Forex Bulletin, April 14, 2011

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FOREX Newsletter 

1

April 14, 2011

Pulse of the Market Dollar fell against Cable and advanced against the Euro and Yen on Beige Book and budget proposal Euro edged lower as Greek, Irish and Portuguese troubles come under greater analysis British Pound heavily dependent on its interest rate potential with positive employment data

The Greenback ended yesterday’s trading session lower against most of the major currencies but rose against the Single Currency. The latest consumer spending and Beige Book reports indicate that the 0.00~0. U.S U.S reco recove very ry rema remain ins s on trac track, k, but but rega regard rdle less ss of thes these e posi positi tive ve 25% reports, investors are still uncertain about buying U.S Dollars. The 1.25% recent recent decli decline ne in commo commodi dity ty price prices s has reduce reduced d the press pressure ure on other central banks to raise rates but the reality is that central banks 0.50% in Europe and Asia are still more aggressive than the Fed and for that 0.10% reason the gains in the Greenback have been limited. According to the latest Beige Book report, the U.S economy is improving thanks to 1.00% the pickup in job growth and acceleration in manufacturing activity. Consumer er spendi spending ng rose rose 0.4 percen percentt last last month month,, down down from from 1.1 4.75% Consum percen percentt in Februa February. ry. This This marked marked the ninth ninth consec consecuti utive ve month month of  3.00% positive retail sales growth but also the smallest gain in nine months. Yield Euro traded lower against the U.S Dollar pressured by profit taking. Economic data from the Euro Zone was better than expected with 0.73% 0.73% France and Germany reported stronger inflationary pressures. Consumer prices in France rose 0.9 percent, driving the annualized 2.17% pace of growth up 2.2 from 1.8 percent. Germany wholesale prices rose rose anothe anotherr 1.3 percen percent. t. Indust Industri rial al produc productio tion n also also increa increased sed 0.4 percent. Yet weaker growth forecasts from the Italian government and S&P’s warning of a possible downgrade has prevented the Euro from extending its gains. Slower growth in Italy could mean slower growth for the entire region as it is the third largest economy in the Euro Zone. The Italian government cut its 2011 GDP forecast. Cable ended ended the sessio session n unchan unchanged ged agains againstt the Green Greenbac back k and sli slight ghtly ly stronger against the Euro. U.K labor data for March printed mixed leav leavin ing g curr curren ency cy marke arkets ts unce uncert rtai ain n as to the the stat state e of the the U.K  U.K  econom economic ic recove recovery. ry. U.K U.K claim claimant ant count count was worse worse than than foreca forecast st increasing to 0.7K from -3.6K originally expected. On the other hand

Recent Interest Rates & US Treasury Yields USD

EUR GBP JPY  CAD AUD NZD

2-yr Yield 5-yr Yield

Time(G MT)

Chan ge -0.01 -0.03

Economic Release

IM

Actual

3.5%

Forec ast

Prior

01:00

AUD Consumer Inflation Expectation

Low

3.6%

07:00

CNY New Yuan Loans (MAR)

High

08:00

EUR ECB Publishes Monthly Report

Medium

09:00

CHF ZEW Survey (Expectations)

Medium

12:30

USD Producer Price Index (YoY) (MAR)

Medium

6.4%

5.6%

12:30

CAD Manufacturing Sales (MoM) (FEB)

Low

-0.5%

4.5%

12:30

USD Continuing Claims (APR 2)

Low

3705K

3723K  

12:30

USD Initial Jobless Claims (APR 9)

Low

380K

38 382K  

600.0 B

535.6B

-13.5

Euro The Single Currency tested resistance above 1.4500 but this was redundant and the market tracked U.S stocks lower in the New York trading session. February Industrial Production rose 0.4% vs. 0.7% forecast m/m. The Euro remains near its 15 month high set against the U.S Dollar earlier this week as investors expect the interest rate gap between the Euro Zone and the U.S to further widen. Overall, the EUR/USD traded with a low of  1.4412 and a high of 1.4519 before closing the day around 1.4442 in the New York session.

Yen The Japanese Yen fell against all 16 of its major counterparts as global stocks gained, encouraging investors to seek riskier, but higher yielding assets. The USD/JPY move to day highs at the start of the U.S session on some EUR/JPY buying but this was reversed later as analysts downgraded U.S GDP forecasts and U.S Bond yields fell in response. USD/JPY moves are closely linked with U.S bonds yields which are used by investors to predict the timing of U.S FOMC Rate Hikes. Overall, the USD/JPY traded with a low of 83.49 and a high of 84.25 before closing the day around 83.82 in the New York session.

British Pound The British Pound was extremely contained against the U.S Dollar and Yen but made gains against the Single Currency as the markets waited for fresh catalysts. U.K March Claimant count was +0.7k vs. -10k previously. The Jobless Rate fared better dropping to 7.8% vs. 8.0% previously. Bets of higher rates faded fast after a report showed that CPI, actually contracted last month. Overall the GBP/USD traded with a low of 1.6236 and a high of  1.6308 before closing the day at 1.6266 in the New York session.

Canadian Dollar The Canadian Dollar held steady against the Greenback. Loonie recovered from early losses as a strong retail sales report in the U.S, the primary destination for Canadian exports, offset waning interest in the Canadian Dollar after the Bank of Canada left interest rates on hold and invalidated expectations of imminent hikes. Overall the USD/CAD traded with a low of 0.9583 and a high of 0.9653 before closing the day at 0.09622 in the New York session.

Euro-Yen EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is issuing a bullish stance. The RSI is above 64 and lies above the neutral zone. Overall, the cross has gained 0.06%.

Sterling-Yen Currently GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing bearish and MACD is indicating a bullish stance. The RSI is above 56 reading and lies above the neutral zone. The pair has gained 0.32%.

Aussie-Yen Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic gives bearish and MACD is indicating a bullish stance. The RSI is above 60 reading and lies above the neutral region. The cross has gained 0.94%.

Euro-Sterling This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish and MACD is also issuing a bullish signal. The RSI is above 64 reading and lies above the neutral region. The pair has lost 0.29%.

Sterling-Swiss This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The RSI is above 38 and lies below the neutral region. The pair has lost 0.03%.

Appendix

Currency EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD EUR/JPY GBP/JPY CHF/JPY AUD/JPY EUR/GBP EUR/CHF GBP/CHF

FOREX Closing Prices for April 13, 2011 Open High Low Close

1.4475 83.60 1.6253 0.8966 0.9625 121.04 135.93 93.24 87.23 0.8904 1.2980 1.4574

1.4519 84.25 1.6308 0.8990 0.9653 122.15 137.19 93.89 88.50 0.8922 1.3042 1.4630

1.4412 83.49 1.6236 0.8927 0.9583 120.75 135.69 93.11 87.21 0.8870 1.2914 1.4538

1.4442 83.82 1.6266 0.8962 0.9622 121.06 136.35 93.50 88.05 0.8876 1.2944 1.4578

Net Chg

-0.0035 0.2400 0.0006 -0.0006 -0.0005 0.0700 0.4400 0.3200 0.8200 -0.0026 -0.0040 -0.0004

Daily Pivot Points Trading Range Contract EUR/USD USD/JPY GBP/USD USD/CHF USD/CAD EUR/JPY GBP/JPY CHF/JPY AUD/JPY EUR/GBP EUR/CHF GBP/CHF

S3 1.4289 82.70 1.6160 0.8866 0.9516 119.09 134.13 92.33 86.05 0.8805 1.2763 1.4442

S2 1.4351 83.09 1.6198 0.8897 0.9549 119.92 134.91 92.72 86.63 0.8837 1.2839 1.4490

S1 1.4396 83.46 1.6232 0.8929 0.9586 120.49 135.63 93.11 87.34 0.8857 1.2891 1.4534

Pivot 1.4458 83.85 1.6270 0.8960 0.9619 121.32 136.41 93.50 87.92 0.8889 1.2967 1.4582

R1 1.4503 84.22 1.6304 0.8992 0.9656 121.89 137.13 93.89 88.63 0.8909 1.3019 1.4626

R2 1.4565 84.61 1.6342 0.9023 0.9689 122.72 137.91 94.28 89.21 0.8941 1.3095 1.4674

R3 1.4610 84.98 1.6376 0.9055 0.9726 123.29 138.63 94.67 89.92 0.8961 1.3147 1.4718

Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury) Disclaimer This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FSA. The firm or its staff members may trade on their own account and may from time to time hold or act as market makers in investments mentioned in this document. Please note that the firm makes no warranty, expressed or implied, as to the accuracy or completeness of  the information and opinions herein. All parties are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. City Credit Capital (UK) Ltd is authorized and regulated by the Financial Services Authority, reg 232015 .

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