Market Review for May 16

After a long reign for USD bulls there was a pause, which immediately took advantage of European currencies, having started the correction. As a result, EUR/USD closed the trading day of 1.2880 and GBP/USD — 1.5270 in the area.

Despite the weak U.S. data, EUR/USD failed to fully implement a corrective pullback, because the European scene came a Commissioner Tajani industry. He said that the national currency is too expensive, which is detrimental to exports. Nothing new, but as a result of steam from the opening level of 1.2884 reached 1.2929 high and crawled back and closed trading so, where she began.

Despite the empty calendar, GBP/USD was able to regain its position. Positive signals from the UK economy, as well as the optimism of the last quarterly report of the Bank of England supports the demand of investors. The pair opened the day at 1.5228, reached a maximum of 1.5321, but was unable to consolidate above 1.53 and retreated to the area of ​​1.5270 at the close.

Who surprised today, because Japan is the publication of strong data on GDP, which rose to 0.9% instead of the expected increase of 0.3%. It seems that «Abenomika» bearing fruit, and the ECB and the Bank of England has something to learn. However, what is even more surprising, since it is the reaction of USD/JPY. It seems to be clear evidence that the rate of the Bank of Japan is working, had to reassure investors that the quantitative easing will continue unabated, and push the pair to the area of ​​103,00. Nevertheless, USD/JPY from the opening level of 102.21 to a maximum of 102.67 grown, but no further progress, closing the day around 102.30. His role in this was played by frustration with American values.

Forecast for Friday, May 17, 2013

The second day in a row U.S. data disappoints us, forcing investors to think — if they are not too far to the demand for USD? Number of unemployed people applying for benefits jumped to 360 thousand from 328 thousand in the previous period. The labor market does not relax — and again it is necessary to monitor the following indicators for suspicious signals. We will not mention the sharp drop in the number of new, lower inflation and problems in manufacturing. All that did not kill USD, but has made it weaker.

Meanwhile, officials from the Federal Reserve comments can make a difference. Particular attention to the performance of the voting members of the FOMC: any hints on the release dates of QE3 will boost demand for the U.S. currency. For example, yesterday’s comments about Williams that «anything can happen» this summer, have supported the USD during the U.S. session. By the way, on the EUR/USD may affect numerous performances and European officials, scheduled for today. Against the background of an empty calendar Kerr, Asmussen, Pratt and Mersch can get a couple of new fall and is now below 1.2860 to 1.28.

According to an article in The Japan Times, today Abe will present its new public plan, under which taxes will be reduced and weakened regulation. Thus, given the program of quantitative and qualitative easing to stimulate the economy and restore long-forgotten Japanese inflation will go on two fronts. The fact that the «Big Seven» tacitly agrees with everything going on, give us a signal to the further sales of JPY. Today, however, be warned: if Abe would say nothing, the yen may strengthen again. In the USD / JPY pair the next support level at 101.90, followed by a 101.40.


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