Archived IMT (2011.04.13)

Markets await UK unemployment (8:30 GMT; 9:30 London) and US retail sales (12:30 GMT), while CRB extends losses on muted risk aversion.

Reduced growth forecasts and a bearish Goldman Sachs commodities note prompted some significant risk aversion overnight sending commodity FX into reverse. Copper, Gold, Silver and oil all fell, with AUDUSD looking set to test support at 1.0380, with a break targeting 1.0280, while USDCAD looks set to test 0.9690. These falls in commodity prices can also be explained from a technical standpoint as well as the fundamental reasons just outlined. The technical explanation can be seen by a quick glance at the Reuters CRB. Yesterday it pushed back from a key resistance level at $369 which happens to be a 61.8% Fibonacci retracement of the drop from the 2008 highs at $474 to the 2009 lows at $200.

Another reason for the fall in the Canadian dollar was the Bank of Canada holding pat on rates and stating that the recent strength of the Canadian dollar “could create even greater headwinds for the Canadian economy”. With this in mind the recent strength of the Canadian dollar could keep the Bank of Canada on hold for a fair few months yet.

JPY and CHF both gained from risk aversion but USDJPY bounced off 200 day MA which is a key support, while USDCHF close to potential double bottom at 0.8915.

GBP remains in the spotlight today after yesterday’s unexpected decline in UK inflation for March with unemployment data expected to show a net decline of 3k jobs while the ILO measure of unemployment for the 3 months to February is expected to remain at 8%.

US retail sales are also due out and expected to slip back, with a rise of 0.5% expected for March, down from February’s 1% rise.

Sterling rate index testing key support level at 2011 lows at 78.40, while key levels on GBPUSD remain at 1.6180, break targets 1.5960.

USD INDEX hit fresh 16 month low at 74.70, just shy of its 2009 lows at 74.17.

By KM - AshrafLaidi.com Staff