Market Review for March 11

Japanese and Chinese data disappointed investors, but this has not wake up markets on Monday, so that currency trading have been pretty calm. Only Aussie opened gap down to the next frustration over a slowdown in China. As a result, EUR/USD closed the day of 1.3050, and the GBP/USD — 1.4920 at.

EUR/USD was able to come back above 1.30, supports more hope and promise than real data. Industrial production in France have fallen by 1.2% vs 0.1%, and the Italian GDP contracted by 2.8% against the forecast of -2.7%. The only thing that has pleased, is the growth of Germany’s trade surplus to 13.7 billion from 12.1 billion the previous month. By the end of trade, the pair was able to recover in the 1.3050 area.

GBP/USD more clearly demonstrated the southern direction, although it is recognized that with the absence of a catalyst for economic or political nature, it is expressed within a fairly narrow range. The pair opened at 1.4915 day, rolled to a minimum 1.4865, but the closure returned to the starting point.

USD/JPY Wöhl total peace of mind, while the minutes of the Bank of Japan, one does not expect anything new. The pair opened the week by 95.97, reached a maximum of 96.36, which is close to and completed trading day.

Forecast for Tuesday, March 12, 2013

Inflexibility fans EUR, of course, amazing, but on the other hand they also arguments — while the rest of the major central banks are expanding their balance sheets, it narrows the ECB, and the change of monetary policy at the next meeting now just is not expected (we remember speech Draghi) . Meanwhile, the yield spread of Italian and German bonds has continued to expand, the Italian CDS swaps continue to grow (after reduction of the sovereign rating of the country it is logical), and the EUR/USD back testing 1.3060 area. The situation can change quickly, and we have two arguments in favor of a long-awaited break 1.30.

  1. On Wednesday, the couple can get an additional catalyst for the further weakening of the U.S.. The key event will be the U.S. retail sales data, and given the continued recovery of the labor market, there is every reason to expect a growth rate higher than expected.
  2. Plus the week investors will start to prepare for the planned March 20 FOMC. And while waiting quite positive, given the favorable situation on the labor market, painted by the latest data. Thus, targets for the pair at levels 1.2960, 1.2920, and 1.2880.

London and the UK can give GBP/USD another reason for the fall. As we recall, the business activity in the manufacturing sector fell: in fact, PMI has fallen sharply to levels not just talking about the recession (below 50), but also unseen since last summer. Thus, the data published today in terms of industrial production may well prove a tendency to decline. We are bearish sentiment on the GBP/USD with the immediate goal at 1.4870 and then 1.48.

USD/JPY is moving in a northerly direction, and we expect to continue this trend. In the week we will see the Japanese Parliament voted for a new head of the Central Bank Haruhiko Kuroda, and when we get the final confirmation, the couple can make a new leap up and target 96.60 and then to 97.20. Also, keep an eye on the yield on short-term U.S. government bond index and Dow: the lower the first and above the second, the more likely to see further growth in the pair. Small corrections are possible at current levels — use for other purposes.

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