Market Review for April 17

Currency dynamics becomes less predictable, because every day in the role of catalysts are not acting economic indicators, and unplanned events in the political or financial nature. As a result, EUR/USD ended the day near 1.3030 and GBP/USD — in the area of ​​1.5230.

EUR/USD in the morning was kept in suspense, as the market cruised rumors of a possible downgrade of Germany caused a sharp drop in the index DAX. Then, in the evening, only added fuel to the fire performance of Weidmann, who sent the pair to the lows of the day. Managing the Bundesbank said that the central bank may cut interest rates if necessary. Couple 1.3173 from the opening level of 1.30 to a minimum, restoring only 30 points to close.

GBP/USD fell under the brutal sell-off even during the European session, in connection with the release of weaker-than-expected labor market data. As it turned out, the unemployment rate rose from 7.8% to 7.9%, and the number of unemployed increased from December to February to 70,000, showing a maximum increase in the autumn of 2011, and the rate of wage growth slowed to historically lowest level. A pair of opening level slipped to 1.5357 minimum 1.5215 and closed trading near 1.5230.

Amid all the dynamics of what is happening USD/JPY was not impressed, as the pair does not react to the news from Europe, and the Beige Book survey did not cause any significant reaction. Opening the day at 97.51, the pair reached the maximum 98.42, then slid to the day low 97.20 and closed trading near the middle.

Forecast for Thursday, April 18, 2013

If Weidman meant exactly what he said, and did not give up his words the next day, after seeing the chaos in the markets, this book on the decline of the euro soon. The fact is that the economic data is really saying about the weakness of the euro zone, but at the last meeting Draghi gave no hint of a quick change of the monetary policy. And we know that the ECB likes to warn about the changes. Perhaps as a messenger at this time will perform Weidmann, and the next meeting of the Governing Council will present a more benign view of politics. So, we wait for clarification of the situation, and are gearing up for further decline in EUR/USD. Not the fact that the couple can easily pass of 1.30. Perhaps we will see a temporary correction until such time as investors believe the seriousness of the ECB. By the way, the arguments in favor of this may be a series of weak economic data.

Given the weak position of GBP/USD, as well as yesterday’s disappointing labor market data, today we can expect a «continuation of the banquet.» UK plans to publish retail sales decline in the expectations of 0.3% m / m However, in this situation we can expect even larger drop target, and thus further reduce the pair with the immediate goal of 1.52, after which it will open the way to 1.5160.

From USD/JPY, we do not expect radical breakthroughs, although data on the trade balance of Japan may well demonstrate the positive effect of cheapening the currency. Minor adjustments to the dynamics of the pair can make release report on the number of applications for grants b / d U.S.. If the index drops, it could ease pressure on the pair with the immediate goal at 98.60.


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