Daily FX Market Outlook by AceTrader 26-4-2011

Market Review – 21/04/2011 19:18 GMT

Euro retreats from16-month high of 1.4649 on profit-taking ahead of Good Friday holiday

The single currency extended Wednesday’s rally to a fresh 16-month high of 1.4649 in European morning on Thursday due to dollar’s broad-based selling and then pared most of the gains after the comments from European Central Bank President Jean-Claude Trichet who said that there is no decision on a series of rate rises together with active long liquidations ahead of the Easter holiday. Euro retreated to a low of 1.4532 in late U.S. session.

German April IFO business climate came in at 110.4 versus forecast of 110.5 with previous reading of 111.1. European Central Bank President Jean-Claude Trichet also said that the global economic recovery appeared to be self-sustaining and he believed that the United States would successfully tackle its budgetary situation. Referring to the ongoing negotiations for a European Union-International Monetary Fund bailout deal for Portugal, Trichet said that talks were based on the understanding that an agreement could be reached ahead of upcoming Portuguese elections.   
China ambassador Song Zhe told the European Union that it is possible China will buy more euro zone sovereign debts. He added that China is investing in Euro zone bonds to diversify its reserve portfolio.  
The British pound jumped up after the release of much better-than-expected U.K. March retail sales data which came in at a rise of 0.2% m/m and 1.3% y/y versus the economists’ expectation of -0.5% m/m and 0.9% y/y respectively. U.K. March public sector net cash requirement (PSNCR) came in at 24.831 billion pound versus forecast of 14.5 billion pound. U.K. March public sector net borrowing came in at 16.393 billion pound versus forecast of 18.55 billion pound. U.K. March mortgage approval came in at 44,000 versus economists’ expectation of 48,000. Cable rose to a fresh 16-month high of 1.6600 before retreating to 1.6509 in late U.S. session on active profit-taking. U.S. dollar also weakened to a fresh lifetime low of 0.8782 against the Swiss Franc before recovering.  
On the data front, U.S. initial jobless claims came in at 403,000 which was higher than economists’ forecast of 392,000. U.S. leading indicator rose for ninth straight month in March by 0.4% versus forecast of 0.2%. Philadelphia Fed survey of manufacturers in April fell from 43.4 to 18.5 versus forecast of 37.0.  
All major markets except Japan’s market will be closed for Good Friday holiday. Data to be released next week include:  
New Zealand, Australia, H.K., U.K., EU, Germany, France and Swiss markets will be closed on Monday (Easter Monday holiday). U.S. new home sales on Monday.  
Swiss trade balance; Germany import price index and retail sales; U.K. Confederation of British Industry (CBI) orders, S&P/Case-Shiller home price, consumer confidence and Richmond Fed manufacturing on Tuesday.  
U.K. Nationwide house prices and GDP; Japan retail sales; Australia CPI; Germany Gfk consumer confidence survey, CPI and HICP; EU industrial orders; U.S. durable goods, Midwest manufacturing, Fed April rate decision and policy statement on Wednesday.  
New Zealand RBNZ rate decision; Japan household spending, CPI, unemployment rate, BOJ April rate decision, construction orders and housing starts; U.K. Gfk survey; Germany unemployment rate; U.S. GDP, GDP deflator, personal consumption expenditures (PCE) core Q/Q, jobless claims and pending home sales on Thursday.  
New Zealand import and export and trade balance; EU business climate, economic, industrial and consumer sentiment, HICP flash and unemployment rate; Swiss KOF indicator; U.S. personal spending, personal income, PCE index M/M, Chicago PMI and U. Michigan survey Preliminary; Canada GDP on Friday.