Forex-Metal Weekly Analysis

Euro: In the beginning of the week the euro tried to accelerate during the second half of Asian trading session and continued it’s a seven-day gain, the longest gain since 2010. As we noticed before, the trigger for that increase was the report the People’s Bank of China which confirm Bank’s intends to make an additional contribution for the International Monetary Fund. However, during the European trading session, the euro’s attempted to reach the new daily highs. The EUR / USD pair fell to lows of $ 1.3377.

The G20 meeting decided not to increase the European Rescue Fund. The Euro fell after this publication. Also, during the American session the European currency was pressured by the report of S&P credit rating agency, which reduced the outlook for the European Financial Stability Facility (EFSF) from stable to negative.

On Tuesdaythe EUR / USD pair strengthened during the Asian session to the level of $1.3451 on positive anticipations of the second three -year operation LTRO for providing unlimited liquidity to European banks by the ECB for 3 years term with the annual rate of 1%.  The EUR / USD pair rose to the area of $ 1.3450.

The EUR / USD pair almost reached a three-month high again at the level of $1.3470. The support for that growth was provided by the decision of ECB to allocate 500 billion euro for European banks on Wednesday.

On Wednesdayat the beginning of the Asian trading session, the currency slightly grew on the background of the following publication of second three -year LTRO program for providing unlimited liquidity to European banks by the ECB for a term of 3 years with a annual rate of 1% . The EUR / USD pair climbed again to its highest level since the beginning of this year, $1.3485 area. After the results of LTRO program, which supported the market’s expectations, the EUR / USD couple rapidly dropped. The market participants were taking profits after the recent growth of the currency on the background of starting LTRO program. According to the published information, the ECB provided to the European banks the amount of 529,531 billion euro. The EUR / USD couple fell into the region of $ 1.3426.

The Euro currency suffered a very sharp sell-off to the lows of $1.3320 and did not even pull back. The market participants were not only taking profits on long positions on this currency but also entering in short positions on the background of speech of Mr. Bernanke who did not support the expectations that the Fed will take new measures to strengthen the economy.

On Thursdaythe employment report in Euro-Zone had a negative impact on the trading dynamics of the Euro currency. It recorded a rise in unemployment in the region to the level of 10.7% in January. As a result, the EUR / USD pair fell into the region of $ 1.3305 during the early Asian session. The demand for the euro was also limited due to an anticipation of the meeting in Brussels. On Thursday and Friday the European leaders and finance ministers met together in order to complete the organization of the second aid package to Greece.

By the end of the week as a result of the European leaders summit, the European currency was not  supported as the Czech Republic and the UK refused to sign the agreement on the unification and reforming of the fiscal  policies. On Friday the EUR/USD traded at the support level of 1,3200.

U.S. Dollar: At the beginning of the weekthe dollar Index was showing the negative dynamics at both sessions. The market participants also expected the good news of macroeconomic data from the U.S.

On Wednesdayinanticipation of the Federal Reserve Chairman Ben Bernanke speech in Congress, the dollar weakened against almost all major currencies. It was expected that Bernanke, in spite of recently published good news of the U.S. economic, would confirm the continuation of the easy monetary policy that was declared on January 25.

On Thursdaythe demand for the U.S. dollar on early Asian session was supported by the comments of the Fed Chairman Ben Bernanke, who confirmed an improvement in the U.S. labor market, thus significantly reduced the chances of a new round of QE. During the European session, however, the U.S. dollar fell against most major currencies in anticipation of the publication of report on manufacturing purchasing manager’s index, ISM by the Institute for Supply Management, USA, the economists’ forecasts on which were positive.

The dollar fell against almost all its competitors after report showed a decrease in amount of Initial Jobless Claims, which recorded 351K, compared forecasted 355K.

British Pound: On Mondaythe GBP/USD couple copied the trading dynamics of EUR /USD pair. It was trading within the range of $1.5878 to $1.5832 during both trading sessions.

On the next day the GBP / USD pair traded mostly in upward trend. During the European session the couple showed a growth to $1.5833level. The pound was supported by the report on the index of retail sales from the Confederation of British Industry (CBI). The February’s value of this index resulted an improvement and was much better than forecasts.

Nevertheless, on Friday the strengthening of the dollar and the drop of the euro pushed the sterling down to the level of $1,5815.

Japanese Yen: On Mondaythe Yen was gaining positive momentum due to its oversold factor as well as of covering some short positions which were taken on this currency more than a week ago. The positive overall background caused by signs of an improvement in the situation with the debt crisis in Europe and the economic redevelopment of the United States, also supported for the currency dynamics. The USD / JPY pair stepped back from its high’s in more than 100 points to lows of Y80.305 at the end of European trading session.

The Yen continued its growth against all currencies on the speculations about further increasing of oil prices and not yet solved Europe’s debt crisis. The USD / JPY pair fell to Y80.15 level.

On Friday against the background of the US dollar strengtheningthe yen tried to reach the 81,70 level.

Australian dollar / New-Zealand Dollar: The Australian and New Zealand dollars showed mostly negative trading dynamics on the background of the published information, that the Standard & Poor’s international rating agency downgraded Greece’s credit rating to SD (selective default).

The Australian currency rose against almost all major currencies after the publication of the Retail Sales report, which showed growth to the four-month highs. According to the Australian Bureau of Statistics, Retail Sales, as it was expected, increased in January in comparison with December by 0.3% to 20.95 billion Australian dollars. These were precisely matched the forecasts of economic specialists.

The New Zealand dollar also grew after the publication of New Zealand National Bank, which recorded in its conducted survey that the business confidence increased up to five-month high in February.

These high-yield currencies rose after the publication of the report on Capital Spending by Japanese companies. The report showed the highest growth in the fourth quarter of 2011 by 7.6% versus forecasted -6.5%.

Though on Friday the dollar growth, which started during the speech of the FRS leader, stopped this dynamics and returned the prices for the following ranges: 1,0605-1,0805 and 0,8255-0,8405 accordingly.

 

Weekly technical analysis for 5 – 09.03