Talking Forex Daily Wrap: April 15, 2012

The pair settled the Thursday session higher, as market participants reacted to rumours that the latest GDP report from China will beat the consensus estimate, as well as another successful sale of the latest round of issuance by the Italian Treasury. Separately to this, ECB’s Asmussen has said the Irish promissory note must be paid in line with plans, adding that Ireland has the means to honour the banking debt.

The ECB official has also said that the bond-buying program could be resumed if the need arises. By the closing stages of the session, the pair was trading up around 80 pips, while the shorter dated 1-month at-the-money (ATM) implied volatility posted a loss of around 5.25%. To the upside, nearest resistance levels were seen at the 21DMA line at 1.3205 and then at 1.3240. On the other hand, support levels were noted at 1.3100, 1.3067 and then at 1.3033.

GBP/USD

The pair remained at the mercy of the news flow relating to the never-ending eurozone debt crisis and yet again traded in tandem with EUR/USD for much of the session. As a result, the pair posted modest gains after the Italian Treasury sold the latest round of issuance, while the closing stages of the session were dominated by market talk of stronger than expected Chinese GDP report.

Of note, the Office for National Statistics (ONS) released figures showing a widening of Britain's trade gap from GBP 2.5bln to GBP 3.4bln. The ONS noted that weaker sales of cars, investment goods and food, drink and tobacco were the main factors behind a drop in exports. In terms of technical levels, supports are seen at the 21DMA line at 1.5893, followed by the 55DMA line at 1.5828. On the other hand, resistance levels are seen at the 21-Day Upper Bollinger Level at 1.6030, followed by 1.6095.

USD/JPY

The pair settled the session higher after the Japanese government has said CPI is flat in April, (previously falling slightly in March) adding that the view change does not mean that deflation concerns have eased. In addition to that, the Japanese government kept their overall economic view unchanged. Separately to this, BoJ’s Shirakawa has said the BoJ will pursue powerful monetary easing as defeating deflation is an important task to ensure a sustainable recovery with price stability.