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Forex Trading: London Market Wrap

Posted by Chris Advincula on May 7, 2013 7:39:00 AM

May 7 Tuesday 11:45 GMT


The euro rallied 63 points to 1.3130 from 1.3067 against the dollar after Germany posted a better than expected increase in manufacturing orders in March, the second straight monthly gain in domestic and foreign demand. The weaker yen also gave additional buoyancy to the euro. German manufacturing orders rose +2.2% in March, above the median forecast of -0.5% after a slight downward revision of +2.2% from +2.3% in February.The gain in March pushed the level for the first quarter into positive territory, +0.4% from the 4th quarter of 2012.

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The yen fell against the major currencies as market participants pushed the rates higher on a short covering rebound and as the euro gained over the Japanese Yen. The dollar initially fell to 98.85 from 99.40 in the prior Tokyo market after the Japanese holiday yesterday. However, technical buying quickly ensued in Europe which took the rates back to 99.35. (+45 points). Euro-yen rose 100 points to 130.30 from 129.30 aided by the increase in German manufacturing orders of +2.2% in March.

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The Swiss Franc fell and pushed the rates higher against the euro. Euro-Swiss rallied 80 points to 1.2335 as the market dipped to 1.2255, while Dollar-Swiss rose 70 points to 0.9438 from 0.9368. There were unsubstantiated rumors in the market that the Swiss National Bank was the sentry guard bidding at the 1.2250 level.

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The Australian Dollar fell further to 1.0165 from 1.0250 (-85 points) in Europe following the 25 basis point cut of Reserve Bank of Australia’s Cash Rate.The central bank’s decision did not came out as a surprise to some, as a few analysts have predicted a 60% chance of an RBA cut. RBA Governor Glenn Stevens said that the move was appropriate to encourage sustainable growth in the economy and inflation was consistent with the target.

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Chris Advincula



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