John Starks

FXstreet.com (Barcelona) - The aussie plunged against the greenback, printing a new 2012 low at 1.0033. The cross is trading 0.85% lower than the opening price. MBA mortgage applications in the US grew by 1.7% while wholesale inventories, which are due at 14:00 GMT, are expected to increase by 0.6% in March (from a previous 0.9% growth). The Minneapolis Federal Reserve President, Narayana Kocherlakota, is expected to give a speech today at 14:00 GMT as well. On the other hand, the EIA crude oil stocks change is forecasted to reach 2.00 million (previous was 2.84 million). The pair is currently trading at 1.0034, facing resistance at 1.0199, followed by 1.0277 and 1.0333, according to Fxstreet.com pivot points on technical tools. On the downside, there is support at 1.0009 and 0.9931.

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Growing concerns towards the Eurozone and Greece political developments are weighing on risk sentiment, triggering the strengthening of the greenback. The leading political party in Greece post-elections failed to form a government, and the second placed party is unwilling to compromise. Repeated failure should push for new elections, perhaps by mid June, according to Wells Fargo analysts. “The interim period of uncertainty has the potential to weigh on the euro, and more broadly on foreign currencies and global equity markets”, wrote head of currency strategy Nick Bennenbroek. The Eurozone debt and political crisis should continue the main issue in the comind days. “That said, given subdued overall global data and discouraging European developments, our bias if for U.S. dollar and yen strength, and further weakness in other foreign currencies in the near-term”, Bennebroek added.

U.S. shares opened lower Friday, as the nonfarm payroll numbers missed estimates igniting the risk off trade. Near the open of U.S. trade, the Dow Jones Industrial Average gave back 0.57%, the S&P 500 fell 0.74%, while the Nasdaq Composite plunged 1.09%. Igniting the risk off sentiment, U.S. nonfarm payrolls advanced less-than-expected last month, official data showed on Friday. The U.S. Department of Labor reported non-farm payrolls climbed to a seasonally adjusted 115K, from 154K in the preceding month whose figure was revised up from 120K. Economists had expected U.S. non-farm payrolls to rise 170K last month. Adding to the equity bearish uncertainty, France and Greece will hold elections over the weekend. French voters will decide on the final round of the countries presidential race and Greece will be voting on a new parliament. Francois Hollande, the Socialist challenger for the French highest office, is the leading incumbent. He is calling for a re-negotiation of the budget pact with European leaders, saying it needs to place more of an emphasis on growth. He has rejected Sarkozy’s plan to increase sales taxes to fund lower payroll charges. Meanwhile in Greece, neither of the two major political parties, New Democracy and Socialist Pasok is likely to win the majority. On Thursday, in the U.K., a report showed that service sector activity expanded at a slower rate than expected in April, falling to the lowest level since November, but the report indicated that the overall outlook remained positive. The services purchasing managers index fell to 53.3 in April, from 55.3 the previous month, worse than expectations for a decline to 54.6. Bebe Stores plunged 17% after missing the USD0.08 per share earnings estimate. Linkedin Corp advanced 7.5% after reporting first quarter sales and profit exceeding estimates. Digital Globe, a satellite photography company, jumped 18% after GeoEye make a USD17.00 per share offer for the company. In the midst of European trade, the EURO STOXX 50 trades down 1.01%, France's CAC 40 moved lower by 1.30% and Germany’s DAX dropped 1.32%. Meanwhile, in the U.K. the FTSE 100 gave back 1.30%.

Forexpros - The U.S. dollar remained mixed against its major counterparts on Tuesday, as investors eyed the release of a key report on U.S. manufacturing activity while concerns over Spain’s sovereign debt crisis continued to weigh on investor confidence. During European afternoon trade, the dollar was lower against the euro, with EUR/USD rising 0.18% to hit 1.3263. Trading was expected to be light as markets in France, Germany and Italy remained closed due to national holidays. The euro weakened earlier as data on Monday confirming that Spain’s economy entered a recession in the first quarter sparked fresh fears that austerity measures could impair economic growth in the euro zone. Investors were also cautious ahead of weekend elections in Greece and France and the European Central Bank’s policy meeting on Thursday. The greenback was higher against the pound, with GBP/USD slipping 0.09% to hit 1.6221. The pound came under pressure after the U.K. manufacturing purchasing managers' index dropped to 50.5 in April from a downwardly revised 51.9 in March, but remained above the neutral 50.0 mark that separates expansion from contraction. Analysts had expected the manufacturing PMI to fall to 51.4 last month. The report underlined concerns over the outlook for the U.K. economy, after official data last week showed that the economy entered a recession in the first quarter. Elsewhere, the greenback was steady against the yen and lower against the Swiss franc, with USD/JPY easing 0.01% to hit 79.82 and USD/CHF falling 0.18% to hit 0.9058. The yen remained supported after new easing measures announced last week by the Bank of Japan fell short of some market expectations. The greenback was steady against its Canadian counterpart and sharply higher against its Australian and New Zealand cousins, with USD/CAD inching 0.01% higher to hit 0.9872, AUD/USD plummeting 1.04% to hit 1.0321 and NZD/USD shedding 0.62% to hit 0.8134. The Australian dollar fell sharply against all of its major counterparts after the Reserve Bank of Australia surprised markets with a larger-than-expected interest rate cut to 3.75%, its lowest level since early 2010, in an attempt to boost the nation's commodity-linked economy. The export-related currencies had found support earlier after official data showed that an index of Chinese manufacturing activity rose to a 13-month high of 53.3 in April from 53.1 the previous month, but remained slightly below expectations for a reading of 53.6. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.13% at 78.76. Later in the day, the U.S. was to release a closely watched report by Institute for Supply Management on manufacturing activity.

Finally do both banks agree on a trading strategy: short EUR/GBP. The Copenhagen based bank, Danske Bank, says in its daily technical report to “short at 0.8378 for a 0.8067 objective, stop at 0.8253", while Commerzbank suggests to do “shorts from 0.8275 were profit stopped 0.8205. Resell 0.8215, 0.8230, stops 0.8285.” Yesterday it was announced that the UK is officially in recession after its quarterly GDP growth rate registered a second consecutive negative reading (-0.3%, followed by today's -0.2%). UK YoY GDP growth did worse than expected, reaching 0.0% while the 3 month change of the Index of Services came in line with forecasts at 0.2%. The eurozone's consumer, economic and industrial confidence indices did worse than expected with scores of -19.9, 92.8 and -9.0, respectively. The pair is currently trading at 0.8164, down by 0.18%.

The price of the barrel of the American benchmark for the light crude oil is trading lower on Tuesday, following some strength in the greenback and the effects of a probable slowdown in the Chinese economy, the world’s second oil consumer. According to data, demand for crude oil in China has dropped to the lowest level since November 2011, to 9.51 million barrels/day in March. It is worth noting that despite yesterday’s improvement in the HSBC flash manufacturing PMI in China, the value still remains under the 50 threshold, indicative of contraction. As of writing, WTI is down 0.11% at $103.01 Next support levels lie at 102.01 followed by 100.88 and then 99.92, while resistance levels are located at 104.09 ahead of 105.04 and finally 106.17.