Daily FX Market Outlook by AceTrader 29-4-2011

Market Review – 28/04/2011 20:10 GMT

Euro retreats from fresh 16-month high on profit-taking

The euro initially extended recent sharp ascent to a fresh 16-month high of 1.4882 in Asian trading session on Thursday following comments by Federal Reserve President Ben Bernanke who signaled that the central bank was unsure when it would tighten its monetary policy. However, price then ratcheted lower from aforesaid Asian high in European trading session and despite staging brief rebound after the release of weaker-than-expected U.S. economic data in New York morning, the single currency later fell marginally to an intra-day low of 1.4773 before staging another rebound in New York midday.

U.S. Q1 GDP came in at 1.8% versus economists’ forecast of 2.0%. U.S. weekly jobless claims rose to 429,000 (forecast was 392,000) from previous reading of upwardly revised 404,000.   
In the other news, Eurogroup chief Jean-Claude Juncker was quoted as saying that ‘confident deal will be found on Portugal aid by mid-May; a Greek debt restructuring is not an option; shares French President Nicolas Sarkozy’s position regarding Bank of Italy Governor Mario Draghi is contender for European Central Bank job.’  
The British pound tracked euro’s intra-day movement closely. Despite extending recent upmove to a new 16-month high of 1.6747 in Asian trading, the pound ratcheted lower in European and New York sessions and eventually fell to an intra-day low of 1.6622 in New York midday before trading sideways.   
The US Dollar Index, which tracks the greenback against a basket of currencies, sank to a 3-year low of 72.871 on speculation that the Fed will lag behind other developed economies in raising its interest rate.   
The usd/jpy pair declined again after meeting renewed selling interest at 82.28 in Asian morning after the sharp selloff from 82.82 on Wednesday and price then dropped swiftly to 81.48 in European morning. Later, despite staging a brief recovery in European midday, the pair weakened to an intra-day low of 81.40 before trading sideways in late New York session.  
Earlier, the Bank of Japan kept overnight call rate target unchanged at 0-0.1% by unanimous vote. Bank of Japan Deputy Governor Kiyohiko Nishimura proposed increase of asset buying fund by 5 trillion yen but the proposal was turned down by vote of 1 to 8. Bank of Japan said it would accept application for loans under new scheme for quake-hit banks until end-Oct 2011.  
Data to be released on Friday include:  
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.