Market Review for the week from 25 to 29 March

U.S. dollar resumed its rise against the major competitors in the period 25 to 29 March. The Dollar Index USDX, which is its relation to a basket of six major currencies, added 0.7% to its highest level since August 2012. The main driver of the movement was to continue weakening of the euro, whose share in the index is about 57.6%. Macroeconomic data from the U.S. continues to receive positive and also have a positive impact on the U.S. currency, to maintain a positive correlation with the equity markets.

Euro continues to remain under pressure as the denouement of events in Cyprus was not as optimistic as I would like the participants, and carries a bad signal to investors. In addition, another round of political crisis in Italy boosted the yield on bonds of the Government, which also weakens the position of the single currency. For the week it lost about 180 basis points or 1.4%.

The British pound is feeling much more confident than the euro. Recent retail sales data related to key macroeconomic indicators pleasantly surprised. In addition, the Bank of England still concerned about inflation and does not intend to target my economic growth at any price, which caused a wave of fear a few weeks earlier. At the same time, and the problems that are similar to the situation in Cyprus and Italy in the country «Albion» is not. Accordingly, the pound has significantly strengthened its position against the euro. Against the U.S. dollar’s position in the week remained virtually unchanged.

The Australian dollar reached our target level of 1.0480 the pair AUD/USD, then «fell» into a correction. Significant macroeconomic statistics in the reporting period have been published. Couple still driven by the latest positive about the situation in the Australian economy and the suspension of a cycle of declining interest rates by the Reserve Bank. On Friday, March 29, it is closer to the closing weeks tested important support level 1.0390.

The Japanese yen continues to «cool down» after the growth, triggered by expectations of changes in monetary policy (LTR) of the Bank of Japan towards mitigation. In advance of the next meeting of the regulator, which will be held on April 4, it gradually declined and closer to the close of trading, was quoted in a major support level of 94.00, losing in the week about 110 points, or 1.1%.

Forecast, 1 — 5 April

The coming week will be the first week of the month, and so on will be full of key macroeconomic data from the U.S. that could set the mood of the world’s financial markets through April. On Monday, April 1 (18.00 GMT) will come not joking data on the index of purchasing managers in the manufacturing sector. Expectations are quite optimistic. The last speaker of industrial orders has been very positive and the whole forming an opinion about the beginning of a «renaissance» in the U.S. industry. Because any negative surprise would have a significant impact on the stock markets and the dollar.

Wednesday (18.00 GMT) The Institute for Supply Management will present and report on the index of purchasing managers in the non-manufacturing sector. Traditionally, it has less effect on the financial markets, but they will look very carefully at this release. In anticipation of the publication of data on the labor market from the Bureau of Labor Statistics on new jobs, the focus would be, and the same indicator calculated ADP Inc, which will be released also on Wednesday at 16.15 GMT. Well, on Friday (16.30) ICC is waiting for us, «the great and terrible» Non-farm payrolls (released on the number of new jobs in non-agricultural sectors of the U.S. and the unemployment rate).

Macroeconomic data from the U.S. is now very positive, so chances are high that the stock markets and the dollar will respond to it very positively. The dollar has the potential to further strengthen.

Tenderers for the pair EUR/USD main event of the week will be the ECB meeting. We do not expect any change in monetary policy. Lowering the discount rate is a step not seen fit. Yes, the economy continues to stagnate, but the rate is therefore only 0.75%. Another step by 0.25 basis points will not have much help, but would deprive the regulator trump card in the fight with a strong euro, which is good to have in store for the future. On the negative external background euro will feel very confident, but we think that will keep the support of 1.2680, as the decline of the single currency already has taken into account a huge stream of negativity.

In the first week of the month Markit traditionally publishes a series of data on the index of purchasing managers in the main sectors of the UK economy. On Monday, April 1 will report on the industrial sector, on Tuesday on the construction, and on Wednesday for the service sector. All data will be published at the same time each day — 12.30 GMT. Macroeconomic data in recent months carried negative, but retail sales were a breath of fresh air. Participants will be expected to continue the positive trends. If they will be disappointed, it is quite likely decline in GBP/USD to around 1.50, and to overcome it will open the way to an annual minimum of 1.48.

Australian dollar will test 1.0390 support against their counterparts from the United States. At these levels, the AUD/USD is attractive for long positions with stops in the 1.0330. Reserve Bank of Australia will hold a regular meeting, the results of which will be announced on Tuesday, April 2 at 07:30 GMT. Changes in monetary policy are expected, and therefore a significant impact on the market, they are not expected. However, the fact that the interest rate will remain unchanged, can support «ausi.» Possible resumption of growth towards 1.0570.

For the Japanese yen on April 4 will be «the day of truth.» The Bank of Japan will announce the results of his meeting. Participants in the global financial markets have been stored for a substantial easing of monetary policy by the regulator after the departure Haruhiko Kuroda. Nikkei 225 Against this background, marked by rapid growth of almost 30% over the last 5 months, the yen has weakened by 20.5%. If investors will not be disappointed with the action plan, it is possible the resumption of the pair USD/JPY towards 100 yen per dollar.


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Market Review for the week from 25 to 29 March | Web Trade For All - Forex trading, analytical reviews of the market and help for beginners