Market review for 2 – 6.07.2012
Euro: On Monday theEuro came under pressure against most major currencies on the background of negative results of published report on the unemployment rate in the euro zone, which rose to 11.1 % in June, the highest rate since 1990 year. The value matched the analysts’ forecasts, yet affected the mood of market participants who responded on the information by pushing the euro to session lows against the dollar. The temporary support for the currency was provided by the published data on the index of business activity in Germany and the euro area, which were above expectations. The euphoria associated with the EU summit which was held last week had finished and the market participants started to realize the real situation in Euro zone. The euro rose on Tuesday’s sessions on statements of the head of the IMF’s, Mrs. Christine Lagarde who called to an additional stimulus for the U.S economy for preventing economic slowdown after the published yesterday the ISM index of the manufacturing sector the result of which recorded a drop to 49.7 in June. During the European session on Thursday, after the publication the decision of the ECB on lowering the interest rate by 0.25 % points – to a record low of 0.75% per annum and its comments on the current situation in Euro zone the currency fell sharply, despite the fact that this decision has matched the analysts’ predictions. The EUR / USD pair fell steeply to the 1.2360 area after the announcement. The pressure on the euro had also the results of Spain bonds placement. Spain was able to sell its bonds for 3 billion Euros today, while the cost of borrowing rose to 6.43 % from 6.04% from the previous placement. The rumors which spread on markets, that after the rate cut below 1% of the euro had became attractive for the Carry trades provoked more sales of the Euro currency. At the end of the week the EUR / USD pair was trading at $1.2260 areas.
U.S. Dollar: The dollar rose against almost all major traded currencies on increased investors demand for safe assets which grew after the result of report on manufacturing activity in the U.S. provided by the Institute of Management which declined for the first time in three years. Investors were disappointed by the report. In details, the index fell to 49.7 points compared with 53.5 points in May and forecasts of analysts who predicted that the index will be at 52.0 levels. Also the currency got support by the statements of the representative of the ECB Mr. Claes Knothe, who discussed the program of bonds purchases. The demand for the dollar after announcement of the ECB rate decision news grew sharply. The reason for that action was the fact that the Mr. Mario Draghi who commented the ECB decision had not mentioned any possibilities of additional support for Euro zone economy, thus increased uncertainty which negatively impacted the confidence to the Euro zone’s economy. The volume of dollar purchases increased dramatically on Thursday. The Friday’s published data on the U.S. labor market which did not match the analysts expectations again prompted the strengthening of the dollar across the markets.
British Pound: The pound weakened on the results of publication of a number of macro statistics from Britain on Tuesday. In June PMI of the construction sector declined to 48.2 from 54.4, approved the application for a mortgage in May fell to 51.1K from 51.6K and the Net Lending in June rose by only 0.6 billion pounds against 1 billion in May. All these results confirmed that the economy is still unable to return to a normal growth pace. The pound fell sharply on Wednesday after disappointing data on the Purchasing Managers’ Index (PMI) for services in June sector, which fell to 51.3 from 53.3 in May, reaching its lowest level since October last year. The GBP / USD pair sharply dropped to $ 1.5575 area. In addition to the weak British PMI report, which disappointed the pound’s holders and provided the negative impact on the currency, was information of a running scandal around the definition of policy rates Libor. The Bank of England decisions of expanding the current amount of the asset repurchase program, which currently stands at 325 billion pounds ($ 525 billion), up to 50 billion pounds and leaving unchanged its interest rate provided significant support for the currency and the GBP / USD pair rose sharply to $1.5625 area.
Japanese Yen:The yen rose against the dollar after the publication of the report of the Bank of Japan Tankan, which recorded that the index of activity in the sector of large manufacturers in June rose to – 1 from – 4 in March. The yen also rose this day against the dollar on increased demand for the safe heaven assets after the published ISM report which did not match forecasts. The USD / JPY pair renewed the level of Y80.08, its maximum of this week.
Australian dollar: The Australian dollar reached a two-month high after the publication of positive reports on the number of building permits and new approvals. So in Australia the number of permits issued increased by 27.3% in May, against the revised 7.6% increase in April and forecasted 5%. The Reserve Bank of Australia decided to leave unchanged the interest rate amid existed concerns about the weak situation in Europe and the world economy. The Australian dollar was supported by the report of the Australian Bureau of Statistics which recorded that retail sales in Australia in May increased by 0.5% to $ 21.307 billion.
NewZealanddollar: The statements of the representatives of the People’s Bank of China about lowering rates for loans and deposits provided a significant support for commodity currencies. In the regard of this news, which caused a great interest in buying these currencies, the New Zealand dollars strengthened against its competitors.
Weekly technical analysis for 9 – 13.07
The pair’s strong support maybe found at Fibonacci 50% level at 1.20280.
Resistance: 1.25667, 1.28800, 1.33427
Support: 1.20280, 1.17063, 1.14010
The pair’s resistance is 1.59962. Support is at Fibonacci 23% 1.52523.
Resistance: 1.59962, 1.64274, 1.68504
Support: 1.52523, 1.48532, 1.43344
MACD divergence warns the possible trend reverse. The pair may start corrections and first aim will be at 0.91074.
Resistance: 0.99031, 1.01369, 1.04060
Support: 0.96597, 0.93264, 0.91074
The pair has returned to 80.244 and may decline to 78.031 if stays below 80.244.
Resistance: 80.244, 83.330, 86.836
Support: 76.535, 73.126, 69.117
The pair is closed between two median lines 1.02986 and 0.99091.
Resistance: 1.03847, 1.05810, 1.07806
Support: 1.01873, 1.00592, 0.97889