To recap Wednesday’s trading activity, the Dollar lostground across the board after Fed Chairman Ben Bernanke’s dovish testimony.Testifying before the Joint Economic Committee, Bernanke reiterated the Fed’sstance that interest rates would remain low for an “extended period”. He alsosaid “the income data suggest that growth in private final demand will besufficient to promote a moderate economic recovery in coming quarter”. Finally,he added that “significant restraints on the pace of the recovery remainincluding weakness in both residential and nonresidential construction and thepoor fiscal condition of many state and local governments.” In summary,Bernanke weakened the Dollar by stating that the recovery will continue to bemodest while indicating the Fed has no intention of changing its languageregarding interest rates in its FOMC statements.
The EUR USD is selling off sharply overnight. Marketparticipants are feeling jittery again because of concerns over
High premiums demanded by investors on Greek bonds rose 400basis points above the German Bund for the first time since the rescue plan wasannounced on April 11th. This is the clearest sign that investors are becomingworried again. In addition, after three tries, the Euro has been unable to takeout the high reached Sunday night at 1.3691. Hedge funds continue to be shortand appear to be adding to their positions on each rally.
At this time, the course of the Euro remains weak. Over thenext week, several European Union nations will be meeting to approve theircontributions to the EU bailout plan. This voting process could be anothersource of turmoil for the Euro. Not only will these nations have to put up themoney to back
Now that traders have had almost a week to digest the EUrescue package, a consensus is building which believes that this plan wasnothing more than a short-term fix and that long-term problems still exist.Some sources say the key to a long-term solution to the sovereign debt problemsin the EU sits firmly on
The GBP USD traded higher early in the trading session aftera report showed the opposition Conservative Party’s lead over the Labor Partywidened, easing concerns that the May 6th election will produce a hungparliament. Traders had been pressuring the British Pound lately because ofconcerns that a hung parliament would result in a government too weak to tacklethe
Traders are also beginning to doubt the viability of thecurrent rally. Speculation is building that bullish traders will begin toliquidate their long positions ahead of the election. Technically, the chartsindicate this market may accelerate to the downside if uptrending Gann anglesupport at 1.5397 is violated today. The most likely downside target is 1.5160on April 20th.
A drop in demand for higher yielding assets is helping tounderpin the USD CAD overnight. The short-term picture indicates thepossibility of a short-covering rally. Traders may also be lightening uppositions ahead of next week’s Bank of Canada meeting on April 20th.
For over a year, Bank of
The AUD USD rose overnight following
The NZD USD is feeling similar pressure but this marketcontinues to remain glued to a major 50% price level at .7124. The chartsindicate that downside pressure is likely as long as the Kiwi remains below.7200. A break through .7086 will turn the main trend down. Traders may beginto sell off both the