ForexNewsNow Daily Market Overview for March 23rd, 2011

ForexNewsNow | Published on March 23, 2011 at 3:05 am

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NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar turned in a mixed performance on Tuesday according to the daily forex news, dropping sharply against Sterling, the Australian Dollar and the New Zealand Dollar, while rising marginally against the Euro, the Swiss Franc and the Canadian Dollar.

The biggest mover on Tuesday in realtime forex trading was Cable, with Sterling rallying strongly versus the U.S. Dollar after U.K. Headline CPI came out showing an increase of +4.4% year on year in February. The number was significantly higher than the previous reading of +4.0% and also beat the market consensus of a rise of +4.2%. This increased expectations in the market of a BOE rate hike of around 25 bps for the meeting in July, and was the highest U.K. inflation number seen since October of 2008. The number has been consistently above the target of 2% for the last 15 months.

Elsewhere, the Japanese Yen was up marginally against the Greenback as Japan continues coping with additional aftershocks after the March 11th 9.0 magnitude earthquake. Japanese Finance Minister Noda reiterated that the concerted intervention of the G-7 countries was “significant for stability in the markets”. Also, Japanese All Industries Activity increased by +2.9% month on month.

March 22nd Important Economic Developments:

  1. U.K. Headline CPI rises to 4.4% – As mentioned above, GBPUSD news showed U.K. Headline CPI rose to +4.4% fueling a rally in Sterling. GBPUSD rose to a new recent high of 1.6399 closing at 1.6362 for the day’s session, and exceeding the high made on March 2nd of 1.6342.
  2. Swiss Trade Balance – The Swiss Trade Balance came out showing a surplus of 2.49B, significantly higher than the expected surplus of 2.13B.
  3. Canadian Retail Sales – Canadian Core Retail Sales came out showing a disappointing decline of –0.3%, considerably lower than the market consensus of a +1.1% rise.
  4. New Zealand Current Account – The New Zealand Dollar made a new recent high at 0.7445 and closed at 0.7398 despite the New Zealand Current Account showing a deficit of –3.52B, versus an expected deficit of –2.13B.
  5. Japanese All Industries Activity – The Japanese Yen gained some ground against the Greenback after the Japanese All Industries Activity came out showing an increase of +2.9% m/m, versus an expected increase of +2.7%.

March 23rd Forex Events for Traders to Watch

  1. U.K. MPC Meeting Minutes – The release of the BOE’s MPC Meeting Minutes for March is expected to show three members advocating for higher interest rates, and six members to leave rates unchanged, while all members are expected to leave the Asset Purchase Facility at 200B. Given yesterday’s high CPI number, purchasing a binary GBP call/USD put option may provide a good opportunity for a profitable transaction if additional MPC members advocate for higher interest rates.
  2. U.S. New Home Sales – The U.S. housing sector has been under considerable pressure lately, New Home Sales are expected to show a rise to 291K from a previous 284K.
  3. New Zealand GDP – New Zealand GDP is expected to increase by +0.1% versus a previous decline of –0.2% for the first quarter. Given yesterday’s rally, the Kiwi may rise significantly if the number comes out better than expected.
  4. Australian CB Leading Index – The Australian CB Leading Index came out showing an increase of +0.7% last month. A higher number may further fuel the rally in AUDUSD.
  5. Japanese Trade Balance – Given the recent volatility in the USDJPY rate, the Japanese Trade Balance may further influence the rate. The market is expecting the surplus to expand to +0.68T from its previous surplus of +0.19T.

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