Daily FX Market Outlook by AceTrader 18-4-2011

Market Review – 15/04/2011 19:57 GMT

Euro falls on renewed fears over European periphery debt defaults

Euro fell against the dollar and the Japanese yen on Friday as fears over European periphery debt defaults increased after Moody’s cut Ireland’s rating to just above ‘junk’ status.

Moody’s downgraded Ireland to BAA3 from BAA1 and outlook remained negative.   
Euro ratcheted lower from Asian morning high of 1.4504 following an extremely volatile trading session on the previous day and despite staging a brief but strong rebound following a dip to 1.4451 after Moody’s downgraded Ireland’s debt rating, selling interest quickly emerged below said intra-day resistance and price then retreated swiftly. Later, the single currency fell sharply to the day’s low of 1.4390 in New York morning after German Deputy Foreign Minister Werner Hoyer said in an interview that ‘a Greek debt restructuring would not be a disaster’, however, euro managed to recover following remarks from European Central Bank Governing Council member Athanasios Orphanides. Orphanides said in an event held in New York that a Greek debt restructuring would be undesirable as well as unnecessary, adding that ‘the whole of Europe’ is supporting the country.  
The British pound fell from Asian high of 1.6373 after failure to penetrate previous session’s 1.6385 high and despite staging a recovery from 1.6317, selling interest below said resistance capped intra-day rebound. Later, cable declined to a day’s low of 1.6294 in tandem with the euro in New York morning.  
The continued surge in commodity prices underpinned the Australian dollar, the New Zealand dollar and the Canadian dollar. Aud/usd rebounded strongly from 1.0511 to 1.0579 (shy of Monday’s 29-year high of 1.0585), nzd/usd rose above previous top of 0.7976 to a 3-year high of 0.8000 while usd/cad fell from 0.9650 to 0.9591. Spot gold price posted another record high of 1486.90/oz and spot silver price strengthened to a fresh 31-year high of 42.82/oz.  
On the data front, eurozone February trade balance came in at -1.5 billion euros versus economists’ forecast of 2.2 billion. Eurozone March inflation rose by 1.4% m/m and 2.7% y/y, slightly higher than the expectations of 1.3% m/m and 2.6% y/y. Eurozone March inflation excluding energy and unprocessed food increased by 1.3% m/m and 1.5% y/y against consensus forecast of 1.0% m/m and 1.1% y/y respectively. U.S. March CPI rose by 0.5% m/m and 2.7% y/y versus the economists’ forecast of 0.5% m/m and 2.6% y/y respectively.  
Data to be released next week:  
New Zealand CPI; U.K. Rightmove house prices; EU consumer sentiment; U.S. NAHB housing market index on Monday.  
Reserve Bank of Australia’s board April minutes; Japan Consumer confidence and machine tools orders; Germany manufacturing and service PMI; EU manufacturing and service PMI and current account; Canada CPI, leading indicators and wholesale sales; U.S. housing starts and building permits on Tuesday.  
Japan import / export, trade balance and tertiary industry index; Australia Westpac consumer confidence and import / export price index; Germany PPI; Bank of England minutes of the MPC’s meeting; U.S. existing home sales on Wednesday.  
Australia PPI; Japan Leading indicators; Germany Ifo business climate and current assessment; U.K. retail sales, public sector net cash requirement (PSNCR) and public sector net borrowing; U.S. jobless claims, leading indicators and Philadelphia Fed survey; Canada retail sales on Thursday.  
New Zealand, Australia, U.K., EU, Germany, Swiss, Canada and U.S. markets will be closed on Friday (Good Friday holiday).