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Market Review May 5, 2014

May 5, 2014

Last week had an abundance of various market events. The Euro ended trading with symbolic increase by 0.15%. ECB officials made statements about the Euro’s high rate, which bears risks for inflation processes in Europe. Only a weak report on inflation in Germany made them close long positions and the rate has reached 1.3776. CPI index in Europe in general came out worse than in median forecasts, but “bears” couldn’t take advantage of the situation.

1st quarter GDP release in the US has disappointed investors, what contributed in appreciation of the Euro. Strong decline in winter has caused a negative impact on the pace of economic growth of the biggest economy of the world and now the FRS is definitely not going to be in a rush with exiting QE-3. Even positive data on the US market labor couldn’t inspire “bears” to open more short positions in spite of increase of Nonfarm to 288K. That was the maximum figure since 2012.

In spite of GDP data in Britain for the first quarter turning out to be a little less than in the median forecasts, the trading week has ended by the pair with 0.4% growth. Nevertheless investors assume that British economy will show good growth results. Demand for the Pound is supported by exacerbation of negative trends outside the UK. Negative statistics from the States on economic growth pace for the first 3 months of the year has encouraged bulls to open long positions. After publishing of positive data on the labor market in the USA bulls fixed profits on long positions and trading week ended at 1.6871.

Positive trend on the leading stock exchanges in the first part of the week supported moderate demand on the USDJPY pair. On Wednesday there was an announcement of the results of BoJ meeting. Monetary regulator as expected kept the monetary policy unaltered. Negative statistics from the USA on GDP growth in the first quarter has only strengthened the fall of the pair. After report on Non-Farm bulls tried to keep above 103 but the attempt had failed and the week ended at 102.17.

 TECHNICAL ANALYSIS

 

EUR/USD

The Euro looks bullish in the long run as well as in the short term . The target on the upside at 1.3900 still remains relevant for the pair. If that resistance level is taken the upward trend is expected to strengthen.

USD/JPY

The pair is down and at the moment it is below 102.00. Quite recently the downward trend has exacerbated, what can be clearly seen on the chart. Therefore the forecast is bearish.

GBP/USD

The Pound has retraced a bit and is consolidating now. Still the outlook remains bullish. It can be inferred from the chart and longer trading history of the pair. It has been up since March 2014. So there is no change of prediction for the coming week.

ECONOMIC CALENDAR

 

Monday, May 5

All Day     Holiday  United Kingdom – Early May Bank Holiday

All Day     Holiday  Japan – Children’s Day

All Day     Holiday  South Korea – Children’s Day

01:45    CNY  Chinese HSBC Manufacturing PMI 

14:00    USD  ISM Non-Manufacturing PMI    

 

Tuesday, May 6

All Day     Holiday  Japan – Substitute Holiday for Greenery Day

All Day     Holiday  Hong Kong – The Birthday of the Buddha

All Day     Holiday  South Korea – Buddha’s Birthday

04:30    AUD  Interest Rate Decision    

04:30    AUD  RBA Rate Statement             

08:30    GBP  Services PMI      

14:00    CAD  Ivey PMI    

22:45    NZD  Employment Change (QoQ)    

 

 Wednesday, May 7

01:30    AUD  Retail Sales (MoM)      

14:00    USD  Fed Chair Yellen Testifies             

 Thursday, May 8

01:30    AUD  Employment Change    

02:00    CNY  Chinese Trade Balance    

11:00    GBP  Interest Rate Decision    

11:45    EUR  Interest Rate Decision    

12:30    EUR  ECB Press Conference  

Friday, May 9

01:30    CNY  Chinese CPI (YoY)      

08:30    GBP  Manufacturing Production (MoM)     0.3%  1.0%   

12:30    CAD  Employment Change