Market Review for May 6

Yesterday justifiably be called the day of correction. Over the weekend, investors had plenty of time to realize the value of a published report on the U.S. labor market, so the opening of markets, the European currencies have come under attack. As a result, EUR/USD ended the day near 1.3070 and GBP/USD — in the area of ​​1.5530.

The day began rather quietly, given the closed markets of Tokyo and London. Even the sad data from Australia and China were not able to cause any reactions. Then came the European session and positive euro zone PMI data in the service sector. Figure grew to 47 from 46.3, but the fact that less than 50 still spoiled the mood. EUR/USD opened the day at 1.3119, hit a low of 1.3053, which is near and closed trades near these levels.

GBP/USD has followed European counterparts. However, this correction was of a purely technical nature, as the economic events were planned, and markets and at all were closed due to the holidays. The pair opened the day at 1.5559, hit a low of 1.5520, which is near and closed day.

Meanwhile, USD/JPY slowly moving up, enthusiastically supported the «faithful to the American economy.» The pair not only opened up a small gap at the level of 99.16, but continued to rise during the day, reaching a high of 99.45 and ended the day near this level.

Forecast for Tuesday, May 7, 2013

Against the background of an empty calendar Mondays and equally meager list of events planned for Tuesday meeting of the Reserve Bank of Australia will be the main catalyst for movements in the foreign exchange market. AUD/USD is trading near two-month lows and can go even lower if the RBA will give the appropriate signal.

Yesterday’s data from Australia and China have upset investors, but they have made the same impression on the head of the Central Bank? Hardly. Just recently the country’s sovereign rating was affirmed at its highest level, what can not boast of any U.S. or UK. Perhaps this will persuade Stevens once again leave rates at the same place. However, the accompanying statement may be more lenient than usual, given the dire predictions to reduce investment inflows into the country. If so, the couple can return to the 1.0200 area after the breakdown of the intermediate support 1.0230. The breakthrough of the first level is possible only in case of an unexpected decline rates are already at the current meeting.

A series of positive signals fed to the British economy, can not suggest, the economic recovery. And Q1 GDP and PMI of the three sectors were above expectations to cheer GBP/USD to rise. The need to encourage action on the part of the Bank of England is not so acute, and, therefore, one should not expect anything serious from this week’s scheduled meeting. To date, the 1.56 level is strong resistance and it will require a major breakthrough catalyst. Of the declared this week’s economic events such we do not see.

USD/JPY pair eventually will mark 100.00, but this is unlikely to happen this week in the absence of any catalyst. First, the economic calendar of both Japan and the U.S. is nearly empty. Secondly, 80% of companies S&P 500 have already reported their profits. The only ones who can move a couple — officials FOMC, however, and we will hear no earlier than Friday.


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