Forex Metal Newsletter

Market review for 23 – 27. 05, 2011

Last week demonstrated diverse trading dynamics of the major currencies. Concerns over the possible reduction of the credit rating of Italy by Standard & Poor’s credit agency, pressured the euro on Monday.  Reduction of the credit rating of Greece continued to have a negative influence on the euro as well. European budget crises pushed investors’ optimism lower. During the elections to local authorities, that just took place in Spain, the opposition People’s Party received most of the votes, which rendered additional pressure on the euro.   Released on the same day European PMI indices turned out to be below the forecasts and lower previous month’s levels. For example, the Euro-zone PMI (composite) index was 55.4 against expected 57.3.   The EUR/USD pair dropped to the $1.4060 minimums. European trading session showed minimums of $1.3970.  The GBP/USD pair dropped to the $1.6110 level.

The euro started its growth during the Asian trading session on Tuesday and reached the $1.4060 mark. After the release of the European statistics on Tuesday, the euro continued its growth. German IFO – Business Climate, Current Assessment and Expectations for May turned out to be above expectations. As a result, expectations for the increase of the Euro-zone principal rate reinforced. According to the experts’ expectations, the European budget crises would reinforce and return to the focus of the market very soon.

Publication of the UK weak fundamentals on Tuesday pressured the sterling. Increase of the Public sector net borrowing volume had a negative impact on the national currency. But major pressure came from the statement of the Moody’s credit agency about the decrease of the credit ratings of the number of British banks.  At the same time the CBI Reported sales happened to be above forecasts: 18 against expected 11. Therefore, the GBP/USD grew to the $1.6180 level.

Greenback was pressured during the American session after the release of the negative Richmond Fed Manufacturing index, which dropped to -6 against the positive forecast of 9. As a result, the EUR/USD pair grew and reached the $1,4130 maximum and the GBP/USD pair reached the $1,6200 mark.

Uncertainty and lack of consensus with the Greek budget problems pressured the euro on Wednesday. The EUR/USD pair showed minimums at the $1.4000 level. Later on the euro managed to strengthen and reach the $1.4070. Swiss frank set a new historical maximum against the euro on Wednesday. Concerns regarding the possible slow-down of the economic rehabilitation of the region as a result of the European debt crises, pressured the euro. At the same time, possibility of the principal rates increase by the Central bank of Switzerland, supported the national currency.    The GBP/USD pair decreased to the minimums of $1.6130 during the Asian trading session on the same day. The released UK GDP data turned out to be at the expected level. The quarterly GDP demonstrated the 0.5% level, the yearly GDP showed 1.8% level. The GBP/USD pair grew above the $1.6200 maximums.

Euro managed to grow against the US dollar on Thursday and kept its reached positions. The head of the ECB, Jean-Claude Trichet, supported the euro by his statement, that the ECB is watching the inflations closely, which reinforced the speculations that the interest rates could be increased. In the morning the euro was supported by the possibility that China was going to increase its volume of purchases of European countries’ bonds.  Therefore, the positive expectations for the rehabilitation of the Euro-zone budget crises increased. The EUR/USD pair reached maximums of $1.4190 mark.

The Australian dollar rate strengthened on the same day against its competitors after the release of the Private capital expenditures in the first quarter in Australia. This indicator grew for 3.4% against the expected increase for 2.7%.

Greenback decreased against the yen and the Swiss frank after the release of the weak US fundamentals during the second part of the day on Thursday. The Annualized GDP dropped below expectations and the Initial jobless claims grew above forecasts.

On Friday greenback demonstrated its negative move against all major currencies. The released on that day American consumer expenditures growth turned out to be below expectations. As a result, possibility of the interest rates increase in the US dropped.

Weekly technical analysis for 30.05 – 3.06

EURUSD

The pair is trading around support 1.41130, if the pair closes below this level the pair will decline to the next level at 1.37441.

Resistance:  1.44835, 1.47697, 1.50676

Support: 1.41130, 1.37441, 1.33427

GBPUSD

The pair is trading between Moving Averages (200) 1.65379 and (100) 1.59962.

Resistance:  1.64274, 1.68504, 1.72652

Support:  1.59962, 1.52523, 1.48532

USDCHF

The pair has declined below 0.85633. it may bring pair to decline to the next support level at 0.82723.

Resistance:  0.88022, 0.91074, 0.93264

Support:  0.85633, 0.82723, 0.79957

USDJPY

The pair couldn’t rise to 83.330 and may decline to 80.244. If this level is broken the pair will continue declining.

Resistance:  83.330, 86.836, 90.909

Support:  80.244, 76.535, 73.126

AUDUSD

The pair is trading between 1.07806 and 1.05810. If 1.05810 is broken the pair will decline to 1.03847.

Resistance:  1.07806, 1.09604, 1.11831

Support:  1.05810, 1.03847, 1.01873