FX.co ★ Forex review for March 30, 2011

On Wednesday the New Zealand dollar was traded at a higher rate after it had shown a considerable gain as investors were tending to risk more and more.
Before the beginning of this session the kiwi had been demonstrating mixed trading due to better investors’ sentiment towards risk.
However, during most part of the session on Wednesday the currency of New Zealand traded in a narrow diapason after a failed attempt to break USD 0.7580 resistance level. It even increased up to 0.7582 which is high since the earthquake happened in the second largest city of the country Christchurch on February 22.
The New Zealand dollar was not affected by weak February data on building permits as adverse news was quite expected. Yet, the National Bank business index is seen to be the centre of attention which is slated for Thursday.
The Aussie increased on Wednesday amid high activity and better attitude to risk on the part of investors. It is the third time they contributed to this currency’s growth for the last four sessions and to its high since floating rates appeared.
For the last four sessions investors relying on the Aussie’s rate referred to the yen inflow caused by the nuclear power plant emergency, insurance compensation of the two natural disasters in Australia and potential activity in the field of company merging which were interpreted as signals to buy.
In 2010 the Australian currency was mainly traded near the parity rate versus the US dollar; even under the circumstances of an abrupt fall in risk sentiment in Japan. At present, the Australian dollar is traded on its high after floating rate was introduced in 1983.
The principal factor of AUD/USD pair growth on Wednesday was apparently AUD buy stop-orders having triggered.
The US dollar rose on Tuesday being supported by the comments of James Bullard, the president of the Federal Reserve Bank of St. Louis that gave rise to talks about the central bank preparing the ground for stabilizing the monetary policy.
During his speech in Prague Mr. Bullard claimed that it is impossible to keep the US monetary policy mild all the time. This comment brought about the US dollar to be intensively bought. Mr. Bullard also spoke for the possibility of what earlier had seemed impossible to most analysts: he thinks that the ambiguous second programme of quantitative easing may well be ceased before the amount of USD 600 bln. is spent.
The Federal Reserve System inclination to keep the interest rates low and to ensure unrestricted liquidity damaged the US dollar position, while investors have been actively purchasing highly profitable currencies. The comments of Mr. Bullard were released at the time when traders were expecting the signs of the Federal Reserve System not appearing to be the last bank to abandon a mild moneraty policy.
Market participants are not unanimous in their views regarding recent rigid announcements made by the Federal Reserve System top officials. Even though he is a member of the Federal Open Market Committee without a right to vote, his comments coincide with those made by Charles Plosser, the president of the Federal Reserve Bank of Philadelphia. Last week the latter was firmly against a mild monetary policy for an uncertain period.
A sort of reverberation of the market being upset by the EU summit that was aimed at elaborating a mechanism to help the eurozone out was bringing down the sovereign loans of Greece and Portugal by Standard & Poor's agency. Both countries were damaged by the sovereign debt problems and gloomy prospects of economic growth.
Yet the euro showed some uprise. As analysts say, Standard & Poor's agency decision was reflected in quotations. EUR/USD pair reached its lows and was traded a little lower than 1.41. GBP/USD was traded near 1.5975 down from the Monday level of 1.5990.
An abruptly eased yen, harmed by the continuing nuclear disaster in Japan and weakened expectations concerning currency inflows, dropped down to its maximum low since G-7 made an intervention to make the yen weaker. USD/Yen pair traded at 82.31 against 81.67 at session closing in New-York. Meanwhile EUR/JPY attained its maximum high since May, 2010 of over 116. Market participants expect strong data on employment slated for Friday, however, the reports released on Tuesday proved to be less than promising for the US dollar.
Case-Shiller housing price index for 10 major metropolises declined in January by 0.9% as compared to the previous month, while the index for 20 metropolises lost 1%. The seasonal adjustments taken into account, both indices declined by 0.2%.
Conference Board private research group informs that the consumer confidence index lowered down to 63.4 in March versus an adjusted 72.0 value in February. As it was announced earlier, in February the index constituted 70.4. The March value of the index coincided with that registered in December, 2010, 63.4.