Market Review for the week from 13 to 17 May

During the trading week from 13 to 17 May, the U.S. dollar has strengthened its position as the second economy of its main currency rivals or continue to remain in recession or slow down much faster rate than the U.S.. In particular, the euro continues to remain in a recession for the sixth consecutive quarter. In addition, the Bank of Japan has received support from the «Big Seven» on the proposed program of quantitative easing. Against such a background USDX dollar index in the second half of the day on Friday, would add up to a week 0.9%. Additional support for the U.S. currency have statements from some Fed officials that the regulator can start reducing the amount of quantitative easing closer to the end of the summer.

GDP data for the euro area were once again in negative territory, and for the first quarter of 2013 amounted to minus 0.2%. Germany noted a slight increase of 0.1%, which has helped her avoid the technical definition of a recession, but economic activity in France and Italy fell by 0.2% and 0.5%, respectively. ECB likely to go further interest rate cuts in the near future, and currency market participants lay it in the price. The EUR / USD continued to decline and reached the level of 1.2820, which is 1.4% below the close of the previous week.

The Bank of England released its quarterly inflation report. Regulator expected was more optimistic about the economic outlook than the last time, It’s a few to stop the decline of sterling observed since the beginning of the week. However, from July 1, Mervyn King will leave his post and take his place, Mark Carney. Accordingly, the uncertainty regarding the possibility of additional easing remains. GBP / USD has found support in the area of ​​the lower Bollinger Band on the daily chart and trying to determine the further direction of motion. For the week, it fell by 1.0%, touching the mark of 1.5160 at a minimum.

The Australian dollar continued to remain under pressure. In the absence of important macroeconomic news and as strengthening of the U.S. dollar with AUD / USD continued its decline towards 0.96.

Similarly, the Japanese yen continued to lose ground. Driving factor remain the recent changes in the monetary policy of the Bank of Japan, which will lead to an increase in the monetary base doubled in the next two years.

Forecast for week 20 — May 24

The main event of the week that can have a significant impact on the dollar, will be publication of the minutes of the last meeting of the Federal Open Market Committee Federal Reserve. The regulator said in a recent official statement that he is ready to make changes in the program of quantitative easing in both directions, depending on the state of the economy. This triggered a weakening of the «American», but in the last week, some Fed officials said the possibility of a phased start QE3 collapse near the end of the summer. Accordingly, market participants will be closely grasp the meaning of «minutes» in order to clarify the situation. Chance of a significant increase in volatility. In general, we believe that the regulator will not hurry with the elimination of incentives and investors will be able once again to make sure. The chances of a weaker dollar after the publication of minutes and in our view somewhat higher.

On Monday, May 20 in Germany and France holiday business day, and on Tuesday and Wednesday in the calendar does not appear important releases. On Thursday morning, the market will present a report on the PMI indices in industrial sectors leading economies in the eurozone. The macroeconomic situation in the euro area remains tense, and we do not expect there optimistic figures. At the same time, the Spanish government will hold a regular auction of debt. Results of previous events have been very optimistic and provoked a strong euro. In light of the ECB’s readiness to support the bond market governments of troubled countries, we assume the possibility of strengthening the euro after the announcement of the auction results. Overall, EUR / USD pair is in a downtrend that has the potential to continue. The aim of the movement is the area of ​​1.2760.

The main events of the week for the British pound will be publication of the minutes of the last meeting of the Monetary Policy Committee, and figures on retail sales for April. From the regulator, we do not expect surprises. Despite the continuing difficult macroeconomic situation, he expressed cautious optimism for the near future. Accordingly hints of changes in monetary policy are unlikely. Also in July, the bank head Mark Carney, but because the current plans are losing their relevance. The report on retail sales can surprise either way. Statistics from the UK is largely negative, but became positive diluted releases lately. From the point of view of technical analysis for the GBP / USD pair is important to keep the support of 1.52. Overcoming it down on the corresponding news background could trigger movement to the level of 1.5030.

The Australian dollar is also expected to be the last meeting of the Reserve Bank, where he surprised the currency market participants lowered the discount rate. Investors will be closely read the document to determine how deep the cycle can be further decline. It can determine the prospects of «ausi» in the coming weeks. Key economic releases in the coming week is not planned. From technical point of view, if they continue to decline to 2012 lows are in the 0.9570 area.

Bidders for the Japanese yen will keep the focus on the results of the Bank of Japan. «Big Seven» lit in front of him the «green light» and because the regulator is unlikely to make any changes in monetary policy. The yen will continue to feel weak and the current upward trend for the pair USD / JPY will continue.


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Market Review for the week from 13 to 17 May | Web Trade For All - Forex trading, analytical reviews of the market and help for beginners