ANALYSIS

Forex Market Overview - 22 May 2013

Canadian dollar suffers losses versus US counterpart this Wednesday with 10-week low mark after the release of domestic retail sales figures.

USD continued to fall against EUR at 83.923 for the third day in a row sliding from almost 3 year high of 84.371, as traders await testimony by Federal Reserve Chairman Bernanke, scheduled for 10:00 am EDT.

During the testimony, Bernanke will address the real estate rebound. The central bank supports home sales and keeps interest rates at bay with $40 billion a month in mortgage bound purchases.

currency pairs 22 May 2013

Sales of existing homes rose in April to the top in more than 3 years. 2nd hand home purchases rose to 4.99 million, the highest number since November 2009.

“The market is definitely a lot healthier than it has been for some time,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama. “Other parts of the economy aren’t holding up their part of the bargain, but housing is holding up its end.”

The sales of new houses rose up to 425,000, a 3 month high based on Bloomberg survey of economists. Building permits also see higher figures with increase of 14.3%, highest numbers since June 2008.

As the Bank of Japan focuses on reduction of volatility in bond markets, EUR hovers 3.5 year high vs yen. Bank of Japan policy makers confirmed the plan to double the monetary base during the range of 2 years and their statement didn’t contain concerns regarding rising bond yields.

Euro reached 2 year peak against Swissie at 1.2604 francs after Thomas Jordan didn’t refuse the possibility of negative rates. The weakness of the dollar pushed euro 0.2% higher at $1.2940.

GBP sustained considerable losses of 0.5%, 1 month low against the euro, to 85.62 pence per euro, after the release of declined figures of UK retail sales last month, rising support towards the boost of monetary stimulus.

The retail sales report today will add downward pressure to the pound,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. inLondon. “I have a more optimistic view on the U.K. outlook than the market consensus but I can understand why the data today would boost speculation for further quantitative easing, which is negative for sterling.”