By FXEmpire.com
Analysis and Recommendation: (close of Asian session)
The USD/JPY held at two-month highs against the dollar on Tuesday, having rallied across the board overnight as investors snapped up the safe-haven currency after disappointing economic news from Canada to Spain tempered risk sentiment.
Data showing Spain slipping into recession, Canada’s economy unexpectedly shrinking in February and business activity in the U.S. Midwest falling sharply gave markets the green light to cash in on recent gains in risk assets.
The dollar fell as deep as 79.73 yen, bringing the 100-day moving average at 79.58 in focus. It last stood at 79.85. The euro skidded to a two-week low at 105.47 yen, before steadying at 105.74.
Traders said final month-end positioning on Monday also contributed to the choppy price action.
Chinese manufacturing expanded for a fifth straight month in April, prompting optimism about a moderate improvement in economic activity.
The state-affiliated China Federation of Logistics and Purchasing said on Tuesday its purchasing managers’ index, or PMI, rose 0.2 percentage points to 53.3 per cent in April, up from March’s 53.1 and February’s 51.0. A reading above 50 signifies expansion.
China’s economic growth declined to 8.9 per cent in the final quarter of last year after Beijing increased interest rates and tightened other controls to cool inflation.
Chinese leaders reversed course in December and promised more bank lending to help companies cope with a slump in global demand, but changes have been gradual.
Still, trading is likely to be subdued with much of Asia and Europe is closed on Tuesday for the May Day holiday.
Economic Data for April 30- May 1, 2012 actual v. forecast
|
EUR |
CPI (YoY) |
2.6% |
2.5% |
2.6% |
|
|
USD |
Core PCE Price Index (MoM) |
0.2% |
0.2% |
0.1% |
|
|
GDP (MoM) |
-0.2% |
0.2% |
0.1% |
||
|
USD |
Personal Spending (MoM) |
0.3% |
0.4% |
0.9% |
|
|
USD |
Chicago PMI |
56.2 |
61.0 |
62.2 |
|
|
NZD |
Labor Cost Index (QoQ) |
0.5% |
0.5% |
0.7% |
|
|
May 01 |
CNY |
Chinese Manufacturing PMI |
53.30 |
53.60 |
53.10 |
|
AUD |
House Price Index (QoQ) |
-1.10% |
-0.50% |
-0.70% |
|
|
AUD |
Interest Rate Decision |
3.75% |
4.00% |
4.25% |
Economic Events for May 1, 2012 for the Asian and US Markets
01:30 JPY Labor Cash Earnings 0.7%
Indicator released by the Ministry of Health, Labor and Welfare shows the average income, before taxes, per regular employee. It includes overtime pay and bonuses but it doesn’t take into account earnings from holding financial assets or capital gains. Higher income puts upward pressures over consumption; therefore an increasing trend in earnings is inflationary for the Japanese economy.
02:30 CNY HSBC Manufacturing PMI 48.3
The HSBC Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics is an early indicator of economic health in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has influence on the global economy, this economic indicator would have an impact on the Forex market.
12:15 USD ADP Employment Change 209K
The Employment Change released by the Automatic Data Processing, Inc is a measure of the change in the number of employed people in the US Generally speaking; a rise in this indicator has positive implications for consumer spending which stimulates economic growth.
14:00 USD Factory Orders 1.3%
The Factory orders released by the US Census Bureau is a measure of the total orders of durable and non durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector.
22:30 AUD AIG Performance of Services Index 47
AIG Performance of Services Index released by the Australian Industry Group presents business conditions in the Australian service sector. The group surveys 200 manufacturers on their assessment of the business situation including employment, production, orders, prices, and inventories, and their short-term planning. A result above 50 is seen as positive (or bullish) for the AUD, whereas a result below 50 is seen as negative (or bearish).
22:45 NZD Unemployment Rate .3%
The Unemployment Rate released by the Statistics New Zealand is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand lobar market. As a result, a rise leads to weaken the Australian economy.
Government Bond Auctions (this week)
Date Time Country
May 02 09:10 Sweden
May 02 09:30 Portugal
May 02 13:00 US
May 03 08:30 Spain
May 03 08:50 France
May 03 09:10 Sweden
May 03 09:30 UK
May 08 09:15 Austria
May 08 09:30 Belgium
May 08 14:30 UK
May 08 15:30 Italy
May 08 17:00 US
May 09 09:10 Sweden
May 09 09:30 Germany
May 09 09:30 Swiss
May 09 09:30 UK
May 09 14:30 Sweden
May 09 15:30 Italy
May 09 17:00 US
May 10 15:00 US
May 10 17:00 US
May 11 09:10 Italy BOT auction
May 11 10:00 Belgium
Click here to read USD/JPY Technical Analysis.
Originally posted here
