IAFT Weekly Economic Review

Published last week statistical data for the Eurozone in general were mixed. Data on the balance of the current account of the Eurozone have exceeded analysts' forecasts, but the February production in the construction sector has not reached the predicted values and the previous value was revised downward. However, macroeconomic statistics was of secondary importance for the participants of the currency market, because their attention was focused on the forthcoming meeting of the European Central Bank and the press conference of Mario Draghi.

In anticipation of these events in the euro against US dollar traded mixed, rising to first resistance in the area of 1.1380, and after the pair back to the testing 1.1283 the support. As analysts predicted, the ECB did not make any changes to the current monetary policy, leaving interest rate and the volume of asset purchases unchanged, and in his comments, the president of the bank has confirmed the absence of intent to continue lowering of rate, so the first reaction of the euro became its growth. However, caution of the president of the ECB about the possible exit of of Great Britain from the European Union has returned the sellers, and the pair completed the week down to 1.1220.

Thus, the ability of euro/dollar to continue the growth was in serious doubt, and break through at least a week will lead to a reduction to 1.1144-1.1059. Doubtful now looks and the ability of the Japanese yen to continue the growth, since at the end of the week, the dollar/yen broke through the resistance at the 110-th figure and rose to the level of 111.80. This was facilitated by rumors about of possible introduction by the Bank of Japan of negative deposit rate, which have provoked a fairly large-scale profit fixation on long positions in the yen. Prior to the announcement of the results of the meeting of the Japanese Central Bank, which will be held later this week, the pressure on it will remain, and further dynamics of the pair may depend on the results themselves, and that should be considered by the IAFT traders. BlogLinks

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International Association of Forex Traders

IAFT Weekly Economic Review

Market activity remained quite low last week. The US dollar tried to develop an upward trend against most of its competitors, but to talk about any outstanding successes is not necessary. British pound in a pair with it was trading in different directions, where the growth shortly, swiched to decline. Support in the beginning of the week the pound has received from the inflation data from the UK, exceeded predicted values, but the probability of the country's exit from the European Union continues to pressure on it.

The Bank of England, as expected, kept interest rate and amount of asset purchases unchanged, and published protocol of the last meeting of the Committee on monetary policy showed the absence of votes in favor of a rate hike. Thus the prospects for the beginning of the tightening by the Bank of England of monetary policy remains very vague, which is also have a negative effect on the dynamics of the British pound. Due to some recovery he is in general came out of the oversold condition, that poses a threat to the resumption of the downward trend, but in the short term, expect its large scale fall is hardly worth it.

Despite the risks of a possible introduction by the Bank of Japan of additional stimulus measures, the recovery of the US dollar against the Japanese yen did not differ with stability and duration. By the end of the week the pair once again dropped, and the new one has begun a small gap down, which was triggered by the drop of oil prices and the fall of of stock indexes. The inability of the dollar to test and overcome the 110-th figurewith the following fall to the lows, increases the risk of breakout. However, at the current levels and lower, is possible the tightening of relevent rhetoric from Japanese officials, that will provoke bursts of volatility and rebound of the dollar/yen up, IAFT traders we recommend be extremely cautious.BlogLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

According to the published last week data, the unemployment rate in the Eurozone remains high, and producer prices remain negative dynamics, not giving a reason to hope for the acceleration of inflationary pressures in the medium term. The service sector in the Eurozone is in a very good condition, and data on retail sales have exceeded the expectations of analysts. However, the euro was unable to continue the upward trend in the pair with the US dollar, had continued consolidation below the current highs.

Fluctuations of exchange rate of the pair occur in the range between resistance in the area of 1.1450 and support of 1.1340. Published last week minutes of the last meeting of the Federal Committee on the US FRS open market was rather "soft", which is actualy was expected by the currency market participants, thus turned out to provide support for the euro/dollar. But the fall of the euro in tandem with the Japanese yen have a deterrent effect on the dynamics of the pair.

The Japanese yen again in great demand, against which the US dollar in tandem with it broke through the psychological level of 110.00, which led to a reduction of the pair below the 108th figure. From the support in the area of 107.65 its getting buy out, but the recovery attempts are continue to attract interest in the sale. To IAFT traders we recommend to pay attention to the fact that the prospects for the US dollar look pretty bleak, its fall may continue. However, the Yen is showing signs of overbought, which increases the risks of an upward rebound. The reason for the profit-taking on long positions in the yen may be the growth of expectations of the expansion of stimulus measures by the Bank of Japan.BlogLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

In anticipation of the publication of important data on the US labor market, which could shed some light on prospects for increasin by the US Federal Reserve of interest rate this year, to be exact - on the rate of increase, the US dollar last week, remained under pressure. Commentary from the head of the Federal Reserve Janet Yellen lowered expectations of rate increase during the year, which had a negative impact on its dynamics. On this background, the euro all week confidently grew against the dollar, breaking the previous high and testing the resistance in the area of 1.1438.

Published data have shown growth of in the US unemployment rate up to 5.0% vs. 4.9% and growth of employment in non-agricultural sector up to 215 ths. people vs. 205 ths. Besides, have exceeded the forecasted value and the data on the average hourly wage. The US dollar reacted to the statistics with the growth against some of its competitors, but, as should be expected, its growth did not last long, as they do not change their expectations maximum of two increases FRS rate. Its representatives have repeatedly stated that in order to accelerate the pace of monetary policy tightening only the positive dynamics of the labor market is not enough.

Thus, the euro ended the week near the 14th figure, and the dollar/ yen - below 112 th. Despite the recovery of stock indexes, the demand for the Japanese yen remains, and a weekly closure below 112.00 increases the risks of testing and breaking of the lows at 110.66. Passage of this support and the psychological level of 110.00 will lead to a reduction to the area of the 108th figure. However, the differential of policies of the FRS and the Bank of Japan, as well as the positive dynamics of stock indexes, forcing with the high caution sell the pair at current levels or lower. Besides, look risky and the purchases of the euro/dollar at current levels, which, IAFT traders should pay attention to. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders