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Forex: USD/JPY bounces to 93.70/75 ahead of US data

FXstreet.com (Barcelona) - Corrective movements of the Yen ahead of BoJ meeting this week and the Chinese manufacturing PMI, as well as risk-off sentiment due to Cyprus, pulled the USD/JPY down to 93.28 low on the European opening. The market was able to retrace part of those losses back to 93.70/75 area, where it is currently sitting on ahead of US data.

In China, NBS manufacturing PMI rose from 50.1 to 50.9 (below consensus of 51.2). “A decent bounce, but overall disappointed market expectations for a more convincing improvement to 51.2”, according to TD Securities analysts. “The March quarter average is 50.5: same as Dec qtr 2012, hence hints at a steady GDP print of 8.0%/yr (after 7.9% in Dec qtr 2012)”, they continued. The HSBC data beat consensus from 50.4 to 51.6 (expectations at 51.5).

There are indications suggesting that deposits over 100K in two Cyprus banks may be subject of more losses than the 30% tax previously thought, but the EUR/USD was able to bounce back from its low at 1.2772. The pair erased its gains back to the opening price, but is facing resistance there, which is keeping the market slightly on “red”.

The economic calendar will welcome March manufacturing PMI data in the US, with market consensus pointing to a rise from 54.3 to 54.9 of the Markit indicator, and a slight drop of the ISM figure from 54.2 to 54.1. “The US manufacturing sector is continuing to enjoy a period of rebound as the bounce back in domestic economic growth momentum is pushing new orders and production activity close to their highest level in almost a year. This positive momentum should be sustained in April”, wrote TD Securities analyst Alvin Pontoh.

“The downtrend here is intact, targeting 92.80 support zone and initial intraday resistance is projected at 93.80”, wrote Deltastock.com analyst Stoyan MIhaylov, pointing to crucial resistance at 94.35 high.

Forex Flash: EUR weakness explained – UBS

In Cyprus, there are fresh indications that deposits greater than EUR 100k in two Cypriot banks will likely sustain larger losses than originally feared. According to Research Analyst Gareth Berry at UBS, “This may partly explain why the EUR/USD fell to a new 14-week low of 1.2771 overnight.” Meanwhile, a quarterly IMF survey released on Saturday probably did the euro no favors either.
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