Market Review for May 1

European currencies honestly want to prepare for the meeting of the ECB, but the flow of weak U.S. data did not give a reason for the weakness. At the end of the day, EUR/USD ended the day near 1.3190 and GBP/USD — 1.5560 in the area.

Labor Day, we celebrate not only — the majority of EU stock exchanges were closed, with the exception of the UK. EUR/USD, meanwhile, has managed to grow even against the background of rather weak PMI data in China and an empty calendar in the eurozone. During the U.S. session, there was one bad point — the members of the FOMC continued to argue that labor market conditions are improving, but it could not take away a pair of current positions. The pair opened the day at 1.3164, 1.3242 and peaked completed the day trading just below 1.32.

United pleased with unexpectedly strong data on business activity in the manufacturing sector. PMI rose to 49.8 vs. 48.6 forecast, despite the weak signals previously published industry reports. Of course, happiness is incomplete because the measure fell short of the 50 mark. Nevertheless, it helped GBP/USD close to get close to 1.56 with the achievement of maximum 1.5595, but after the correction occurred in the area of ​​1.5580, where it ended trading.

USD/JPY currently achieved very strong support at 97.00, which is not so easy to break even at the output of the weak performance of the labor market. Investigation of ADP in the private sector only confirmed fears that the employment rates published in this Friday, do not make it to forecast. Has fallen from 131 million in March to 119 million in April. The ISM manufacturing slipped to its lowest level this year, from 50.7 previously marked 51.3. However, a couple from the opening level of 97.45 to a minimum slipped only 97.01 and 97.18 returned to the area to complete trades.

Forecast for Thursday, May 2, 2013

A series of reports from the United States points to an emerging weakness in the economy that began in March. However, the study Beige Book indicates that the signals are not sad extended to April, and now everything is in the hands of the FOMC — which of the reports they will take as a basis for their judgments. Perhaps a future release of non-Farm, especially after we found out that they still believe that the situation on the labor market continues to «improve.» If the index is below the forecasts, expectations to get out of QE3 will be moved from September to December, and it’s bad for the USD.

At the same time, will once again play a role attitude other central banks. Today, the ECB may finally decide to make changes in monetary policy. If the rate reduction will take place, the first reaction will be selling EUR/USD to 1.31 and then 1.3070. But be careful — after only a couple of hours we expect recovery of interest, since in the long run this decision will positively impact on the economy of the euro zone, and Friday’s NFP already rather spooked traders. Thus, at the end of the day a couple can return to the area of ​​1.32. Pay special attention to Draghi’s speech — if his words will be no hint of a prolonged easing of monetary policy, and the comments will be a gradual recovery, the couple just up the road.

The situation with the state of UK manufacturing is of interest. In a new study, the sector has received the support of the restoration of the flow of export orders, which was caused by the increase in sales to customers in North and Latin America, and Australia. The level of new export orders received reached the maximum rates from July 2011! What is this? States really recovered? However, demand from the euro zone remains rather weak — all from the same study. Today, let’s see how to behave on the construction sector PMI — another pleasant surprise pair will go from 1.56 to 1.5640 next target.

USD/JPY is behaving very sluggishly, stopping near the mark of 97.00, which is not strong enough to break through. At the same time, the road up too thorny, especially in anticipation of NFP. As long as the pair remains the only consolidation.


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