Market review for 7 – 11.05, 2012
Euro: The Euro was driven by the political news this week. On Monday, it fell steeply against major traded currencies on the results of elections in France. The France got a new president, Mr. Francois Hollande, a representative of the Socialist Party of France. Loss of the former president Mr. Nicolas Sarkozy French influencednegatively the Euro’s trading dynamics. The currency fell against the US dollar to the three months lows, the region of $1.2956, showing the biggest drop since September 2011. The report on industrial orders in Germany, which on the monthly basis in March was significantly better than expected provide some positive support for the currency. The Euro also compensated some of its losses this day due to support provided by speech of the representative of the Government of Germany, who noted that the relationship between German Chancellor, Ms.Angela Merkel and the new President of France, Mr. Francois Hollande will be kept and developed successfully. The second negative news for Euro was the information from Athens revealing the fact that the new government of Greece could not be still formed. This issue increased investors’ concerns about the worsening the situation with the debt crisis in Euro zone. The only positive news that prevented currency from falling to new lows was a report on industrial production in Germany, the results of which recorded a growth in March and were significantly higher than forecasts. On Wednesday, the arose fears of investors were based on increasing the probability that the Greece can reject the cost-saving measures or even leave the euro zone. The EUR / USD pair dropped steeply at the beginning of the European session to new lows of $ 1.2930 area. All in all, these negative news might give a suggestion that the EUR / USD couple after breaking the important technical support level of 1.30 on the way to the next important support level of $1.29.
U.S. Dollar: On the backdrop of increasing demand for safe-haven assets due to the fears based on probability of the worsening the situation with the debt crisis in Euro zone as well as on the fact of losing the elections of France by the Mr. Nicolas Sarkozy the dollar raised against most major currencies. The Dollar Index recorded a new highs at the level of 80.437 growing by weekly 1.1%. Even the positive report on producer price index on Friday did not have any negative impact on its direction.
British Pound: The reaction of the pound after the report showed that UK house prices fell in April was falling against the dollar to the lows of $1.6124.The house index fell to – 19 from – 11 in March as it was announced by the Royal Institution of Chartered Surveyors. On Wednesday, the GBP / USD pair declined to new lows of $1.6097 amid the investors’ anticipations of meeting of the Bank of England. The recent disappointed report on UK’s GDP raised the expectations of further measures of the Bank of England for stimulating the British economy. The GBP / USD pair continued its downtrend to new lows of $ 1.6065. Accordingly to the announcement of the Bank of England on Thursday, the interest rate was kept unchanged at the rate of 0.50% and the quantitative easing program of asset purchasing remained at the same level of 325 billion pounds. The GBP / USD pair showed some weakness moving firstly to the lows of $ 1.6090 but then giving a big strength growing to the area of $ 1.6177 in a 1 hour time period.
Japanese Yen: The Yen was in demand on Wednesday, due to the fears that the global economy recovery may be slower than expected. The USD / JPY pair continued its downtrend breaking the support at Y79.60 level and falling to the area of Y79. 41. After a board member of the Bank of Japan Mr. Sayuri Shirai noticed in his speech that the Central Bank must carefully monitor the exchange rates the yen weakened against the major traded currencies. The USD / JPY couple moved to the highs of Y79, 98.
Canadian Dollar: On the backdrop of falling Oil prices, due to a six-day decline and a record level of growth of amount of Oil in the U.S. inventories, the Canadian dollar fell to a three-month low against the U.S dollar.
Australian dollar: Despite of the positive macroeconomic statistics, which recorded a growth in retail sales in March on monthly basis by 0.9% after a revised 0.3% gain of the previous month, the Australian dollar continued its strong fall. The number of Building Approvals grew by 7.4 percent in March, after falling in February by 8.8 percent and triggered some players to take profit on their short positions taken on this currency a week ago. However, the Australian dollar continued its downtrend on one more negative day this week weakening again against its competitors on the news. That time due to the growing of the trade deficit in the country’s to a five-year maximum. Analysts expected the figure will be -1.40B, however the official data showed that Australia ‘s trade balance changed more than expected and went up from -0.75B (last month) to -1.59B. The Australian dollar fell again, this time because of the information which the country’s Prime Minister, Ms. Julia Gillard revealed to the publicity saying that, “if the country’s budget will be in profit again, it will give the central bank “maximum space ” to change the level of interest rates. The unemployment rate in Australia unexpectedly declined in April to the 12- month low and recorded 4.9 % against 5.2% the previous month and forecasted 5.3 % as it was reported by the Bureau of Statistics today in Sydney. This is the lowest rate since December 2008.As the result, the Australian dollar rose on these positive news. The increase on the 15,500 in the number of new work positions created had also a positive impact on the Australian currency trading dynamics. The big disappointment though for the currency was the report on China’s export which showed that the volume of exports in April grew by only 4.9%, with forecasted growth of 9.1 %.
Weekly technical analysis for 14 – 18.05
The pair had drawn Triple Top. If the pair declines below 1.28800 the pair may workout the figure and the end maybe expected at 1.26833.
Resistance: 1.33427, 1.37441, 1.41130
Support: 1.28800, 1.25667, 1.20280
The pair is trading between Moving Averages (500 and 100) 1.62818 and 1.59430.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
The pair has risen to the Moving Average (100) at 0.93264.
Resistance: 0.93264, 0.96597, 0.99031
Support: 0.91074, 0.88022, 0.85633
The pair is trying to break 80.244. If the pair stays below this level the pair will decline to 76.535.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126
The pair is testing Moving Average (100) at 1.00353.
Resistance: 1.00592, 1.01873, 1.03847
Support: 0.97889, 0.94417, 0.89581