The Euro wavered from up a few pips to down a few pips throughout most of the New York session as very limited news changed hands. Last night Greece concluded a successful 6-month and 52 week T-Bill auction. Demand was strong and the bid-to-cover impressive. Interest rates were high, but better than they were last week. Traders are now waiting for the next move by Greece. They are either going to be satisfied with the proceeds of the auction or have to use some of the funds available from the European Union bailout package. Investors remain cautious about going long the Euro. Hedge funds are still selling rallies.
The GBP USD traded higher after a better than expected trade report. The U.K. trade data showed that the deficit narrowed substantially in February. After the initial thrust to the upside, the British Pound settled into a range before turning lower.
British Pound traders are becoming nervous about holding on to longs ahead of next month’s elections. Investors are still waiting for either party to submit a plan to reduce the budget deficit. Monday’s closing price reversal top was confirmed, indicating a developing downside bias.
The sideways Euro helped to hold the USD CHF in a range between two retracement levels at 1.0610 and 1.5068. Look for this pair to remain range bound until the Euro makes a move. A weaker Euro will pressure the Swiss Franc. A strong Euro will diminish the possibility of an intervention by the Swiss National Bank.
The inability to break U.S. equity markets lent some support to the USD JPY but this pair was still trading lower in limited trading. This pair is walking down a Gann angle at 93.27. If this angle fails, then look for an acceleration to 93.67. A continuation of the downtrend could trigger a break to 92.26.
A rift has developed between the Japanese government and the Bank of Japan. The government wants the BoJ to be more aggressive in fighting its battle against deflation.
The USD CAD has been trading in a range for about four days, indicating impending volatility. Oversold conditions have been contributing to the low momentum and low volatility. As long as last week’s reversal bottom at .9975 holds as support, then there is the possibility of a rally back to 1.0138. Breaking through the bottom is likely to trigger an acceleration to the downside, now that a large group of traders has committed to a rate hike on June 1st rather than in July. Higher interest rates will attract more foreign buying of the Canadian Dollar.
The AUD USD was under pressure during most of the New York session in a follow-through break following Monday’s closing price reversal top. Traders are paring positions after Monday’s Australian Housing report showed mortgage approvals had dropped unexpectedly. This could mean that the Reserve Bank of Australia may be considering skipping an interest rate hike at its next session. Traders are adjusting their positions in anticipation of this taking place. The chart indicates that a move to .9194 is likely over the near-term.
The NZD USD traded flat to lower most of the day-session. The lack of buyers and the lack of conviction in holding higher yielding assets helped to pressure this market. The late session turnaround in the U.S. equity markets prevented this currency pair from selling off into the close.
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