Market review for 04-08.06.2012
Euro: During past week the Euro currency was able to turn the previous strong downtrend to the opposite positive direction. On Monday, it traded higher against the background of politicians’ discussions the possible restructuring of the banking sector of euro area as well as the good news from Portugal. The fact that the Vice -President of the European Commission, Mr. Olli Rehn as the European regulator considered the possibility of direct recapitalization of banks through the mechanism of the euro area financial fund of stability provided initial support for the Euro currency. The sellers tried to push the Euro down using the negative news published on Tuesday, the speech of the Minister of Finance of Spain, Cristobal Montoro who asked the European financial institutions to help Spain in recapitalizing its banking system. Also, the economics reports which were published on the same day came out much worse than expected. Indeed, the Retail Sales in the Euro zone fell to -2.5% versus the forecasted -1.1% and Germany’s Factory Orders fell to -1.9% vs. -1.1% in April in Month to Month term. The EUR / USD pair suffered big intraday loss falling to the area of $ 1.2408 during the European session. On Wednesday the couple jumped above $1.2580 level on the background of the ECB’s decision on interest rate in Euro region. The ECB left the interest rate unchanged at 1% as it was forecasted, however, the speech of the European Central Bank president Mr. Mario Draghi this day where he mentioned the “readiness to act” after leaving the rate on the lowest record low level as well as intentions to extend the control mechanism for unlimited auctions before the end of the year as a measure of support for the European economy provided significant support for the currency. Moreover, Mr. Mario Draghi also said that the financial and credit institutions can rely on the provision of an unlimited liquidity by the ECB. On this positive news the EUR / USD pair rocketed above $ 1.2600 and recorded the new weekly high of $1.2625 mark.
U.S. Dollar: At the beginning of the week, the Dollar rose against a background of falling of World stock markets due to the negative economy statistics from China, Europe and U.S. As it was posted by the Federation of Logistics and Purchasing of China the PMI industry of the country recorded 50.4 points in May, which was the lowest level in the past five months. The unemployment rate in the 17 euro zone countries remained at a highest mark of 11% in April in monthly terms, unchanged from the revised in March. The volume of the Industrial Orders in U.S. in April 2012 decreased by 0.6 % compared to the analysts’ expectation of predicting their growth by 0.2 %. However, the currency started to became cheaper from Tuesday due to decreased demand for “save heaven ” assets as well as the turning of the stock markets to the positive direction. The fact that the People’s Bank of China lowered the benchmark interest rate by 25 points also put also some pressure on the Dollar. On Thursday, the Dollar strengthened against its competitors on a background of speech of the Federal Reserve chairman Mr. Ben Bernanke who did not mention to provide any additional measures for supporting the U.S. economy.
BritishPound: During the Monday the GBP / USD pair was trading between $ 1.5340 -$ 1.5380 in relatively narrow range on the background that the UK financial markets were closed this day due to the National holiday as well as on lack of macroeconomics data. With the positive sentiment which came back to the markets the pound showed a growth against major currencies. The announcement of the Bank of England on the decision to leave the interest rate unchanged at the 0.50 % also provided some support for the sterling. Although, the Bank of England left the bond repurchase program at 325 billion pounds, as it was expected, it did not mention any further additional measures aimed for supporting the national economy in spite of the worsening situation in the British economy and the deepening debt crisis in the euro area. The GBP / USD grew, in contrast, into the region of $ 1.5598.
Japanese Yen: The reason that the Dollar strengthened against the yen was the fact that the treasuries’ yields rebounded from a record low for the first time in four days. Also, the statements the of Minister of Finance of Japan Mr. Azumi ‘s about the readiness to take ” decisive action ” in order to reduce the “excessive movement” of the national currency which were made by June 1 contributed to correction in USD / JPY pair after the three-day of fall.On Tuesday, the yen fell against the Dollar after the leaders of the G7 group agreed to cooperate for preventing the excessive growth of the currency in the Forex market. The Japanese Finance Minister Mr.Jun Azumi noted that the recent growth of Japanese Yen as well as decline of the Japan’s stock market had a negative impact on the economy. He also mentioned that the G- 7 committee Central banks promised to intervene in the foreign exchange market in case the Japanese currency will excessively grew. In till the end of the weekthe yen was falling against most of the major currencies on continued growth of the risk appetite among investors as well as on rising World’s stock markets.
Australian dollar: The RBA lowered the benchmark interest rate by 0.25 % points – to 3.5 % per annum. Despite the fact, the currency grew up against almost all its competitors. The 3.5% rate which the lowest since 2009 was lowered amid fears that the debt crisis problems in Europe and China’s economy slow down will put a negative impact on the Australian economy. The currency continued its uptrend on the background of positive report on GDP in country. In details, the Australian economy grew in the first quarter of 2012 faster than it was predicted by experts. The GDP of the 1-st quarter of 2012 grew to 1.3% versus forecasted values of 0.6%.Together with that, the Australia’s economy grew by 4.3% compare with the first quarter of 2011 where the value was only the 2.5%. Unexpectedly high rate of growth of Australian economy reduced the fears of many investors and analytics who thought that the slowdown of the global economy would impact negatively the Australian economy performances. In addition, the currency also got support from the report on the employment situation in country, which improved much better than analysts’ expected and resulted in May a rise in the number of jobs in Australia by 38.9K, versus forecasted 0K and compared with the revised increase in April by 7K.
Weekly technical analysis for 11 – 15.06
The pair may decline to 1.21390. This is a strong level which is supported by Fibonacci 50%.
Resistance: 1.25667, 1.28800, 1.33427
Support: 1.20280, 1.17063, 1.14010
The pair has found support at Fibonacci 23% 1.53270.
Resistance: 1.59962, 1.64274, 1.68504
Support: 1.52523, 1.48532, 1.43344
The pair has reached resistance 0.96597 and rolling back to Moving Average 0.93264.
Resistance: 0.96597, 0.99031, 1.01369
Support: 0.93264, 0.91074, 0.88022
The pair has broken 80.244 but couldn’t reach 76.535. The pair may return to 80.244.
Resistance: 80.244, 83.330, 86.836
Support: 76.535, 73.126, 69.117
The pair is trading below Moving Average (200) 1.00137.
Resistance: 1.00592, 1.01873, 1.03847
Support: 0.97889, 0.94417, 0.89581