Market review for 23 – 27.07.2012
Euro: The single currency started this week very negatively. The currency fell steeply against all its competitors on early sessions pressured by the the Friday’s news. On Friday, the European Central Bank informed the markets that from now it will not accept the Greek bonds as a guarantee. This meant that the ECB had closed an access to cheap loans for the Greek Banks as long as Greece does not have a stable finance system. The currency dropped on fears that Spain would require international financial assistance and Greece will leave the euro zone very soon. The fact that the euro-zone finance ministers approved the 100 billion euros loan to Madrid did not support the currency from weakening against the other traded candidates. Also on Monday, the yield on the 10- year bonds in Spain rose to 7.59% which was the highest level since the introduction of the Euro currency to the forex markets. Other news was also not supportive for the currency trading dynamics. The Euro dropped after weak PMI’s reports of France and Germany, then continued lower after the rating agency Moody’s downgraded the credit rating outlook for Germany, Netherlands and Luxembourg from a “stable ” to ” negative”. As the result, the EUR / USD pair fell to $ 1.2066 to the two-year low against the dollar. However, on Wednesday the Euro slightly grew, despite the weak results of the reports on the Index IFO for Business Climate and business sentiment both from Germany. The Euro was supported by the speech of the head of the management of the European Central Bank, Mr. Nowotny, who said that he sees now a reason for granting a banking license to a Europe fund, the idea that he was rejecting before. The Thursday’s presentation of the ECB, which was, as it turned out later, the main event of the week where the president of the ECB Mr. Draghi pointed out that the regulator, is ready to do any necessary measures in order to save the euro-zone from collapse pushed the Euro currency up against all its competitors. Mr. Draghi also mentioned that the euro zone is much stronger than many people think, and the deficit in the European Union is less than in the United States. On his comments the yield of 10-year Spanish bonds fell under the mark of 7%, while the euro rebounded from morning lows and strengthened to around1.2330 level against the U.S. dollar.
US Dollar: The demand for the dollar raised on fears of almost all markets participants that the Greece will not fulfill the requirements for obtaining financial assistance, which would prevent the release of new fund tranches. The dollar Index recorded the new high at the 84.21 mark. On Wednesday, the new U.S. homes sales unexpectedly fell in June and the currency came under the pressure. In till the end of the week the “greenback” traded lower amid the positive speech of the ECB president as well as amid positive results of report on the number of initial applications for unemployment benefits in United States.
British Pound: The British currency fell on results of the report of BBA for Loans for House Purchase which showed that the number of approved applications for mortgages in the UK decreased in June. The GBP / USD pair moved down to test the lows of $1.5486. The report on UK GDP in the second quarter published on Wednesday showed a decrease by 0.8% YoY versus forecasted decline by 0.3 %. The first reaction of the British pound was negative. However, the currency was able to recover and then grow. The GBP / USD pair couple rose to $ 1.5550 yet fell after the publication to $ 1.5467 area. On Thursday, the GBP / USD pair rocketed to the level of to $ 1.5668 against the optimist speech of the president of ECB and gain back all its previous losses. The Pound showed the biggest intraday gain since two years rising by more than 1.5%. The reason for this action was the statement that European politicians will make all efforts to contain the debt crisis of Euro zone. This news was strongly related for improvement of prospects for the UK economy. The currency continued strengthened on Friday. At that time on anticipation of starting the Olympic games in London.
Japanese Yen: The Yen grew after the German edition of the magazine “Der Spiegel ” was released to the public. The edition provided the news which contained the information that the IMF in the near future intends to refuse to provide financial assistance to the authorities in Greece. Also, the management of the organization allegedly informed the EU that the decision on bankruptcy of Greece may be held in Athens in September. The currency even continued to grow despite the readiness of Japanese government to oppose excessive strengthening of the national currency because the high rate of the Yen is not acceptable for Japanese exporters, since the fact leads for Japanese goods to become expensive thus less attractive for selling them abroad. The yen showed a slight increase on Wednesday against most major currencies after the report on Trade balance of June showed a surprisingly positive result. This day Japan reported about the largest trade deficit for the first half of 2012, which amounted to nearly $ 40 billion. The main reason for that result is the need to import oil and liquefied natural gas to supply fuel power plants.
Australian and New Zealand dollar: The commodity currencies, the Australian and New Zealand dollars showed an increase after two days of fall on a background of positive news from China. As it was reported by the HSBC, the Manufacturing PMI of China rose to 49.5 in July against the value of 48.2 in June. This value is the highest index value in five months. The Reserve Bank of New Zealand left the interest rate unchanged at 2.5 % in 11 times in a row stating that the economy should grow moderately. The news supported the New Zealand dollar trading dynamics and the “kiwi” grew by 1.4% for the second day and reached almost the highest level of the week against the dollar.
Weekly technical analysis for 30.07-3.08
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. The pair may try to test Moving Average (100) at 1.58790.
Resistance: 1.59962, 1.64274, 1.68504
Support: 1.52523, 1.48532, 1.43344
The pair has tested Moving Average (200) at 0.99031 and rolling back to 0.96597.
Resistance: 0.99031, 1.01369, 1.04060
Support: 0.96597, 0.93264, 0.91074
The pair is staying below 80.244. The pair may decline to 78.031, next aim is at 76.535.
Resistance: 80.244, 83.330, 86.836
Support: 76.535, 73.126, 69.117
The pair is testing upper median line at 1.03847.
Resistance: 1.05810, 1.07806, 1.09604
Support: 1.03847, 1.01873, 1.00592