EUR/USD
The Euro initially consolidated in the 1.31 area against the US dollar during Tuesday and then pushed higher ahead of the US open in choppy trading conditions.
There was a rise in Italian yields at the latest bill auction, but the markets were focussing primarily on the longer-term bond yields which lessened the impact. After the spike higher the previous day, there was a sharp drop in Spanish yields which helped stabilise market sentiment with some speculation that the ECB could re-start its bond-buying programme. There was also an improvement in risk appetite as equity markets rallied and this helped curb defensive dollar demand. With a squeeze in short positions in evidence, there was a Euro rally to the 1.3150 region.
The Euro found it difficult to gain sustained support as there was still an important element of unease surrounding the Euro-zone outlook. There were continuing fears surrounding the Spanish outlook with particular fears surrounding the banking sector as negative media coverage continued.
There were no major US economic releases during the day while the Federal Reserve Beige Book stated that growth conditions were modest to moderate which was the same as the previous two releases and had only a limited impact. Markets will remain on high alert over comments from Federal Reserve officials given the uncertainty over the policy outlook. Regional President Bullard stated that policy was appropriately loose, but that the very easy policy should not be extended for too long. Similarly, Governor Yellen stated that the loose monetary policy was appropriate for now and that further action could be required if the economy deteriorated again.
The Euro retreated back to the 1.31 region against the US currency in subdued conditions before rallying back to the 1.3140 area as risk appetite remained firmer.
Source: VantagePoint Intermarket Analysis Software
Call now and you will be provided with FREE recent forecasts
that are up to 86% accurate* 800-732-5407
If you would rather have the recent forecasts sent to you, please go here
Yen
The dollar was unable to break above the 81 level against the yen in early Europe on Wednesday and dipped to six-week lows in the 80.60 region ahead of the US open as yield support remained weaker.
The yen was also generally resilient despite reports that the Bank of Japan would consider a further relaxation of monetary policy at the late-April policy meeting. There were still important concerns surrounding the Asian economic outlook which curbed yen selling pressure.
The North Korean situation remained a significant focus as it prepared for a missile launch and markets will remain on alert given the potential yen impact if there is any launch. The dollar edged firmer during the Asian session as there was a more confident tone surrounding regional risk.
Sterling
Sterling was able to find support just below the 1.59 level against the US dollar during Wednesday and continued to test resistance levels above 1.5920, although it was unable to break through. The UK maintained a strong tone against the Euro as it held below the 0.8250 level while the trade-weighted index was at a 14-month high.
Markets took a slightly more optimistic tone surrounding the domestic economy which helped underpin Sterling sentiment. There was also further speculation that the UK would gain additional support on safe-haven grounds. There was, however, relatively weak demand at the latest bond auction which suggested limits to Sterling demand at lower yields.
Sterling again tested resistance above 1.59 in Asia on Thursday with further reports of sovereign interest for the UK currency.
Swiss franc
The dollar found support in the 0.9140 area against the franc on Wednesday and rallied back to the 0.9175 region. A firmer dollar trend was compounded by a slightly weaker franc tone on the crosses. The Euro rallied to the 1.2025 area as failure to break the 1.20 minimum level this week encouraged some reduction in long franc positions. There were also some investment-bank speculation that the central bank could raise the minimum level to the 1.25 level which curbed franc buying support.
There will still be underlying concerns surrounding the Euro-zone structural outlook which will tend to discourage capital outflows from the Swiss currency.
Source: VantagePoint Intermarket Analysis Software
Call now and you will be provided with FREE recent forecasts
that are up to 86% accurate* 800-732-5407
If you would rather have the recent forecasts sent to you, please go here
Australian dollar
The Australian dollar found support in the 1.0270 region against the US dollar on Wednesday and rallied to challenge resistance levels above the 1.03 region, but it was unable to make significant headway. The currency struggled to gain robust support even with a general improvement in risk appetite.
The currency secured broader support in Asia on Thursday following a stronger than expected labour-market report with an employment increase of 44,000 for March following a 15,400 decline the previous month while unemployment held at 5.2%. With a slightly more robust attitude towards risk, the Australian dollar advanced to a five-week high in the 1.0380 area against the US dollar.
