The U.S. Dollar is
trading firm overnight against all major currencies. Without any major
economic reports today, the focus will be on demand for higher yielding
assets and the Greek financial situation.
The Reserve Bank of
India unexpectedly raised borrowing costs on March 19th. This helped
support the Dollar as investors boosted demand for safe investments.
Traders fear that the hike in India means that China will soon do the
same. This news should pressure demand for higher yielding assets,
fueling a rise in the Dollar. The early action suggests the markets are
a little risk negative this morning which should benefit the Dollar.
are expected to continue to pressure the Euro on expectations the
European Union will fail to agree on an aid package for Greece.
Pressure is on the British Pound after a report said the U.K. recovery
will be â€śslow and sluggishâ€ť.
The passing of the biggest health
system overhaul in 40 years could pressure U.S. stock markets today.
Overnight the stock indices are trading lower, but so far there has
been little reaction by the Forex markets to the news. This could
change once U.S. equity markets open. There still appears to be some
debate as to how much if anything this new bill will increase the U.S.
deficit. Lower equity markets will send money into the lower yielding
U.S. Dollar and Japanese Yen.
Euro traders are bracing for a down
day ahead of the start of this weekâ€™s EU summit. Traders are being told
by German Chancellor Angela Merkel that they shouldnâ€™t expect any
agreement to be reached on a financial aid package for Greece. If
Greece doesnâ€™t get any aid, then look for it to turn to the
International Monetary Fund for help. This isnâ€™t sitting well with
market because it makes Europe appear weak and makes it look as if
Europe cannot afford to help its own members.
The GBP USD is
expected to face another round of selling pressure on the heels of the
news that the Confederation of British Industry sees a â€śbumpyâ€ť road
ahead for the U.K. economy. The report sees a weaker economy because it
expects to see consumers save more and spend less. Traders also feel
that there are too many negatives to support the British Pound at this
time. These negative issues include political uncertainty and a
possible credit rating cut.
The weaker Euro is helping to drive
up the USD CHF. Traders fear that the Swiss National Bank will continue
to intervene to protect its currency and economy from the falling Euro.
Gains may be limited because of the threat of higher interest rates.
Watch for a breakout over 1.0646 with 1.0701 the next upside target.
USD JPY is trading better in limited action. Traders appear to be
taking a tentative approach to the market while waiting to see how U.S.
stock markets will fare in the face of the passage of the healthcare
reform bill. The charts indicate that a trade over 91.08 will turn the
main trend up. Bullish traders are being less aggressive before the
opening of the U.S. markets. Aggressive selling in the stock indices
could lead to increased demand for the lower yielding Japanese Yen.
USD CAD is up after confirming last Fridayâ€™s closing price reversal
bottom at 1.0060. The market bottomed late last week after the release
of better than expected Canadian Inflation Data. The report suggests
that the Canadian economy is growing at a faster pace than previously
thought, thereby increasing the chance of a rate hike by the Bank of
Canada before the Fed. The steep decline in the Dollar/CAD has lead to
oversold conditions which is helping to fuel the developing
Weaker higher yielding assets are helping
to pressure the AUD USD. Based on the range of .8577 to .9241, look for
a possible retracement to .8914 to .8834. The daily chart indicates
that a break to .8914 could happen by March 25th. This is likely to
occur if equity markets sell off hard.
The NZD USD is down
overnight. Lower demand for higher yielding assets is helping to
pressure the Kiwi. The charts indicate a move to .6992 to .6948 is
likely over the near-term.