Market review for 1 – 5.08, 2011
The previous week has been marked as a very volatile one for the major currency pairs.
On Monday the EUR/USD pair reached maximums of $1.4420 level during the Asian trading session. Published on that day German PMI was below its forecasts (factual 52.0 against the forecasted 52.1). The Euro-zone unemployment stayed at the previous level of 9.9%, which did not have any impact on the trading dynamics. The GBP/USD tested the $1.6390 minimums after the release of the weak UK statistics. The UK PMI for July turned out to be below expectations.
It was announced that the leaders of the US Democratic and Republican parties agreed on the reduction of the national debt. The level of the government debt would be increased for $2.1 trillion.
On Monday the greenback hit its record-breaking minimum against the yen, and reached the Y76,30 level. At the same time the US Dollar renewed its historical minimum against the Swiss franc as well. The greenback dropped against the Swiss franc to the 0,7730 mark.
The euro fell against major currencies on Tuesday amid rising yields on government bonds in Italy, which increased fears of further spread ofthe debt crisis in the EU against the background of slowing global economic growth. The EUR/USD pair continued to fall from the $1.4280 areaand showed the session lows at $1.4150. The released on that day Euro-zone Producer price index dropped from 6.2% to the expected level of 5.9%, which reinforced market confidence that the ECB would leave the interest rate unchanged at the meeting on Thursday.
The demand for the US dollar on Tuesday was limited on concernsthat the agreement between the US President Obama and Congress leaders to increase the national debt ceiling and to reduce expenses would result in the slowing down of the economic rehabilitation rate. House of Representatives approved a project to raise debt limit by at least$ 2.1 trillion and to cut expenses from the budget for $2.4trillion.
The yen retreated on Tuesday, due to speculations that Japanese authorities intervene in currency markets. The USD/JPY tested the Y77.15 level, thenrecovered to Y77.36 during the European session.
It should be mentioned that Australian dollar decreased after RBA meeting results, when the interest rate was left unchanged at the previous level of 4.75%.
During the American trading session the euro reached its 11-months low against the US dollar level on concerns that slowing U.S. economy would negatively affect the economies of other countries. The Swiss franc rewrote the historical maximum against the greenback again. The released strong statistical data supported the national currency.
During the Asian trading session on Wednesday the EUR/USD pair initially dropped to $1.4142, and then recovered the levels at $1.4274. At the same time the UK Purchasing Manager index showed a much stronger result, compared to the forecasts (55.4 against the expected 53.2). Therefore, the sterling received support. The GBP/USD pair demonstrated lows around $1.6245 before recovering to $1.6365 and hitting maximums at of ?$1.6400.
The main event of the European session on Thursday was the announcement of the Central Bank about leaving the interest rate unchanged at 1.50%. However, since this decision was expected by the market, this announcement did not have any impact on the trading dynamics of the euro.
During the Asian session the EUR/USD pair straightened and reached the $1.4346 level. During the European session, though, downtrend had resumed and the pair declined to $1.4246 and continued to fall to $1.4228 area.
Rising dollar was restrained in advance of the data publication on the labour market situation. It was expected that US government report would confirm that unemployment rate would exceed the 9%.
The Bank of England left its interest rates unchanged at 0.5% and similar to the euro this announcement did not have any effect on the sterling trading. During both trading sessions the GBP/USD pair traded in range of $1.6250 – $1.6430.
On Thursday, the yen fell significantly against major currencies after the Japanese government for the first time since March had intervened in foreign exchange markets to weaken the national currency. The yen fell more than 3,5%, which was the maximum daily decline since March and rallied rapidly to reach its peak at Y80.00 against the US Dollar.
The Canadian dollar fell to its lowest level in 5 weeks against the U.S. dollar on the background of a significant decline in oil prices, the main component of Canada’s exports. Oil fell to $86.31 per barrel. While gold prices fell within 2 hours from peaks at $1685 to the lows of $1642.30 per ounce.
On Friday the euro and the sterling managed to rehabilitate and win back previously lost positions. The EUR/USD closed the week at the $1,4280 level and the GBP/USD almost reached the $1,6400 maximums. The US change in non-farm payrolls turned out to be above expectations, and the US unemployment rate decreased, which supported the high-risk assets.
Weekly technical analysis for 8 – 12.08
EURUSD
The pair couldn’t stay above 1.44835 and declining to the channel line at 1.41130. If this level is broken the pair will decline to Moving Averages (100 and 200) at 1.37441.
Resistance: 1.44835, 1.47697, 1.50676
Support: 1.41130, 1.37441, 1.33427
GBPUSD
The pair has risen to median line and Moving Average (200). The pair may roll back to 1.61154 before breaking the level.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
USDCHF
The pair has broken 0.76882 and aiming to 0.73183.
Resistance: 0.76882, 0.79957, 0.82723
Support: 0.73183, 0.69837, 0.66177
USDJPY
The pair has broken 80.244 and aiming to 76.535.
Resistance: 80.244, 83.330, 86.836
Support: 76.535, 73.126, 69,117
AUDUSD
The pair has current support at 1.03847. The next level is at 1.01873.
Resistance: 1.05810, 1.07806, 1.09604, 1.11831
Support: 1.03847, 1.01873, 1.00031