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Currency Market update 20th March 2014

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International Foreign Exchange
Thursday 20th March, 2014

UK News

UK unemployment stayed at 7.2% in February according to an ONS report yesterday morning, as those claiming jobless benefits fell by 34,600. The data was released as the Bank of England published the minutes of its March meeting, where MPC members voted unanimously to maintain the central bank’s monetary stance.

Sterling appreciated on the news to as high as $1.6649 yesterday, but as the US dollar strengthened when the Federal Reserve announced their renewed forward guidance, some dollar strength led a sharp decline in cable.

Finding support at the previously mentioned $1.6537 level, GBP/USD slid in the evening to close around $1.6540. The pound has pared some of these losses this morning to trade at $1.6559 at 8:12 a.m. in London.

The UK currency pared losses experienced against the euro earlier this week to appreciate throughout the day, nearing the €1.20 level once again as it broke above the support-turned-resistance at €1.1933. The pair held these gains this morning, and continued to push higher to change hands at €1.1975 at 8:18 a.m. (GMT).


International News

The Federal Reserve announced at 6 p.m. yesterday evening that they would be reducing their monthly bond purchases by a further $10bn, a move largely expected by the market. This takes the total to $55bn/month and if “tapering” continues at the same pace, they central bank will halt asset purchases by the end of 2014.

What was perhaps not expected were the signals from Federal Reserve policymakers that they will probably raise interest rates in the middle of 2015, to a similar timeframe as their British counterparts in the Bank of England.

The Bloomberg US dollar spot index advanced 0.8% in the evening as the Federal Reserve announced their decisions and Janet Yellen’s press conference progressed. The measure, which tracks the US dollar against 10 major counterparts, was little changed this morning, trading at 1,020.25 at 8:29 a.m. (GMT).

Mizuho Bank say that, “the Fed is hawkish this time from any aspect…the market has no choice but to buy the dollar.” The FOMC also discarded their 6.5% unemployment threshold for raising interest rates, making their forward guidance much more qualitative.

EUR/USD took a hit on the FOMC news yesterday evening as it pushed back below $1.39, falling to the low $1.38s. These dollar gains were held this morning too, and the pair was trading at $1.3824 at 8:34 a.m. in London.

Analysts suggest the pair is still in a bullish channel despite breaking support at $1.3853 (the 23.6% retracement of February/March’s gain), and look to a break above resistance at $1.3877 for a full re-initiation of the bull trend.


Economic Calendar (GMT)

Time
Event Forecast Previous
09:30 CHF Swiss National Bank Rate Decision 0.00%
11:00 GBP CBI Trends Total Orders 5 3
11:00 GBP CBI Trends Selling Prices 17
12:00 GBP CBI Trends Selling Prices 17
12:00 GBP CBI Trends Total Orders 3
12:30 USD Initial Jobless Claims 322K 315K
12:30 USD Continuing Claims 2880K 2855K
13:30 USD Continuing Claims
13:30 USD Initial Jobless Claims
14:00 USD Philadelphia Fed. 3.2 -6.3
14:00 USD Existing Home Sales (MoM) -0.4% -5.1%
14:00 USD Leading Indicators 0.2% 0.3%
14:00 USD Existing Home Sales 4.60M 4.62M
14:30 USD EIA Natural Gas Storage Change -195
15:00 USD Leading Indicators 0.3%
15:00 USD Existing Home Sales 4.62M
15:00 USD Philadelphia Fed. -6.3
15:00 USD Existing Home Sales (MoM) -5.1%
15:30 USD EIA Natural Gas Storage Change
19:00 USD API Monthly Statistical Report
20:00 USD API Monthly Statistical Report
20:00 USD Fed Releases Dodd-Frank Act Supervisory Stress Test Results
21:00 NZD ANZ Job Advertisements (MoM) 2.8%
21:45 NZD Net Migration s.a. 3090
22:00 NZD ANZ Job Advertisements (MoM) 2.8%
22:45 NZD Net Migration SA 3090
23:00 AUD Conference Board Leading Index 0.8%

Interbank Exchange Rates (09:00)

GBP EUR USD HKD AUD
GBP 1.1979 1.6557 12.856 1.8341
EUR 0.8350 1.3824 10.733 1.5312
USD 0.6041 0.7235 7.7640 1.1076
CAD ZAR NOK SEK CHF
GBP 1.8633 17.993 9.9945 10.597 1.4612
EUR 1.5555 15.025 8.3449 8.8486 1.2199
USD 1.1252 10.868 6.0363 6.4004 0.8824

Support and Resistance Levels

GBP/USD Support 1.6480 1.6420 1.6333
GBP/EUR Support 1.1916 1.1874 1.1850
EUR/USD Support 1.3782 1.3732 1.3656
GBP/USD Resistance 1.6627 1.6714 1.6774
GBP/EUR Resistance 1.1982 1.2006 1.2048
EUR/USD Resistance 1.3908 1.3984 1.4034

GBP/EUR

GBP/EUR Graph

GBP/USD

GBP/USD Graph

EUR/USD

EUR/USD Graph

To trade or for any other enquiry, please contact me on +44 (0)20 3005 8898.
Osman Hanif
Executive Dealer

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