Market review for 28.02 – 04.03, 2011
The previous trading week saw the weakening of the US dollar against its major counterparts. During the beginning of the week the euro was constantly supported by the expectations for the principal rate increase by the ECB. On Tuesday the EUR/USD rate reached the level of $1.3854.
The publication of the Euro-zone fundamentals was strong and above expectations. The German unemployment dropped much below forecasts and the Euro-zone unemployment was 9.9% against the expected 10.0%. The released PMI indices were above forecasts. Sterling followed the positive trend of the euro and the GBP/USD rate almost reached the $1.6323 maximum.
The Reserve Bank of Australia left the principal rate unchanged today at the level of 4.75%.
According to the forecasts, the Bank of Canada left the principal rate at the previous level of 1.00%. In conformity with the experts’ opinion, Canadian exporters experienced difficulties due to the elevated rate of the Canadian dollar, which resulted in the decision of the Bank of Canada to maintain the rate at the same level.
At the same time the New-Zealand dollar dropped dramatically against its major counterparts after the speech of the Prime Minister, who mentioned the possibility of the interest rate reduction, as an outcome of the devastating earthquake, that struck the country.
Due to the instability in the Middle East region the oil prices stayed at their maximums. Brent oil showed maximums of $115.42 per barrel after the speculations that the Saudi Arabia would not produce oil until the price reaches $120 per barrel.
Strong Euro-zone fundamentals, released on Wednesday, rendered additional positive influence, and the EUR/USD pair hit the $1.3842 highs. The released Euro-zone Producer price index turned out to be above expectations and much higher than previous volume. At the same time the Middle East instability continued to reinforce and escalated oil price influenced the demand for the US dollar. As a result, the greenback was pressured and market participants were getting rid of the greenback. The released ADP employment change for February happened to be above forecast: 217K against the 185K, but could not render support to the dollar.
The released UK Construction purchasing manager index for February was 56.5, which was much higher than the predicted level of 52.9. Consequently the pound was supported as well and the GBP/USD pair reached the maximum of $1.6345. By the end of the day the EUR/USD managed to reach daily maximums at the level of $1.3890 already.
According to the experts’ forecasts, the ECB left the interest rate unchanged at the previous level of 1.00% on Thursday. But during the accompanying interest rate decision statement of the head of the ECB, Jean-Claude Trichet, he mentioned that “the rate increase at the next ECB meeting would be possible”. As a result, the demand for the euro grew and the EUR/USD rate increased and reached the maximums of $1.3974.
On Thursday the US dollar managed to rehabilitate against almost all its counterparts and won back the previously lost positions. The released Initial jobless claims dropped for 368K against the forecasted increase for 395K. The ISM non-manufacturing composite index turned out to be at the level of 59.7 against the expected level of 59.3.
The released on Thursday UK PMI Services index turned out to be below the forecast and below the last month’s level. As a result, the pound decreased considerably against the greenback. The GBP/USD dropped to $1.6250 range.
The released on Friday the US unemployment rate and Change in non-farm payrolls happened to be above the forecasts, but could not render substantial support to the greenback.
Weekly technical analysis for 07 -11. 03
EURUSD
The pair is aiming to upper border of the triangle at 1.41130.
Resistance: 1.41130, 1.44835, 1.47697
Support: 1.37441, 1.33427, 1.2800
GBPUSD
The pair is aiming to Fibonacci retracement 38.2% at 1.64274 and Moving Average (200) at 1.65789.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
USDCHF
The pair has broken support 0.93264 and aiming to 0.91074.
Resistance: 0.93264, 0.96525, 0.99031
Support: 0.91074, 0.88022, 0.85633
USDJPY
The pair is closed in the triangle between 83.330 and 81.548.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126
AUDUSD
If the pair breaks 1.01873 the pair will rise to 1.03847. If the pair breaks 1.00031 the pair will decline to 0.97889.
Resistance: 1.01873, 1.03847, 1.05810
Support: 1.00031, 0.97889, 0.94048