Currency Pair Overview Markets Continue To Trade Mixed

Overall, the market continued to trade mixed in the last few sessions. The swissy barely moved, the euro advanced, while the cad and the pound tumbled lower yesterday. A particular case was the yen, which seems to have lost its link with the S&P futures, as the BoJ threatens with currency interventions.

The Euro (EUR/USD) is trading just near the 1.2850 area, an intra-day resistance level, after it gained 60 pips tonight. Yesterday, the euro gained another 70 pips, even though during the U.S. session, the pair rose as much as 150 pips.

The Pound (GBP/USD) bounced off the 20-day moving average and declined almost 400 pips, for the first time in the last 6 days. The pair sold lower after Moody’s cut the debt rating of Barclays. Interestingly, the pound’s strength came after Barclays announced record revenues in 2008, last week. The pair was mostly unmoved in the Asian, having a range smaller than 50 pips.

The Aussie (AUD/USD) reached a two-month low and broke under the 0.6300 support area in the last day of trading. The pair sold lower, as the market expects the RBA to cut down to 3.25% tonight. This is a big change from one year ago, when the bank was voting to raise the interest rate by 0.25% to 7%. Ahead of the interest rate announcement, the aussie rose 70 pips, paring the declines seen one day earlier.

Australia posted a lower than expected trade balance for the month of December. In seasonally adjusted terms, the surplus was A$0.59 billion; this is a decrease from November’s A$1.05 billion. This softening of the trade balance reinforces Australia’s Central Bank Governor Glenn Stevens’ view that the economy will be hurt by waning global demand, and the trade balance may narrow further in the coming months as economic growth slows.

The Cad (USD/CAD) gained 200 pips, as oil was heading towards the $40 area. The pair also managed to break above the area formed by the 20 and the 50-day moving averages for the first time in the last 6 days. In the Asian session, the cad lacked any volume, and fell 20 pips.

The Swissy (USD/CHF) closed the last day of trading forming a doji-star pattern. The pair moved mostly side-ways yesterday, something that made it break an upside trend line that held the pair in the last few days. The swissy struggles to break free from the 1.16 level for about 10 days.

The Yen (Usd/Yen) traded in large swings yesterday. Initially, the pair fell 100 pips down to TheLFB S2 (88.75), but then recovered every pip and even advanced a few more. The yen’s recovery came during negative S&P numbers, something that shows yet again that the yen has lost part of its link with the equity markets. On the upside, the resistance area remains formed by the 20-day moving average.

The Japanese monetary base came in with a reading of 3.9 percent year over year in January. This is sharply higher than the December reading of 1.8 percent, as well as being above analysts’ expectations. Banknote circulation in January was up 0.4 percent.