Market Review for April 23

Tuesday placed all points on the «i» and dispel doubts that the eurozone is really on the road to recession. This immediately triggered a sell-off of the single currency, which pulled him and the British pound sterling. As a result, EUR/USD ended the day near 1.30 and GBP/USD — in the area of ​​1.5250.

EUR/USD, finally broke through the psychologically important 1.30 level of support under the influence of weak PMI data in Germany, only confirmed the likelihood of the imminent easing the ECB. The index in the services sector slipped below the key 50-item mark to 49.2 vs. 51.1 forecast for the first time since October 2012. The indicator in the manufacturing industry reached 47.9 vs. 49.0 expected. As a result, from the opening pair slipped to 1.3062 minimum 1.2972 and closed trading around 1.30.

In GBP/USD also had its frustrations in the form of a larger than expected performance of net public sector debt amounts. The index rose to 16.2 billion pounds, exceeding the forecast level of 14.3 billion the previous figure of 7.2 billion Nevertheless, the couple still could not engage below 1.52, although during the day was achieved at least 1.5195. Closure occurred in the area of ​​1.5250.

In Asia, the tone in the morning sets the data from China and found lower levels of business activity than expected. However, the index remained above 50, which further confirms the growth, but more moderate rate. Concerns about the cooling of the Asian economy have resulted in another surge in demand for the Japanese currency. USD/JPY began its descent in the morning, reaching from the opening level of 99.21 and a low of 98.48 completing trading day in 99.25.

Forecast for Wednesday, April 24, 2013

Sad German data give rise to more and more doubt about the myth of the euro-zone economic recovery in Q2, and two quarters of negative growth rates — this is the technical recession. Draghi can no longer remain idle in the current situation, so that now there was talk about lowering interest rates at the next May meeting. And despite the fact that a direct stimulatory effect on the rate really is questionable, the market will react decline in demand for the national currency, and this, in turn, will support the export activities in the long term. Today, all eyes will be on data from Germany. If IFO survey shows drop in business confidence, the pair will open the way to 1.29. And the closer the ECB meeting, the greater the chance for a breakthrough of such support. Recall, it is scheduled for next week.

As of today we will have a break in terms of economic data from the United Kingdom: Retail sales from the CBI and the volume of mortgage lending BBA, which do not have much impact on the markets. However, judging by the reaction of yesterday’s GBP/USD on the sad state of the data on the country’s public finances, the pair is set to strengthen. Game of contrasts between the spirit and the Bank of England, the ECB continues to maintain favorable conditions for bears on the EUR/GBP. The immediate aim — 0.85 with further support the move to 0.8460.

The market continues to wait for the arrival, or rather, care insurance companies in foreign bonds. Perhaps that is what has helped the pair to hold above 99.00, despite the entrenched demand for «safe haven.» We continue to wait for all the same levels: USD/JPY to 100 and then 100.45. Not far off meeting of the Bank of Japan.

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