The Japanese Yen is stronger and the risk currencies are lower after the release of Chinese GDP gave traders concern that the Chinese economy is slowing. China’s GDP grew 7.7% year on year in the first quarter of 2013, which was down from 7.9%, the previous quarter. Growth was down 1.6% quarter on quarter in the first quarter of 2013, which was down from 2% quarter on quarter in the last quarter of 2012. Growth had been expected to rise 8% annually.
Needless to say, as China goes, so goes the Australian Dollar and these economic numbers caused the AUD to lose a cent, falling to through support levels to a low of 1.0416.
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Adding to the Australian Dollar’s woes was the continued fall in gold. Gold continued its decline falling through the psychological $1500 an ounce level. Many analysts consider this lower move in Gold to be “overdoneâ€, but the sell off continues. Gold reached a two-year low overnight touching the 1425 level. One of the reasons for the sell off in gold has been reports that Cyprus was planing to sell some of their gold holdings, a rumor that was denied by Cyprus’s central bank.
Risk off sentiment seems to be pushing the EUR, GBP and CAD dollar lower as well. EUR is looking to test the 1.3050 support level after comments from the Moody’s rating agency said the risk of Cyprus leaving the EURO remains high.
On Friday, April 12, Cyprus and the “Troika†had come to an agreement that will allow for EUR 10 billion to be sent to Cyprus to aid the financial problems there. There is still the question of how Cyprus will find the additional EUR 13 billion it needs. They are attempting to do that through a combination of taxes on uninsured depositors, tax rises and spending cuts. According to the new finance minister, Harris Georgiades, “Cyprus will remain a member of the Euro zoneâ€. He also said that Cyprus will do whatever it takes to fix their imbalances and put their house in order.
These two factors have seen the EUR move away from the 1.31 level it had achieved overnight, but there is still an underlying “bid-tone†to the single currency and that will remain unless the currency can break through the 1.2980 level.
Further reading:Â EUR/USD Stalls Climb Around 38% Retracement Level
Lower crude prices has pushed the Canadian Dollar back through the 1.0200 level. Resistance in the USD/CAD is seen at 1.0220 and 1.0250. Support for the currency pair is at 1.0180 and 1.0165.
Looking ahead for today, commodity and equity markets are expected to be in the spotlight as currency markets take a back seat. How far can the gold sell off go? Will the DOW reach the magical 15,000 level this week? These questions seem to be on the minds of traders as we head into the new week.
Good luck and have a good day,
