Currency Trading Summary - 16 April 2009

U.S. Dollar Trading (USD) the Dollar gained in Asia as stocks came under pressure for the second day in that region. Most of the gains were given up in the US session as equities bounced into the close. The EUR struggled once again but AUD and GBP rallied well. CPI (March) gained 0.2% vs. 0.1% forecast. Crude Oil closed down $0.16 ending the New York session at $49.25 per barrel. In US share markets, the Nasdaq was up 1 point or 0.07% whilst the Dow Jones was up 109.44 points or 1.38%. Looking ahead, March House Starts forecast at 0.54M vs. 0.583M previously. Also released Philly Fed (Apr) forecast at -32 vs. -35 previously.

The Euro (EUR) came under pressure in early Europe as ECB’s Weber commented on unconventional measures (ie. Quantitative Easing) at next months meeting. Also weighing was the EUR/GBP cross which continued to make new lows this week. A bounce in the US session on the back of EUR/JPY buying helped the Euro reclaim 1.3200 but further gains will require fresh USD weakness. Overall the EUR/USD traded with a low of 1.3148 and a high of 1.3296 before closing at 1.3230. Looking ahead, March Industrial Production forecast at -2.4% vs. -3.5% previously. Also released, Core CPI (Mar) forecast at 0.5% vs. 0.4% m/m previously.

The Japanese Yen (JPY) surged on the back of heavy cross sales in Asia with USD/JPY testing 98.20. AUD/JPY and EUR/JPY selling the main channel with the later testing 130 Yen before rebounding for the rest of the day. Continued speculation over the health of the Japanese economy is providing support for Yen weakness. Overall the USDJPY traded with a low of 98.15 and a high of 99.65 before closing the day around 99.40 in the New York session.

The Sterling (GBP) finally broke through the 1.500 level albeit not for very long on the back of improvement in the RICS house Price Balance which jumped to -73 vs. -78 previously. EUR/GBP selling and GBP/JPY buying helped the cable rally from low 1.48’s in the Europe. A sustained break is now needed to talk of further upside targets. Overall the GBP/USD traded with a low of 1.4824 and a high of 1.5036 before closing the day at 1.4990 in the New York session.

The Australian Dollar (AUD) came under pressure in Asia as rumors of large sell orders and weak stocks combined to push the pair towards supports at 0.7150. The rebound came with the change in sentiment New York and the rally seen in Copper prices and AUD/JPY. The run up to 0.7300 has been quite fast so pullbacks are healthy for the resurgent Aussie. Overall the AUD/USD traded with a low of 0.7149 and a high of 0.7295 before closing the US session at 0.7275.

Gold (XAU) tested both sides of the range with $900 proving too much while $886 supported after US data sent demand for Gold lower. Overall trading with a low of USD$886 and high of USD$899 before ending the New York session at USD$890 an ounce.