Market review for 6 – 10.08.2012
Euro: On Monday, the negative mood on markets was caused by the speech of the Italian Prime Minister Mr. Mario Monti who said that the disagreement about the overcoming the debt crisis in the region threatens the future of the Euro zone. Indeed, the German politicians are still against of purchases of sovereign bonds. As the result, the EUR / USD pair fell to $ 1.2342 area. The Euro grew on Tuesday due to the published information that the German’s government approved on Monday a proposal of the ECB President Mr.Mario Draghi regarding the purchases of Spain and Italy bonds in order to reduce their level of profitability. Another push up that the single currency got this day occurred after the publication of the result of report for Italian GDP in 2d Quarter of 2012 year in yearly term showed that the economy of Italy fell less than it was expected by economists. The Euro continued to rise ignoring the negative results of Germany’s factory orders report. On Wednesday, the Euro currency dropped against its competitors due to the decline in industrial production in Germany, which fell for the month of June and once again showed the negative impact on the Germany’s, the Europe ‘s largest economy. Also, the Euro was negatively influenced by the statement of experts from international agency Standard & Poor’s which on August 7th lowered forecasts of the Greek economy rating from “stable” to “negative.” The positive news of the day was the report on labor productivity in U.S. which in the second quarter rose more than expected. Also, the trading dynamics of the currency were positively affected by the published data on changes in the level of non-farm productivity of the U.S. economy, which showed increase in the second quarter of the 2012 year. The euro came under pressure after published information that the European Central Bank economists have cut growth forecasts of the economy in 2013 to 0.6 % from 1 %.The EUR / USD pair fall sharply to the area of $1.2585. All in all, all these negative factors once again confirmed that the Eurozone is sinking slowly into a recession thus providing a pressure on Euro currency. Toward the close of the week the EUR / USD pair declined by 0.9%.
US Dollar: On Monday and Tuesday, the dollar was trading at its lows against most of its competitors on the background of positive dynamics of stock indices, which continued to support the tendency of market participants to take risks. All this positive sentiment was coming on hopes of market participants about the ECB steps in taking appropriate measures that will cope with the current debt crisis. However, on the publication of the results of the quarterly report of inflation in Britain by the Bank of England, the dollar got support and rose sharply. In connection with this, most of all currencies which trades in pair with the U.S. dollar updated their daily lows and continued to decline. The greenback continued to grow on Thursday, on the information that the central banks postponed announce of the new stimulus measures for economy growth. Also this day, it became known, the yield of U.S. Treasury bonds reached its highest level in more than a month thus attracted many investors.
British Pound: The pound fell against the dollar on the of last week publication about the negative situation with the housing market in the UK the statistics of which indicated the weakness of the British economy. Since last month, the index of housing prices fell to -0.6 % versus -0.5% earlier as it was calculated by the largest mortgage lender in the UK, the Halifax Bank of Scotland. The GBP / USD pair fell to $ 1.5545 level during the European session yet later was able to recover. On Wednesday, after the report of inflation in Britain was published the pair, after testing the $1.5571 level, its daily low strengthened up. The less negative tone while announcing the inflation report, where it was noted that the official data of results of the growth of the gross domestic product exaggerated the underlying weakness of the British economy provided significant support for the currency. The pound grew sharply against all its competitors after the governor of the Bank of England Governor Mr. Mervyn King expressed less concern than it was expected by the markets and signaled that the reduction in interest rates did not significantly change the British economy outlook.
Japanese Yen: On expectations that the BOJ will not undertake any significant changes in the monetary policy at the meeting on August 8-9, the Yen continued to be kept at high levels against most world currencies. Many analysts predicted that the Bank of Japan will leave unchanged its benchmark interest rate and the amount of incentive programs at the same level in August. The yen weakened after the Bank of Japan left unchanged at the level of 0,0-0,1 % and confirmed the estimates for the country’s economy, however, reduced the outlook for exports and industrial production. Also, the Bank of Japan kept its fund asset purchases of $ 45 trillion yen and lending funds of 25 trillion yen. The yen traded with volatility against the dollar after the Bank of Japan refrained from increasing incentives. The USD / JPY pair firstly fell to the minimum of Y78.282 then strengthened to Y78.78 during the same European session.
Australian dollar: The RBA left its key interest rate unchanged at 3.5% as it was expected by the markets. The published news provided support for the National currency and the Australian dollar rose to a four- month high against the American dollar. Amid results of the published today report that showed that the number of people employed in the country grew by 14 000 people, the Australian dollar strengthened against most of major currencies. This figure exceeded analysts’ expectations of an increase in the number of employees by 10,000 only and showed the big difference compared with the previous results of falling by -28.3%. Also, the rate of unemployment in Australia fell by 0.1% from 5.3 % to 5.2% in July.
Weekly technical analysis for 13 – 17.08
The pair’s support is 1.20280, resistance 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