Kong Hang Seng Index added 0.6% and China's Shanghai Composite rose 0.4%. On the negative side, South Korean Kospi Index edged 0.1% down.

Euro rallies after ECB rate hike

The Euro has rallied across the board after the ECB hiked its benchmark interest rate fro the first time since mid 2008. EUR/USD rally from 1.4020 last week has extended to fresh 13-month highs above 1.4400. EUR/JPY regained 122.00 level.

GBP/USD has retraced the whole decline from March 22 to March 28, as recovery from 1.5930 area extended above 1.6355/65 highs to reach to 1.6400 resistance area, -the 2011 high- which s being tested right ahead of London session opening.

USD/JPY has remained trading sideways between 84.60 support area and 6-month high at 85.50, consolidating after having rallied from 76.25 lows on mid-March.