Market review for 30.07 – 3.08.2012
Euro: During the Asian trading session on Monday the Euro fell against most major currencies; the EUR / USD pair fell below $ 1.2300. The currency pair continued to trade even lower after it became known that Spain, the fourth largest economy in the Euro region will have to struggle to reduce debt due to the fact that the recession in country has grown. Also, there were many macroeconomic reports that came out with negative results: the report on the index of economic sentiment fell to 87.9 in July from 89.9 a month earlier, the Industrial confidence fell to -15 in July from -12.8 the previous month. On Tuesday, the Euro also rose against many other traded currencies in anticipation of the positive result of ECB meeting, on August 2. The single currency continued to rise on Wednesday after the speech of the Prime Minister of Italy, Mario Monti who stated in an interview with an Italian radio station that he saw “the light which began to dawn at the end of the tunnel and Italy and the rest of Europe on the path to it”. The EUR / USD pair grew to the level of $1.2335 during the beginning of the European session. The news of downgrading the long-term sovereign credit rating of Cyprus from ‘BB +’ to ‘ BB’ and placing it on CreditWatch with possible further downgrade by Standard & Poor’s international rating agency provoked a negative reaction of the markets and the Euro currency came under pressure. However, the same Standard & Poor’s agency affirmed the stable outlook for Germany’s highest “AAA” rating. After the announcement of the ECB decision on interest rates, which remained at the same level, the EUR / USD pair surged to the new highs of $1.2402 yet fell in a deep downtrend due to the fact that the ECB refrained from declaring the new measures for stimulating the Euro zone economy. Markets were disappointed with the results of the meeting where Mr. Draghi noted the presence of high levels of uncertainty and downside risks as well as the situation with Eurozone’s economic very weak growth. The EUR / USD pair fell into the $1.2133 area, however, on Friday gain back all its previously taken positions and rose above the $1.2300 area.
US Dollar: Demand for the dollar was limited on the eve of publication of interest rate decisions from the U.S. Federal Reserve as well as the report of ADP for July. According to the ADP report, employment increased by 163K in July, against the average forecast of 120K.The results of the report, which in general were optimistic, supported the greenback. The decision of the FRS meeting of leaving the interest rate unchanged and not announcing any new steps in the framework of monetary policy also provided positive for the trading dynamics of the currency. The dollar index grew to 83.2 level this day. The U.S. dollar was trading with an increase against its competitors after on Wednesday, the U.S. Federal Reserve refrained from further monetary policy’s easing measures. The dollar became more expensive after the Fed did not announce a new stage of bonds’ purchases.
British Pound: The pound weakened after data from the UK showed that the number of Mortgage Approvals fell to 44,200 K in June, compared with a forecasted value of 48K and 50,5K figure for May. The GBP / USD pair approached to $ 1.5671 level. There was also a report that revealed that the house prices fell for the first time this year and probably will decline further as the recession obstructs demand for buying homes. The currency continued to fall against almost all major currencies on Tuesday after the rating agency Moody’s downgraded the outlook for UK economy. In addition, the Consumer Confidence report which has been published previously showed that the UK industry stuck this month due to the fact that the recession got worse. During the European session on Wednesday the currency fell after the published UK Purchasing Manager Index Manufacturing report showed that the index of manufacturing activity fell in July to the 45.4 value, their lowest values in the last three years. The Committee of the Bank of England’s kept its interest rate unchanged as well as the volume of bonds purchase program. The GBP / USD pair rose sharply to $ 1.5680 at the beginning, however, fell into the level of $ 1.5529, to its session lows.
Japanese Yen: The unemployment rate of Japan unexpectedly fell in June to the 4.3% versus 4.4% as it was predicted and compared the result of 4.4% in May. As the result, the USD / JPY pair grew up to the level Y78.29. Moreover, the Yen fell against other currencies after Japanese Finance Minister Jun Azumi rejected the idea of buying the foreign countries’ bonds by the Bank of Japan. At the same time Mr.Azumi did not exclude the possibility of taking measures to restraint the growth of the yen, including the intervention. On Thursday, amid the statements of the representatives of International Monetary Fund about the Japanese national currency which got titled as a “moderately overvalued”, the yen fell against other traded currencies. The IMF tried to encourage the Japanese authorities to take additional measures to intervene to markets in order to reduce the high rate of the Yen.
Australian dollar: The Australian currency rose against all its competitors on the publication of the report of Building Approvals resulted that the number of approvals increased in June. Moreover, the result of the report on New Home Sales grew in June also grew by 2.8% to 6021 units, compared with an increase of 0.7% in May. The result of the report on Australian balance of foreign trade, which came out positive, thus reinforced the view that the central bank will keep unchanged the key interest rate at the next week meeting provided support for the Australian dollar as well.
New Zealand dollar: Demand for the currency decreased after the China’s Manufacturing PMI report recorded a decline in the manufacturing industry to the level of 50.1 versus forecasted 50.5.The New Zealand dollar tried to rise however amid speculation that the Fed of U.S. will implement the next round of quantitative easing.
Weekly technical analysis for 6 – 10.08
The pair has found support at Fibonacci 50% level at 1.20280 and may roll back to 1.25667.
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. If 0.96597 is broken the pair will decline to Moving Average (100) at 0.94225. MACD divergence supports pair to start downward corrections.
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 has risen to 1.05810. If this level is broken the pair will rise to 1.07806.
Resistance: 1.05810, 1.07806, 1.09604
Support: 1.03847, 1.01873, 1.00592