Market Review for May 9

This day is remembered for the growth of USD, JPY and collapse AUD, as well as the correction of GBP and EUR. There were no signs of such disasters at the beginning of the trading day on the background of virtually empty calendar. In the morning there was a moderate demand for risk, due to positive economic indicators, but at the end of U.S. session the currency pairs have lost control over key technical levels. As a result, EUR/USD ended the day near 1.3040 and GBP/USD — in the area of ​​1,5440.

In the morning Australia surprised, suddenly showing a sharp increase in employment of 50.1 million versus projected 11 million, and the unemployment rate fell to 5.5% from 5.6%. The data confirmed that at the moment the economy is able to shift from the mining sector to the service sector and construction, showing a much higher resistance than analysts had forecast. In such conditions, expectations for lower rates sharply decreased to only 20% chance of further easing rate RBA in the current year. AUD/USD was able to gain a foothold on the level of the opening of 1.0169 to 1.0252 high, but this was not the end. A wave of rumors about a possible release of the Fed’s QE3 helped USD strengthened, sending the pair to 1.0046 minimum. By the close of the trading day prices have recovered only in the area of ​​1.0080.

Britain is also pleased with the economic news: the manufacturing and industrial production exceeded forecasts, showing a 1.1% versus 0.4% and 0.7% vs. 0.3%, respectively. This further convinced investors that the Bank of England until a hurry with additional mitigation. However, GBP/USD failed to reach 1.56 even on these reports, noting a maximum of 1.5586, and then came under attack all the same rumors about the Fed. As a result, the pair had fallen to a minimum 1.5425 and closed trading at 1.5440 area.

U.S. economic data continue to talk about stabilization of the labor market. Report on the number of unemployed who applied for unemployment benefits showed a drop to 5-year low of 323 thousand from 327 thousand, however, is not what caused the sharp fall in the JPY pair with the USD. The long-awaited breakthrough strong resistance at 100.00 held, and with a rather strange circumstances. Real catalyst was not, with the exception of calls that will be soon published a very interesting article on the topic Hilzenrata the imminent release of the Fed’s QE3. However, even this rumor was enough to trigger the growth of USD/JPY from the opening level of 98.98 to a maximum of 100.78, which is close and ended trading.

Forecast for Friday, May 10, 2013

Where did all this excitement in connection with the name Hilzenrata? The fact that this journalist from Wall Street Journal has a very good reputation in the prediction of further steps the Fed. Someone even joked that in fact the chairman of the Federal Reserve is just Hilzenrat, since all that he did write it, then the central bank must be implemented. However, the situation is complicated by the fact that his partner USD collapsed at a hearing about a certain article, which may or may not exist in reality. And if she did not come to light in the near future, frustrated by the market can be as ambitious — even for a long-awaited break above 100.00 the pair USD/JPY can see a rollback.

So ahead of us pretty busy day. First, we expect the appearance of the article and if it still exists, and it is written on the output of the Fed’s QE3, currency may continue its move in the same direction. In EUR/USD is quite possible to wait for the rapid breakdown and target 1.2960 and 1.2920. Second, pay attention to Bernanke’s speech. If he makes allusions to the fact that the Fed is ready to a gradual change in monetary policy this year, the scenario described above will be implemented. In all other cases, we expect a major correction in the realization that it was just a rumor.

If we abstract from market talk and focus only on the economic calendar, then in the next few hours you should pay attention to the publication of the report on the volume of purchases of foreign bonds by Japanese investors. Given the large-scale implementation of the leniency program from the Bank of Japan, the market is waiting for the huge outflows of capital from national bonds in the bonds of European countries. If this is confirmed, the demand for the yen will continue to fall, and the mark will be 100,00 pretty strong support for the USD/JPY, and target the 103.00 over the medium term.

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