Forex Investment and Currency Trading

• Existing Home Sales (Survey: 4.92M)
• House Price Index (Survey: -1.5%)
• Richmond Fed Manufacturing Index (Survey: 1)

Upcoming Data: Mortgage Applications

USD
US existing home sales will be closely watched today. Despite stronger than consensus call for the release, the near-term risks still appear skewed to USD downside on any negative surprises. With many of the major US banks having reported Q1 earnings, investors will now shift their focus back onto the relative fundamental outlooks.

EUR/USD
EUR/USD is trending higher, closing in on 1.60.  Euro-area yields continue to rise lending fundamental support to the ongoing hawkish rhetoric out of the ECB. Such moves at the front-end of the Euro-area yield curve support the case for a break above 1.60 in EUR/USD. 

GBP/USD
GBP/USD is moving higher this morning after falling through yesterday’s trading. Technical buying at a support level encouraged the bounce. Two-year yields in the UK continue to rise after the BoE’s offer to swap mortgage bonds for government debt. The expectations for an immediate rate cut are slowing and should encourage GBP buying today.

USD/JPY
The yen has traded largely in range through the morning. With little data out of Japan to move the market today, USD/JPY should largely track equities. US Home sales could also be a major driver, and any substantial downside surprise should lead to JPY appreciation.

AUD/USD
AUD is trading marginally higher this morning with little out to move the market. Asian equities tracked lower overnight and performance in the European session has been mixed. The commodity complex ex-oil is trading slightly lower which could put some pressure on AUD. Watch for AUD/USD to remain range bound through the course of the day.

NZD/USD
NZD is following AUD in its grind higher this morning. NZD/USD is moving higher on the back of an improving risk environment and moderating USD strength. With little to move the market today market expects NZD to trade sideways through the day.
USD/CAD

The Canadian dollar has traded flat through the morning ahead of the today’s decision by the BoC. Market expects a 50bp ease, which is in line with consensus expectations and is largely priced into the market. Though such easing will certainly be CAD negative market expects USD/CAD to remain range-bound around par.

Commodities Update
Crude continues to set all time records, trading to $118.05/barrel this morning amid supply concerns. Continued attacks in Nigeria have led to considerable production disruptions while refinery workers in Scotland who are planning to go on strike will help to support upward price momentum. Gold is trading slightly lower this morning with little data out to move markets.