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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