NEW YORK (Forex News Now) – Daily Market Overview – The U.S. Dollar repeated a mixed performance on Wednesday according to the daily forex news, rallying strongly against both Sterling and the Euro and gaining marginally against the Canadian Dollar. Nevertheless, the Greenback lost ground against the Australian and New Zealand Dollars, and consolidated against the Japanese Yen, trading in a tight range for most of Wednesday’s session.
The GBPUSD news showed Cable gave up considerable ground Wednesday after the BOE’s MPC Meeting Minutes for March showed only three members of the MPC voted to raise rates. Two members, Spencer Dale and Martin Weale voted for a 25 bps hike to 0.75%, while longtime dissenter Andrew Sentance continued advocating for a 50 bps increase to 1.0%. The market showed its disappointment that no other members voted for an increase in the wake of Tuesday’s Headline CPI number increasing to +4.4%.
In addition, EURUSD analysis showed the Euro came under considerable pressure against the Greenback after Portuguese Prime Minister Jose Socrates tendered his resignation. The Prime Minister resigned primarily because of the Portuguese parliament’s rejection of Socrates’ latest austerity measures aimed at avoiding a EU/IMF bailout. The Prime Minister’s resignation will allow for talks on a bailout which could begin as early as this week.
Elsewhere, the New Zealand Dollar rallied sharply after news that New Zealand GDP increased by +0.2%, beating the consensus of a +0.1% increase. The Australian Dollar also gained against the Greenback in part due to a strong rally in the price of gold, which is approaching its all time high of $1,444.79.
March 23rd Important Economic Developments:
- U.K. MPC Meeting Minutes Disappoint – As noted above, Sterling got slammed after the MPC Meeting Minutes for the March meeting showed only three policy makers advocated for raising rates.
- Lower U.S. New Home Sales – New Home Sales in the United States increased by only 250K, considerably lower than the 291K expected. Nevertheless, the previous number was revised significantly higher from 284K to 301K.
- New Zealand GDP Beats Estimates – New Zealand GDP rose by 0.2%, beating estimates of a 0.1% rise. The number sparked a significant rally in NZDUSD.
- The Price of Gold – The price of gold rallied considerably to the $1,439 level lending support to the AUDUSD rate.
- Japanese Trade Balance – The Japanese Trade Balance contracted to a surplus of +0.56T versus an expected surplus of +0.68T. Nevertheless, the previous number was revised significantly higher from +0.19T to +0.27T.
March 24th Forex Events for Traders to Watch
1. EU Economic Summit – The resignation of Portuguese PM Jose Socrates puts additional focus on the outcome of these key European Union financial meetings being held in Brussels through Friday and attended by heads of state. Topics to be discussed include: bank stress tests, the Irish crisis and the European Financial Stability Facility fund where the effective increase in the Euro bailout fund is expected to be pushed out to June 2011.
2. U.K. Retail Sales – In light of Tuesday’s +4.4% CPI result, retail sales will be closely watched for signs of economic strength that could prompt tighter U.K. rates. Market expectations are centered on -0.5% m/m versus the previous +1.9% outcome.
3. U.S. Durable Goods Orders – A major U.S. economic indicator, Core Durable Goods Orders are expected to come out at +2.1% m/m compared with last month’s -3.0% result. Durable Goods Orders are expected to rise by a more modest +1.2% versus the previous +3.2% outcome.
4. U.S. Weekly Initial Jobless Claims – An important employment sector indicator, Initial Jobless Claims for the week are expected to rise slightly to 388K compared with last week’s 385K number.
5. RBNZ Governor Bollard Speaks – The top monetary policymaker in New Zealand is scheduled to speak in Sydney at the Basel III Conference. Hawkish comments will tend to boost the Kiwi.