Market Review for May 7

The tone of trading yesterday asked the Reserve Bank of Australia, which is contrary to the predictions of most economists, yet went on rate cut, bringing borrowing costs to a minimum with the 1960 level. At the European currency this had minimal impact, as they traded the operation of market sentiment. As a result, EUR/USD ended the day near 1.3080 and GBP/USD — 1.5480 in the area.

RBA really surprised reduction in the cost of credit in the current session. However, it is recognized that reason, in fact, it was enough, as we wrote in the previous review: The gradual slowdown in the global economy, coupled with the cooling of the economy the main trading partner of Australia forced Stevens to resort to drastic measures. As a result, AUD/USD broke 1.0200, hit a low of 1.0154 and ended the day in the area of ​​1.0180.

Now comes the EUR/USD. Steam during the day behaved with restraint, though managed to gain a foothold to a maximum of 1.3131 and 1.3067 down to a minimum, ending trading day not far from the last. Economic data yesterday pleased, showing an increase in industrial orders up 2.2% instead of the forecast decline of 0.4%. Given the recent weakness in the manufacturing PMI countries, these figures have caused a sigh of relief among investors, triggering a temporary reinforcement of the pair.

GBP/USD yesterday greatly surprised with a sudden drop of 80 points. Initially, the market began to seek out a specific fundamental cause of this trend. It has been suggested on the bombings in Iran hostages in Syria, turn shares Apple. However, the most likely seems to be part of one of the UK clearing banks that have entered into sales as soon as the pair reached a certain critical point. As a result, from the opening price went down to 1.5532 minimum 1.5445 and recovered only in the area of ​​1.5480 to close.

Forecast for Wednesday, May 8, 2013

Ahead of us the Asian session, during which the data will be published on China’s trade surplus. Given naiskuchneyshuyu selection of economic events in the framework of the current week, this release is worth paying attention to. Usually figure shows relative stability, remaining in positive territory, but in the past month we have seen the deficit. Recall the recent slight decline in PMI, and we will see even more of exciting minutes on the AUD/USD. If the performance has restored to the area projected 15.5 billion, the couple can get back above 1.02 with the immediate goal at 1.0230. However, there is a fairly high probability that the balance does not make it to the expected levels, and then AUD/USD will have a new goal — to 1.01.

Then come back to Europe. The representative of the ECB’s Weidmann said yesterday that the competitiveness of the euro area can be restored in two ways: a softer policy and a weaker local currency. As long as EUR/USD holds above 1.30 bravely, but the hint is understandable and implementation of the program could begin fairly soon. Technically difficult to break through the level, and is supported by market sentiment. In May, the demand for risky assets once again started to recover, and the euro, like it or not, to date, is in this status. We continue to expect a moderate pullback to 1.30 this week.


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