Posted on April 12, 2012 by Trading Point Investment Research Desk at 12:44 pm GMT
EURUSD advanced higher going into the US trading session, breaking out of a range to hit a one week high of 1.3175. During most of the European session, the pair was trading within a range formed since the start of this week, meeting firm resistance at the 1.3150 level. The Italian bond auction today caused little reaction, though yields are lower, down to 5.4 percent. The same holds for Spanish bond yields, which were mostly flat today at around 5.8 percent, calming markets after reaching near 6 percent on Tuesday. This prompted the ECB to announce that if necessary it would step in with its SMP bond buying program to help Spain.
GBPUSD is up 0.4 percent from yesterday’s close, hitting a high of 1.5970 despite the release of a widened trade deficit. the trade deficit widened more than expected in February to £8.8 billion from £7.9 billion in January.
USDJPY did little in the European trading session, stuck in a range since late Wednesday. Yen is struggling to gain after Bank of Japan Governor Shirakawa commented today that the BOJ is committed to its ultra loose policy. If this is confirmed in the next policy meeting, this will limit yen strength, unless there is risk aversion in the markets. USDJPY traded a range of 80.81 – 81.12. EURJPY opened the European session at 106.33 and edged higher to 106.68 on broad euro strength today.
Aussie is outperforming today following the release of stronger than expected employment data and is up 0.9 percent heading into the New York trading session. Australia added 44, 000 jobs in March reducing fears of a slowdown in the economy. AUDUSD surged after the data from 1.0302, steadily rising to a European session high of 1.0414. The focus turns to China GDP report tomorrow. China is a major trading partner for Australia and so any weak Chinese data is negative for the AUD.
USDCHF downtrend from a week ago is still in tact, with the pair touching a low of 0.9122, versus the April 5 high of 0.9221. Dollar weakness is weighing on the pair since the recent Fed policy meeting minutes signalled no more quantitative easing.
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