Market Review for April 4

As we warned, Thursday, was very active in terms of monetary dynamics. Many important events triggered impressive variations on publishing. As a result, EUR/USD finished the day in the area of ​​1.2950, ​​and the GBP/USD — in the area of ​​1.5240.

EUR/USD yesterday survived a storm of emotions. In the morning the players were set quite pessimistic, which contributed to the output of the weak data on business activity in the services sector in Germany (50.9 from the prior 51.6). The ECB left rates unchanged, but in the comments, Draghi market still saw a willingness to further easing in monetary policy. His words about the downside risks in the second half of the year, and the need to constantly monitor the situation for a timely response to incoming data initially sent the pair to 1.2744 minimum. But then came the realization that the region it will have a positive effect, and the mention of the fact that «Cyprus does not become a pattern,» the pair helped start the recovery, resulting in a maximum of 1.2948 was achieved.

For GBP/USD was no surprise — Bank of England left rates at the same location and size of the program of buying assets intact. This gave the pair a little incentive, as some players still hoping to mitigate already during this meeting. At first couple stopped at 1.5130 resistance, but the sharp appreciation of EUR/USD, and then the weak data from the U.S. labor market helped to break up. As a result, the pair reached the 1.5244 high, near which ended the trading day.

Japan delighted by making everything as like bulls on USD/JPY. The Central Bank, headed by Kuroda justified expectations by providing the public an unusually aggressive program of quantitative easing, which resulted in a larger scale rally couples than we expected. The Bank of Japan announced a plan to double the program of buying assets, increasing it to 74 billion dollars a month. Also been adjusted to maturity: now can even buy 40-year bonds, and the very «general note issue» will be temporarily canceled. This has convinced investors the seriousness of the Japanese authorities, sending the pair from the opening level of 93.02 to a maximum of 96.41, in the area which have been completed and tenders.

Forecast for Friday, April 5, 2013

After stress, we prepared the meetings of central banks, there is still an interesting event. Report on levels of employment payrolls excluding agricultural sector can prepare a nasty surprise. Rate in three of the last four months, showed an increase of 200 thousand, and at this time forecast says 201 thousand, however, those news from the labor market, we have received for the current week, impel us to the dark thoughts. The fact that ADP ratio in the private sector (158 thousand vs. 203 thousand), and the ISM employment component in the services (53.3 from 57.2), and the number of initial claims for unemployment benefits (stubborn growth indicator for all of March) indicate that the data can not make it to forecast. And significantly.

If so, the European couples can get additional stimulus to growth. EUR/USD currently target the 1.30 further move to 1.3040 after the breakdown. For GBP/USD targets will be 1.5260 and 1.53.

On the USD/JPY separately. From the beginning, the rally was due to a combination of a pair of soft attitude of the monetary authorities of Japan and the strong economic performance of the United States. However, recent U.S. data suggest, that the recovery of exhausted itself. Check out this article will present a report on the labor market: employment levels below expectations may limit the growth USD/JPY with a correction to the area of ​​95.30. However, given the already occurred adjust expectations of players in connection with the release of preliminary leading indicators of the labor market, even in the index 200 000 will be seen as very positive. In this case, the way of USD/JPY will be no obstacles until 97.20.


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