The deficit of 879.9bn yen ($8.6bn; £5.7bn) in April was wider than many economists had forecast.

Japan has deliberately weakened the yen to make its goods cheaper abroad and boost demand. However, this also makes imports, such as energy, more pricey.

The deficit is expected to shrink in coming months, as exports pick up more.

In April, exports rose by 3.8% from a year earlier, while imports gained 9.4%.

via BBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The Office for National Statistics (ONS) also said retail sales volumes last month were 0.5% higher than a year earlier, much less than expected.

The ONS said that sales of garden furniture and barbecue food were especially hard hit last month.

Total food sales plunged 4.1% in April, their largest monthly fall in almost two years.

“Feedback from large food store retailers suggested that the cold weather continued to impact on sales,” said the ONS.

“In particular, the weather hindered sales within their spring and summer ranges.”

via BBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

In its concluding statement on its mission to the UK, the IMF said austerity measures were acting as a drag on the economy.

The government could do more to offset the negative impact of austerity with infrastructure spending, it said.

George Osborne said the UK would not “duck its economic challenges”.

The IMF acknowledged that the UK’s austerity programme had earned the government international credibility.

But speaking at a press conference in London, its deputy managing director, David Lipton, said the view of the IMF was that the UK should consider slowing the pace of cuts.

via BBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

In the US, Existing Housing Sales improved but still failed to meet the estimate. The markets are carefully monitoring the Federal Reserve, which will release the minutes of its previous policy meeting. As well, Fed Chair Bernard Bernanke testifies before a Congressional committee. The markets finally got a look at some US numbers, as Existing Home Sales was released earlier. The indicator jumped from 4.92 million to 4.97 million, but fell short of the estimate of 4.99 million.

In the UK, another weak key release meant more bad news for the struggling pound. Retail Sales posted a decline of 1.3%, way off the estimate of 0.0%. It was the second straight decline for the key indicator, and its lowest reading since last May. There were no surprises as the Bank of England released the minutes of its recent policy meeting, which showed a unanimous vote to maintain the interest rate, while there was a split with regard to quantitative easing, as three of the nine MPC members voted to increase QE. The pound has had a disastrous month of May, and the downward slide shows no sign of letting up. The British currency has now shed about four cents against the dollar since the beginning of the month and if market sentiment continues to be negative, we could soon see the pound test the all-important 1.50 level.

The Federal Reserve will be front page and center on Wednesday, as Fed Chairman Bernard Bernanke testifies before a Congressional committee and the Fed releases the minutes of the last FOMC meeting. The $64,000 question is whether the Fed will make any changes to its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. There are signs that the Fed is mulling making a move, despite lukewarm US numbers of late. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE could have a strong impact on the currency markets.  

GBP/USD for Wednesday, May 22, 2013

GBP/USD May 22 at 13:30 GMT

GBP/USD 1.5110 H: 1.5086 L: 1.5110

GBP/USD Technical

GBP/USD remains under pressure after weak UK numbers on Wednesday. The pair is testing resistance at 1.5111. We could see this line break if the pound bounces back. This is followed by resistance at 1.5203. On the downside, the pair is receiving support at 1.5047. This is the last strong resistance line before the 1.50 level.

• Current range: 1.5047 to 1.5111

Further levels in both directions:

• Below: 1.5047, 1.5000, 1.4873 and 1.4781
• Above: 1.5111, 1.5203, 1.5309, 1.5432, and 1.5524

OANDA’s Open Positions Ratio

The GBP/USD ratio has gone quiet in Wednesday trading. The pound continues to show weakness, and if the pair continues to show activity, we can expect the ratio to swing into action as well.

The pound continues to slip against the dollar, thanks to weak UK data. On Tuesday, inflation numbers sagged, while Retail Sales missed the mark on Wednesday. With the markets still waiting for Bernanke’s testimony and the release of the FOMC policy meeting, we see more volatility from the pair during the course of the day.

GBP/USD Fundamentals

• 8:30 Bank of England MPC Meeting Minutes
• 8:30 British Retail Sales. Estimate 0.0%. Actual -1.3%
• 8:30 British Public Sector Net Borrowing. Estimate 7.6B. Actual 8.0B.
• 10:00 British CBI Industrial Order Expectations. Estimate -18 points. Actual -20 points.
• 11:00 Bank of England MPC Member Charles Bean Speaks
• 14:00 US Existing Home Sales. Estimate 4.99M. Actual 4.97M
• 14:00 US Fed Chairman Bernard Bernanke testifies before Congress Joint Economic Committee
• 14:00 US Treasury Secretary Jack Lew Speaks
• 14:30 US Crude Oil Inventories. Estimate -0.4M. Actual -0.3M.
• 18:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The loonie has struggled since hitting some turbulence late last week, as Canada posted weak inflation numbers. Core CPI, a key event, posted a weak gain of 0.1%, missing the estimate of 0.2%. CPI recorded its first decline since January, dropping by 0.2%. The estimate stood at 0.0%. These are the weakest Canadian inflation numbers we’ve seen since October 2009. The weak numbers out of Canada continued on Wednesday, as Core Retail Sales slipped  badly, dropping from 0.7% to -0.2%. This marked a three-month low for the key indicator. Retail Sales brought no relief, as the indicator slid from 0.8% to 0.0%. The markets had expected a 0.2% gain. These readings point to weakness in consumer spending, a key engine of economic growth.

The Federal Reserve will be front page and center on Wednesday, as Fed Chairman Bernard Bernanke testifies before a Congressional committee and the Fed releases the minutes of the last FOMC meeting. The $64,000 question is whether the Fed will make any changes to its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. There are signs that the Fed is mulling making a move, despite lukewarm US numbers of late. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE could have a strong impact on the movement of USD/CAD.

US releases have not looked good lately, and last week’s numbers were, for the most part, disappointing. Inflation and manufacturing numbers fell below expectations, and housing data did not meet the forecast. Unemployment Claims had looked impressive in recent readings, but was well above expectations, pointing to weakness on the job front. There was better news from Building Permits, and the UoM Consumer Sentiment shot up to wrap up the week. Trying to determine the extent of the US recovery continues to be difficult, as the economy has yet to demonstrate sustained growth and produce continuous positive releases.

USD/CAD for Wednesday, May 22, 2013

USD/CAD 1.0317 H: 1.0330 L: 1.0257

USD/CAD Technical

USD/CAD continues to move higher, as the pair barreled across the 1.03 level in the European session. The pair is receiving weak support at 1.0282, and this line could face pressure if the retreating Canadian dollar shows any improvement. There is a stronger support level at 1.0229. On the upside, the pair continues to face resistance at 1.0337, a line which has not been tested since early March. This is followed by a stronger line of resistance at 1.0442.

• Current range: 1.0282 to 1.0337

Further levels in both directions:

• Below: 1.0282, 1.0229, 1.0157, 1.01, 1.0041 and 1.00
• Above: 1.0337, 1.0442, 1.0502 and 1.0658.

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions in Wednesday trading, and is pointing to movement towards short positions. This is not reflected in what we are currently seeing from the pair, as the US dollar continues to push higher against the Canadian currency. If the pair continues to stay active, we can expect the ratio to swing back into action.

The US dollar continues to post gains, and has crossed above the 1.03 level. Will the greenback muster enough momentum to remain in 1.03 territory? There’s a lot going on in the US on Wednesday, as  Federal Reserve Chairman Bernard Bernanke testifies on Capitol Hill and the Fed releases the minutes of its most recent policy meeting. As well, US Existing Home Sales, a market-mover, will be released later today.

USD/CAD Fundamentals

• 12:30 Canadian Core Retail Sales. Estimate 0.2%. Actual -0.2%
• 12:30 Canadian Retail Sales. Estimate 0.2%. Actual 0.0%
• 14:00 US Existing Home Sales. Estimate 4.99M
• 14:00 US Fed Chairman Bernard Bernanke testifies before Congress Joint Economic Committee
• 14:00 US Treasury Secretary Jack Lew Speaks
• 14:30 US Crude Oil Inventories. Estimate -0.4M
• 18:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Lifting the economic assessment for a fifth month in a row, the central bank said “Japan’s economy has started picking up,” revising upward its description at the previous policy meeting on April 26 saying that it “has stopped weakening and has shown some signs of picking up.”

According to a statement released after a two-day policy meeting, the nine-member Policy Board unanimously decided that the BOJ will increase the monetary base at an annual pace of around 60 trillion yen to 70 trillion yen, in line with measures announced in April.

The policy measures announced on April 4 to achieve a 2 percent inflation target in about two years also include additional purchases of government bonds and riskier financial assets such as exchange-traded funds.

“Exports have stopped decreasing as overseas economies have been moving out of the deceleration phase that had continued since last year and are gradually heading toward a pickup,” the BOJ said in the statement.

via Mainichi

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

AUD/USD continues on its downward journey, as Australia released disappointing consumer confidence numbers on Wednesday. Westpac Consumer Sentiment plunged 7.0%, its second straight sharp drop. This indicates weak consumer confidence in the Australian economy, and a pessimistic consumer can be expected to scale back on purchases, which is bad news for the Australian economy. On Tuesday, the RBA released the minutes of its most recent policy meeting. At that time, the RBA surprised the markets with a rate cut from 3.0% to 2.75%, and the Aussie has been on a sharp downhill ride ever since. The RBA minutes stated that the RBA reduced rates in response to low inflation and a strong Australian dollar, which were hindering economic growth. The central bank also predicted improvement in the economies of Australia’s major trading partners – China, Japan and the US. This is expected to boost Australian exports and help the struggling economy. Meanwhile, the Aussie’s free-fall in recent weeks make another rate cut in the near future less likely.

The Federal Reserve will be front page and center on Wednesday, as Fed Chairman Bernard Bernanke testifies before a Congressional committee and the Fed releases the minutes of the last FOMC meeting. The $64,000 question is whether the Fed will make any changes to its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. There are signs that the Fed is mulling making a move, despite lukewarm US numbers of late. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE could have a strong impact on the movement of USD/JPY.

US releases have not looked good lately, and last week’s numbers were, for the most part, disappointing. Inflation and manufacturing numbers fell below expectations, and housing data did not meet the forecast. Unemployment Claims had looked impressive in recent readings, but was well above expectations, pointing to weakness on the job front. There was better news from Building Permits, and the UoM Consumer Sentiment shot up to wrap up the week. Trying to determine the extent of the US recovery continues to be difficult, as the economy has yet to demonstrate sustained growth and produce continuous positive releases.

AUD/USD for Wednesday, May 22, 2013

AUD/USD May 22 at 11:30 GMT

AUD/USD 0.9762 H: 0.9828 L: 0.9740

AUD/USD Technical

AUD/USD has lost more ground in Wednesday trading, but the proximate support and resistance lines remain in place (S1 and R1 above). The pair continues to receive support at 0.9727. This line could be tested if the Aussie continues to drop. There is stronger support at 0.9651. On the upside, the pair is putting pressure on 0.9795. This is a weak line, and could see further activity. There is stronger resistance at 99.07.

• Current range: 0.9727 to 0.9795

Further levels in both directions:

• Below: 0.9727, 0.9651, 0.9541, 0.9405 and 93.28
• Above: 0.9795, 0.9907, 1.00 and 1.0080

OANDA’s Open Positions Ratio

AUD/USD ratio is continuing the trend we saw last week, showing little change this week as well. The ratio continues to heavily favor long positions, as the sliding pair has covered a large number of short positions.

The Aussie can’t seem to get a break, as it continues to lose more ground. Australian consumer confidence numbers were a bust, adding to the Australian dollar’s woes. We could see further action, as the markets wait to hear from the US Federal Reserve, and the US releases key housing numbers later in the day.

AUD/USD Fundamentals

• 0:30 Australian Westpac Consumer Sentiment. Actual -7.0%.
• 14:00 US Existing Home Sales. Estimate 4.99M
• 14:00 US Fed Chairman Bernard Bernanke testifies before Congress Joint Economic Committee
• 14:00 US Treasury Secretary Jack Lew Speaks
• 14:30 US Crude Oil Inventories. Estimate -0.4M
• 18:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

The Federal Reserve will be front page and center on Wednesday, as Fed Chairman Bernard Bernanke testifies before a Congressional committee and the Fed releases the minutes of the last FOMC meeting. The $64,000 question is whether the Fed will make any changes to its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. There are signs that the Fed is mulling making a move, despite lukewarm US numbers of late. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE could have a strong impact on the movement of EUR/USD.

US releases have not looked good lately, and last week’s numbers were, for the most part, disappointing. Inflation and manufacturing numbers fell below expectations, and housing data did not meet the forecast. Unemployment Claims had looked impressive in recent readings, but was well above expectations, pointing to weakness on the job front. There was better news from Building Permits, and the UoM Consumer Sentiment shot up to wrap up the week. Trying to determine the extent of the US recovery continues to be difficult, as the economy has yet to demonstrate sustained growth and produce continuous positive releases.

Germany, the largest economy in the Eurozone and the “locomotive of Europe”, has raised concerns as German economic releases have looked sluggish. Last week, ZEW Economic Sentiment, one of the most important German releases, came in well below the estimate. German CPI and WPI posted declines, indicating weak activity in the economy. GDP posted a slight gain of 0.1%, but this was below the 0.3% forecast. This week hasn’t started any better, as the important PPI indicator declined for the third straight reading. The index fell 0.2%, a sharper drop than the forecast of -0.1%. If the Eurozone is to have any hope of getting back on solid economic footing, it will need Germany to lead the way and post some positive numbers. We’ll see a string of German releases later in the week, highlighted by PMIs and the German Ifo Business Climate.

EUR/USD for Wednesday, May 22, 2013

EUR/USD 1.2939 H: 1.2945 L: 1.2904

EUR/USD Technical

EUR/USD has moved higher, as the pair trades in the mid-1.29 range. The pair is facing resistance at 1.2960. This line could be tested if the euro continues to make gains. There is a stronger resistance at the round number of 1.3000. On the downside, there is support at 1.2880. This line has strengthened as the euro trades at higher levels. This is followed by a support level at 1.2790.

• Current range: 1.2790 to 1.2880

Further levels in both directions:

• Below: 1.2790, 1.2689, 1.2589 and 1.2500
• Above: 1.2880, 1.2960, 1.3000, 1.3050, and 1.31

OANDA’s Open Positions Ratio

EUR/USD ratio is showing little movement in Wednesday trading. The euro has edged higher, but this has been a modest move. If the pair continues to move higher, we could see some increased activity in the ratio.

EUR/USD continues to post modest gains, as it trades in the mid-129 range. We could see some volatility from the pair during the day, as the US releases key housing data and the Federal Reserve releases minutes of its last policy meeting.

EUR/USD Fundamentals

• 8:00 EU Current Account. Estimate 14.2B. Actual 25.9B
• All Day: EU Economic Summit
• Tentative: German 10-year Bond Auction
• 14:00 US Existing Home Sales. Estimate 4.99M
• 14:00 US Fed Chairman Bernard Bernanke testifies before the Joint Economic Committee
• 14:00 US Treasury Secretary Jack Lew Speaks
• 14:30 US Crude Oil Inventories. Estimate -0.4M
• 18:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

In Japan, Trade Balance was a disappointment, as it missed the estimate. The indicator posted yet another deficit, although it did narrow from JPY 0.92 trillion to JPY 0.76 trillion. However, this was well short of the estimate of JPY-0.63T. The plunging yen can take a lot of the blame for the poor reading, as the weak currency has resulted in the cost of imports rising dramatically. The government may have to reconsider its aggressive monetary easing program, which has greatly weakened the yen and could lead to larger trade deficits. Meanwhile, minutes of the Bank of Japan most recent policy meeting indicated that the BOJ was not making any changes to its monetary policy. The BOJ is moving ahead with its plan to expand the supply of money in the economy, and plans to pump in JPY60 - 70 trillion yen a year.

The Federal Reserve will be front page and center on Wednesday, as Fed Chairman Bernard Bernanke testifies before a Congressional committee and the Fed releases the minutes of the last FOMC meeting. The $64,000 question is whether the Fed will make any changes to its current round of quantitative easing, which involves the purchase of $85 billion in assets each month. There are signs that the Fed is mulling making a move, despite lukewarm US numbers of late. Last week, John Williams, president of the Federal Reserve Bank of San Francisco, stated that the Fed could begin reducing QE this summer and terminate bond buying late in 2013. As the QE program is dollar negative, any moves by the Fed to wind up QE could have a strong impact on the movement of USD/JPY.

US releases have not looked good lately, and last week’s numbers were, for the most part, disappointing. Inflation and manufacturing numbers fell below expectations, and housing data did not meet the forecast. Unemployment Claims had looked impressive in recent readings, but was well above expectations, pointing to weakness on the job front. There was better news from Building Permits, and the UoM Consumer Sentiment shot up to wrap up the week. Trying to determine the extent of the US recovery continues to be difficult, as the economy has yet to demonstrate sustained growth and produce continuous positive releases.

USD/JPY for Wednesday, May 22, 2013

USD/JPY 102.92 H: 102.99 L: 102.35  

USD/JPY Technical

 USD/JPY continues to trade close to the 103 level, as the proximate resistance and support levels (R1 and S1) remain in place. The pair faces strong resistance at 103.75. On the downside, the pair continues to receive support at 102.60. This is a weak line, and could face pressure if the yen shows any strength. This is followed by a stronger support level at 101.81.

• Current range: 102.60 to 103.75

  Further levels in both directions:

• Below: 102.60, 101.81, 100.54, 100 and 99.57
• Above: 103.75, 104.94, 105.87 and 106.55

 OANDA’s Open Positions Ratio

USD/JPY ratio is showing slight movement towards short positions. This is not reflected in the current movement of the pair, as the dollar has posted modest gains against the yen. The ratio is close to an even split between long and short positions, indicating that trader sentiment is closely split as to what to expect next from the pair. 

USD/JPY is again testing the 103 line, as the dollar puts pressure on the yen. Will the pair have enough momentum to push across this level?  With a key US housing release and news from the Federal Reserve on today’s schedule, we could see further volatility from USD/JPY.  

USD/JPY Fundamentals

• 3:07 Bank of Japan Monetary Policy Statement
• 7:24 Bank of Japan Press Conference
• 14:00 US Existing Home Sales. Estimate 4.99M
• 14:00 US Fed Chairman Bernard Bernanke testifies before Congress Joint Economic Committee
• 14:00 US Treasury Secretary Jack Lew Speaks
• 14:30 US Crude Oil Inventories. Estimate -0.4M
• 18:00 US FOMC Meeting Minutes

  *Key releases are highlighted in bold

*All release times are GMT  

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.