IAFT Weekly Economic Review

Last week took place the meeting of the Swiss National Bank and the Bank of England, the results of which could affect the dynamics of the Swiss franc and the British pound, respectively. As generally expected, none of the central banks did not make any changes in its monetary policy, so the market reaction to the events was insignificant and short-lived. Previously published data on consumer inflation in the UK fell short of the predicted values, which had a moderate pressure on the British currency.

Despite the inaction of Bank of England at the last meeting, as well as good data on the UK labor market, market expectations about the central bank lowering the interest rate at the next meeting remain high. Thus by the end of the week the pound has undergone to another wave of sales, as a result it has completed the week down against the US dollar in the area of the psychological level of 1.3000. Results of the week make it possible to keep a negative outlook on the pound, it can improve a steady growth above 1.3445.

The Japanese yen continued to be in demand during the last week, but on the eve of the meeting of the Bank of Japan, which will be held this week, the bears on dollar/yen did not have the resoluteness to break through support at 101.80-101.60. Opinions of analysts on the results of the meeting were divided: some do not expect any action from the Central Bank, while others rely on the further expansion of stimulus measures. The outlook on the yen remains positive, but the market reaction to any outcome of the meeting may be its selling, so before the event is better to refrain from opening the strategic positions in the yen. The same applies to the results of the FRS meeting and the dollar's reaction to them, that should be considered by the IAFT traders. BlogLinks

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International Association of Forex Traders

IAFT Weekly Economic Review

The main event of the last week was the meeting of the European Central Bank. In the current situation with the economy of the Eurozone expectations of any actions on the further weakening by the central bank of monetary policy was very low, so the euro against US dollar most of the week was trading with a positive attitude, testing and breaking the resistance in the area of the 12th figure and at the level of 1.1260 then, continue to grow, it rose to the resistance in the area of 1.1326.

According to the results of the meeting the Central Bank has decided to keep the interest rate, as well as the size and timing of asset purchases. The market's reaction at first was the purchase of a single currency, but its growth to above resistance was used to take profit, against which it has returned to the area of the 12th figure. Overall, the pair is in the long-term consolidation phase, and while it is trading above 1.1200, the chances of growth towards the upper border of the range will remain. The loss of this level will increase the risks of testing and breaking of 1.1000.

Due to lower expectations of US FRS increasing the interest rates at the next meeting and a weak ISM index in the services sector, the US dollar at first declined against the Japanese yen, testing the support at 101.20. On the eve of the next meeting of the Bank of Japan, bears decided to take profits on short positions, triggering recovery of the pair to 103.05. About improvement of its prospects, however, there is nothing to say, because in the conditions of falling stock indexes further recovery of the dollar/yen is associated with certain difficulties. While the pair trades below 104th figure, risks of falling at least to the level of 100.00 will remain high, what should be considered by IAFT traders. BloglLinks

Best regards, AffiLinks

International Association of Forex Traders

IAFT Weekly Economic Review

Last week has not been rich in significant events and related to it movements in the currency market. After the comments from the head of the Federal Reserve Janet Yellen and Vice Chairman Stanley Fischer, in which they pointed out the possibility of increasing of interest rate, the US dollar enjoyed moderate demand. On this background the euro/dollar has been under pressure, and the dollar/yen, gradually moving up, got to the area of the 104th figure, which can be referred to significant levels. But in anticipation of the publication of the US labor market data, of large-scale purchases of the dollar were not.

Published last week by US macroeconomic statistics in general was mixed. The consumer confidence index for August exceeded analysts' forecasts, which had a modest support to the dollar. Report on employment in the private sector by ADP came out within the forecast and the previous values, without putting thus almost no impact on the greenback. Disappointed on it the bulls the publication of the ISM index of business activity in the manufacturing sector of, which was below the level of 50.0, provoking a slight dollar sales.

The key event of the week was the publication on employment and unemployment in the US data that could strengthen expectations of increase by the FRS the interest rate at the nearest meeting and possibly on the next. However, published data showed that the economy was able to add 151 thousand of jobs, instead of the expected 185 thousand, and the unemployment was at 4.9% instead of the forecast 4.8%. The first reaction was a fall of the dollar, but soon he was bought out, which allowed him to finish the week near the current highs. However, after a relatively weak data to expect too much optimism on the dollar bulls are hardly will, at the same time they also can not be considered as a good reason for active selling of US currency. It is possible that this week's market activity will remain low, we recommend IAFT traders to patience. BlogLinks

Best regards, AffiLinks

International Association of Forex Traders