Market Review for April 30

Tuesday was held under the banner of the struggle — the next technical levels had a serious resistance, but the barriers have been broken with the arrival of the U.S. session. As a result, EUR/USD ended the day near 1.3170 and GBP/USD — in the area of ​​1.5535.

For the EUR/USD in the first half of the day stumbling block was the mark of 1.3120, as weaker-than-expected data on the labor market in Germany only increased fears about the state of the eurozone economy. Index of retail sales showed a second month of decline, the number of unemployed increased by 4 million instead of 2 million forecast, while the unemployment rate still remained at the previous 6.9%. However, the pair still managed to take the bastion, reaching a maximum at 1.3185 sad release of data from the U.S.. Chicago PMI fell to 49.0 from 52.4, the first time after going below the 50-item level since September 2009. As a result, the pair finished trading in the 1.3170 area.

GBP/USD has continued to grow, despite the conflicting economic data from the United Kingdom. Consumer confidence has fallen and the number of approved applications for mortgages continued to rise, suggesting that the housing market still holds, but in general, the economy continues on the thorny path. The pair opened the day at 1.5496, 1.5568 and peaked completed the day’s 1.5535.

Meanwhile, USD/JPY continues to conduct its own game. The pair, of course, reacted to the disappointing Chicago PMI data, but only in the form of a lone candle down to a minimum 97.00, after which the prices are back above $ 97.40. Meanwhile, data from Japan’s pleased, showing growth of business activity to 51.1 from 50.4 a month earlier. In addition, the unemployment rate fell to 4.1% from 4.2%, while consumer spending rose by as much as 5.2% of the projected 1.8%. This suggests that Abe boasts the first successes.

Forecast for Wednesday, May 1, 2013

In fact, the market is almost convinced that the ECB will lower rates by 25 basis points, but the EUR/USD continues to feel pretty confident that can be attributed to several factors. First, the alarm bells of the American economy, that indicate that the recovery of Q1 only short-term spike. Secondly, the state of the credit markets in the eurozone. Recently we have seen the decline of yield on government bonds, which could result in a lower cost of financing the periphery. In fact, the banking sector E-17 show quite good results, suggesting that the recovery has begun, and it can provide fundamental support EUR in the short term. Can spoil the mood in the morning only the data on the Chinese PMI — new evidence cooling economy could return in EUR/USD 1.31 area.

GBP/USD continues to stay afloat, even after passing mark of 1.55, but due to the fact that investors are not fully confident that the Bank of England will have to hurry up with the implementation of additional economic stimulus programs. GDP actually sowed doubt, so now will focus on data of PMI. If the next index will reflect the strengthening of the pair can be fixed above 1.5540/50 and move to the area of ​​1.5580. However, we are more inclined to see the likelihood of unpleasant surprises, and then the movement will be more ambitious with the probability of a return to 1.5460 and then 1.5330.

You may ask why the Chicago PMI caused such a strong reaction of the market? The fact that the business activity as an indicator, it is quite clearly reflects the current state of the U.S. economy. Now, after quite expect disappointment on the part of the ISM manufacturing. If, indeed, the indicator is below 51,00, USD/JPY may again come under pressure with the immediate goal at 97.00. FOMC meeting is unlikely to arouse the interest of the market — is likely to heated debate will be made only in the minutes of the meeting published later, but not in the accompanying statement.

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