IAFT Weekly Economic Review

Last week began with presentations by European Central Bank President Mario Draghi and the head of the US Federal Reserve, Janet Yellen. Overall, nothing newwe have not heard from them, except willingness to act in case of necessity on the part of the ECB and the lack of haste in further tightening of monetary policy by the FRS. Thus, these events had no significant effect on the currency market, participants of which were looking forward to the results of referendum in the UK.

On the background of the social polls which have showed the excess of opponents of the UK's exit of the European Union over the number of his supporters, the British pound and the euro enjoyed a certain demand, and the Japanese yen declined due to profit-taking on long positions in it. As a result, the pound was up against the US dollars up to 1.5016, the euro/dollar tested the resistance in the area of 1.1426, and the dollar/yen - the level of 106.81. On the eve of the referendum published macroeconomic statistics had no effect on the dynamics of these pairs.

The preliminary results of the referendum appeared in Friday's Asian session. According to these results, Britons still chose termination of the UK's membership in the EU, which caused quite logical massive decline in the British pound, the euro and the strengthening of the yen, especially in the cross-rates of these currencies. A lot of analysts are expecting relatively negative economic and political consequences from the "Brexit" not only for the UK but for the EU as well. On this background it is expected an increase of the volatility on the markets, where the pressure on the pound and the euro will persist, IAFT traders we recommend to be cautious. BlogLink

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International Association of Forex Traders

IAFT Weekly Economic Review

Macroeconomic calendar last week was full of important events, among of which we should highlight the meeting of the American, Japanese, Swiss and British central banks. Operations Committee on the US FRS open market has decided to keep the interest rate unchanged. Since this decision was expected, market reaction was rather sluggish, and the US dollar, despite the comments of the head of FRS Janet Yellen, soon again was in demand in the pairs with the euro and the British pound.

Decisions of the Bank of England and Swiss National Bank do not make any changes in monetary policy, also was not a surprise for the participants of the currency market. On the one hand, macroeconomic statistics published by the UK does not give a compelling reason to increase by the British CB of interest rate in the foreseeable future. On the other hand, the result of the upcoming referendum, could become the country's exit from the European Union, which excludes any actions by central bank on the eve of this event.

But the inaction of the Bank of Japan was a surprise and provoked another wave of purchases of the Japanese yen, which is on the background of a possible "Brexit" was not deprived of attention from investors. However, in the second half of the week, after the murder of a British member of parliament, which led to the suspension of agitation events, speculators took profits on short positions in the euro and the pound, as well as on the long positions in the yen. This led to the growth of the euro/dollar, the pound/dollar and dollar/yen, but the risks of "Brexit" are remained and jumps of these currencies in different directions can continue, so before the referendum IAFT traders should refrain from opening the long-term strategic position. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

In his comments at the beginning of last week, the head of the US Federal Reserve Janet Yellen expressed concern about a weak report on non- agricultural sectore, and at the same time she said that should not be given too much importance to data for one month. However, the probability of the FRS increasing the interest rate at a meeting which will take place this week, significantly decreased, but, despite this, the US dollar has kept positive dynamics in the pairs with many of its competitors, with the exception of the Japanese yen.

The risks of the UK's exit from the European Union, base on the results of the upcoming referendum, increased the demand for assets-"shelters", which traditionally include gold, the Swiss franc, and, of course, the Japanese yen. The last one is in steady demand, on which background the dollar in tandem with it fell to the support in the area of 106.25, but with the beginning of the new trading week, broke i through and tested the level of 105.81. In general, from the Bank of Japan is not expected any actions this week, but further strengthening of the yen may force it to resort to additional stimulus measures.

As expected, the British pound remains vulnerable in eve of referendum in the UK. The high probability of "Brexit" and related to that event of negative consequences for the British economy has a negative impact on its dynamics, so it is decrease in tandem with the US dollar and cross-rates with other currencies continued, and this trend will continue at least until the referendum, which should be considered by the IAFT traders. Undoubtedly, the results of the poll can provoke bursts of volatility, but according to everything, the number of opponents of "Brexit" hardly will exceed the number of its supporters. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

On the eve of important events of the last week, market participants remained passive, as a result of which some currency pairs, including euro/dollar, were trading in a fairly narrow ranges. According to published data, the unemployment rate in the Eurozone remains high and consumer price inflation low, which kept the speculation about a possible further weakening by the European Central Bank of monetary policy, at the same time any actions from him at the meeting, which was held last week, were not expected.

Thus the preservation by the European Central Bank of interest rate and the volume of asset purchases was not a surprise for investors, so the euro response to the event was generally minor. In his comments at the press conference, the bank's president Mario Draghi did not give the slightest reason to expect a collapse of stimulus measures in the foreseeable future, and the euro came under pressure again, but its decline against the US dollar was limited by support in the area of 1.1140.

In the conditions of decrease of stock indexes the dollar with the beginning of last week, experienced the pressure from the Japanese yen, falling to support of 108.52. To support it, it failed, and released on Friday employment report in the US non-agricultural sector, which largely fell short of the predicted values, reaching the level of 38 thousand instead of expected 160 thousand of jobs. Thus, in spite of unemployment at the level of 4.7%, the dollar fell against the yen to 106.49, while the euro increased to 1.1373. Expectations of increasing by the FRS, in June, significantly fell , which will put pressure on the dollar, IAFT traders we recommend to be careful. However, its further losses could be limited. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders