IAFT Weekly Economic Review

The main topics in the currency market are the possible actions of such central banks as the US Federal Reserve, European Central Bank, the Bank of Japan and Bank of England in the foreseeable future. Besides, the impact on it has and the upcoming referendum on the UK's exit from the European Union. According to exit polls, the probability of this event at the moment, looks rather low, which allowed the British pound to strengthen against most of its competitors, including against the US dollar.However, to exclude the country's exit from the EU no one takes a risk, so, the promotion of the pound/dollar up was limited by the resistance in the area of 1.4739.

For euro the situation is not the best. Published last week's economic data for Germany and the Eurozone was unable to provide support for the currency, and the low consumer price inflation gives cause for speculations on the further expansion by the ECB of stimulating measures. Fundamental factors justify its reduction, and technical allow us to assume testing by the euro/dollar of support in the area of 1.1059-1.1000. A break through of the last level will increase the pressure and open the way towards 1.0800. Despite the negative forecasts, it should still be reminded of the ability of the euro to "survive" in all circumstances.

In turn, the US dollar perspectives are getting better and better. In addition to comments from the Federal Reserve, where they allowed a rate hike at the next meeting, published in the the US housing market data last week were very strong, having supported the dollar. But the main event of the week, of course, was statement by the head of the Federal Reserve Janet Yellen, in which, contrary to expectations, considered it appropriate to raise the rate in the upcoming months. Thus, the dollar finished the week higher against many of currencies, and its prospects have significantly improved. However, investors will continue to closely monitor the upcoming data on the US, which can adjust the expectations of an increase by the FRS of rate, which IAFT traders should be pay attention too. BlogLinks

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International Association of Forex Traders

IAFT Weekly Economic Review

The single European currency last week showed a negative dynamics. Despite the relatively low market activity, it declined against the US dollar, breaking through the support at 1.1283 and reached the level of 1.1179. Published data showed that consumer price inflation in the Eurozone remains low, keeping thus a high probability of start by the European Central Bank in the near future of additional stimulus measures. This factor, weak statistical data, as well as the risks for the Eurozone connected with possible exit of Great Britain from the EU will soon put pressure on the single currency.

In turn, the US dollar, contrary to expectations, has received support from a "hard" protocol of the last meeting of the Federal Committee on the US FRS open market . It was noted that many members of the Committee do not exclude another rate hike at the next, which is in June meeting. The positive for the dollar were comments of the president of the Federal Reserve Bank of New York William Dudley, who also admitted the possibility of a rate hike at the next meeting. Thus, the long-term uptrend on the dollar may well be resumed, that in a large extent will depend on the upcoming US macroeconomic data.

Last week the British pound is also was in demand , helped by the published data on the UK labor market, that have exceeded analysts' forecasts. However, consumer price inflation in the country remains low, but with it, remains low and expectations of an early increase by the Bank of England of interest rate. In addition, the risks for the pound carries the upcoming referendum, so its growth continue to be used for sales. In the short-term pressure on the pound will remain, but the results of preliminary surveys of Britons and strong economic data will support him, that should be taken into account for IAFT traders. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

Published last week macroeconomic statistics for the UK generally was not the best, but it did not have a particular influence on the dynamics of the British pound, which tried to keep from falling below the 44th figure in a pair with the US dollar. Attention of market participants focused on the results of the meeting of the Bank of England, from which most of analysts do not expect anything new, but the weak economic performance of the country and prospects for its exit from the European Union allowed us to assume a weakening of monetary policy.

However, as expected, the ECB left the interest rate and the volume of the asset purchase program unchanged. At first, the market responded positively to to the news , against which the pound/dollar tested resistance at 1.4530, but after testing this level, the pound was down again, ending the week near the support of 1.4340. Thus the prospects for the British pound remain negative, the pressure on him before the referendum can persist. Ease the pressure will able the results of surveys in the UK, if the number of opponents on exit from the EU will exceed the number of supporters.

For the EU to exit of Great Britain is also does not bode anything good, and this is one of the reasons for activation of the bears on the euro last week. His attempt to recover against the dollar was limited by the resistance in the area of 1.1446, from which, being under pressure, it is by the end of the week fell to the support of 1.1283. Further development of the upward correction now looks unlikely, pair may soon test a 12th figure, in this case the loss of the euro on the background of positive account surplus in the Eurozone can be limited, that should be taken into account by IAFT traders. BlogLinks

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International Association of Forex Traders

IAFT Weekly Economic Review

Published last week economic data for the Eurozone and the countries within it, had no effect on the dynamics of the single currency. Its growth was stopped by Ofers from the 16th figure in tandem with the US dollar, being come under pressure a whole week of which, it gradually declined, reaching the support in the district of 1.1386. The inability of the euro/dollar to consolidate above 1.1465 and 1.1400 poses a threat to the formation of the top with a subsequent decrease in the direction of 1.1000. However, having consolidated above 1.1366, pair keeps the potential to return higher than 14 th figure.

Despite the fact that the FRS at the last meeting did not give any reason for purchases of the US dollar, investors in anticipation of the publication of important data on the labor market of the USA, took profits on short positions. Against this backdrop, the dollar showed a positive trend, not only against the euro but also against the Japanese yen, but its recovery has been modest and limited by the resistance in the area of 107.50. The inaction of the Bank of Japan, contrary to the expectations of the currency market participants, helped to keep demand for the yen.

According to the data released on Friday, the employment in the US non-agricultural sector in April was 160 thousand people, which is much lower than expected value. Besides that, the analysts forecasted decline in unemployment to 4.9%, but it remained at the level 5.0%. Thus, expectations of an increase by the FRS of interest rate at the next meeting again decreased, but profit-taking on short positions in the dollar continues and the dollar/yen was able to break through the resistance at 108.00-108.33, that allows to assume recovery of the pair in the direction of the 110th figure. This week is not planned publication of important data on the US, so this week may continue range trading that IAFT traders should be considered. BlogLinks

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International Association of Forex Traders

IAFT Weekly Economic Review

Last week a number of events has occurred , that were able in some way affect the currency market. Published data on consumer inflation in Australia were much lower than the predicted values, that prompted speculations on lowering by the Reserve Bank of Australia of interest rate. On this backdrop, the Australian dollar was subjected to a large-scale selling, falling against the US dollar to support in the area of 0.7548. Fears of market participants were not in vain, because today the RBA lowered the rate and aussie/dollar is testing the support again. Pressure on the pair will remain.

Following the meeting that was held last week, the Federal Committee on the US FRS open market did not raise the interest rate again. This decision was expected, so market reaction was negligible, same as the fluctuations of the US dollar against many of its competitors. Not able to stir up the markets and the FRS's comments, as they were again impregnated with caution about the US economic prospects, and with them the prospects of further tightening of monetary policy.

The main event of the week was the meeting of the Bank of Japan. The rapid growth of the Japanese yen was the reason for the expectations of introduction of by Japanese central bank of additional stimulus measures, but contrary to this expectation, he did not take any actions. Thus, the Central Bank gave a "green light" to the strengthening of national currency, which, in fact, has happened. The dollar paired with it broke the important support in the area of 108th figure and now stubbornly approaching the 105th, on what IAFT traders should pay attention. From Japanese officials quite possible to expect negative for the yen rhetoric, but it is unlikely to be the reason for the reversal of the trend, as the currency intervention of the Bank of Japan at this point is unlikely. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders