Market Review for April 16

Foreign exchange market is pleased excess volatility, but, unfortunately, little predictable. As a result, EUR/USD ended the day near 1.3185 and GBP/USD — in the area of ​​1.5370.

EUR/USD pleased unexpected reinforcement, despite the weak economic data. The study showed a reduction in Germany’s ZEW expectations index to 36 from 42, reflecting the experiences of the March of investors over the future of Cyprus. Despite this, the couple from the opening level of 1.3037 strengthened to a maximum of 1.3201 on hopes that the worst is over for the euro zone. Closing of the trading day was not far from the day’s highs.

GBP/USD also continued to strengthen, largely stimulated by weak reports from the U.S.. Negative findings of the March inflation helped the pair to achieve the maximum 1.5378 1.5278 from the opening level and closed near 1.5370.

After the great sell-off Monday USD/JPY again raised its head, even though the terrorist attack in Boston, as well as weak economic data. A pair of opening level grew to a maximum of 96.72 98.15, closing the day around 97.60.

Forecast for Wednesday, April 17, 2013

We expect that the USD still hold afloat during this week, but it all happened much faster. Only change in expectations about monetary policy the Fed could explain the unexpected willingness of investors to sell the U.S. currency. Yesterday’s inflation figures have confirmed that at the moment the Fed to nothing to hurry — the price has not increased in March, while, in contrast, fell by 0.2%. In addition, recent data from the labor market and the consumer sector of a concern. Apparently, this has led investors to quickly revise their expectations. Now interest is the study of Beige Book, as well as the dynamics of the stock market, which lately is directly correlated to the demand for euros. If the data point to the cooling of the economy, and shares crawl up, in EUR/USD once again have a chance to get close to 1.33.

Also today, of particular interest is GBP/USD, as the UK is to publish minutes of the last meeting of the Bank of England, as well as data on the labor market. We are well aware that a radical change in the balance of power in the camp MPC has not happened yet, but given the weak economic performance of recent months, players expect a quick easing of monetary policy. The fixed ratio of votes, as well as good results reports for employment, may reintroduce GBP/USD above 1.54 with the further aim at 1,5460.

Despite the fact that we believe in the further strengthening of USD/JPY in the long term, at the moment series of rather weak U.S. data could still time to stop the rally. Doubts as to who will be softer — the Fed or the Bank of Japan — make investors more subdued buy a pair. So, if you prefer a short-term strategy for the near future refrain from longs. We do not think that the level of resistance 98.40 would easily passed — most likely, the weak results of the American study Beige Book may trigger another pullback 96.70 area.


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