British Pound surges Overnight

The U.S. Dollar is trading lower overnight. This is triggering an increase in demand for higher risk assets such as equities, gold and crude oil

The U.S. Dollar is trading lower overnight. This is triggering an increase in demand for higher risk assets such as equities, gold and crude oil

The GBP USD is the biggest gainer overnight. The initial move was fueled by a report showing that U.K. Jobless Claims unexpectedly fell in February. The strong surge to the upside was triggered by the news that the BoE members voted 9 -0 to leave its quantitative easing program unchanged. Following this news, a strong up move ensued, driving this market through a pair of 50% levels at 1.5271 and 1.5297. The next upside target is 1.5419.

The EUR USD is trading better on increased demand for higher yielding assets as well as improving conditions in Greece. Traders still feel Greece will receive a bailout from Germany and France. Don’t forget about the huge amount of shorts in this market. A short-covering surge could occur at any time if short begin to panic because of the current rally. The charts indicate that 1.4009 is the next likely upside target.

Overnight the Bank of Japan voted to leave interest rates unchanged. In addition, it doubled its loan program designed to combat deflation. The USD JPY is trading higher this morning. The charts indicate that a break through .9077 is likely to trigger an acceleration to the upside. The increased demand for higher yielding assets is likely to pressure the Japanese Yen as traders continue to use this currency as the funding currency of choice.

The USD CHF is trading lower. The higher the Euro moves, the less likely the Swiss Franc will intervene. This is helping to support the Swiss Franc. The first downside target on the charts was reached last night at 1.0513. There may be a technical bounce at this level, but if downside momentum persists, then look for a further decline to .1.0423 over the near-term.

Stronger demand for higher risk assets such as equities, gold and crude oil are helping to pressure the USD CAD. The trend in this market is decisively lower and likely to continue until this contract reaches parity.

Increased demand for higher yielding currencies is driving the AUD USD and NZD USD up. With the U.S. holding interest rates low and the central banks in Australia and New Zealand considering rate hikes, the interest rate differential has shifted back in favor of the Aussie and Kiwi.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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