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Market Review May 8, 2014

May 8, 2014

OVERVIEW

Positive European statistics are working: the Euro is traded on maximum levels of recent years. Strong PMI data in Southern Europe, growth of retails sales, and the fall of profitability of 10 year Spanish bonds below 3% push the market further up. But the more expensive the Euro becomes the harder it is for exporters, who already report on profits decline.

Earlier Draghi has said that the too high b rate of the Euro will put pressure on inflation. So the regulator will have to ease its policy in such  case. At that Draghi didn’t point out any price benchmarks. The figure is on minimum level, but there is no action on the ECB side.

On Wednesday there were data on industrial orders in Germany which dropped immediately by 2.8% instead of expected growth. French manufacturing was also down. But the Euro reacted on that statistics only with continuation of local correction. If during the day rates’ increase and even maximums test is possible, then tomorrow the ECB meeting might push the market into correction.

In France the law about new stage of spending cut (in order to stabilize deficit) has triggered split within the ruling socialist party. Paris plans to reduce expenditures in 2015-2017 by 50 billion Euros.

To round it off it is important to mention that today is remarkable for an abundance of various market events, so there is obviously a quite exciting trading day ahead of us.

 TECHNICAL ANALYSIS

EUR/USD

The Euro is now falling below the level pinpointed in the previous review. Apparently support won’t hold and the pair will go further down.

On the downside support is approximately at 1.3880.

USD/JPY

The pair has rebounded from 101.5. Nevertheless it looks like a bounce which is not going to turn into trend reversal. Thus the bias for the pair remains bearish.

GBP/USD

Recent pattern looks bearish, though the descent is not strong and the slope of that decline is quite gentle. Analysts assume that it is a correction after a rally a couple of days ago. So we expect bullish trend to resume.

 

 

 

ECONOMIC CALENDAR

 

01:30  AUD Employment Change

01:30  AUD Full Employment Change

01:30  AUD Unemployment Rate

02:00  CNY Chinese Exports (YoY)

02:00  CNY Chinese Imports (YoY)

02:00  CNY Chinese Trade Balance

04:00  IDR Indonesia Interest Rate Decision    

05:45  CHF SECO Consumer Climate  

06:00  EUR German Industrial Production (MoM)

07:00  GBP Halifax House Price Index (MoM)

07:00  GBP Halifax House Price Index (YoY)

07:15  CHF Swiss CPI (MoM)    

11:00  GBP BoE QE Total    

11:00  GBP Interest Rate Decision  

11:45  EUR Interest Rate Decision  

12:00  USD FOMC Member Plosser Speaks          

12:15  CAD Housing Starts    

12:30  CAD New Housing Price Index (MoM)  

12:30  EUR ECB Press Conference          

12:30  USD Initial Jobless Claims  

13:00  MXN Mexican CPI (YoY)    

13:30  USD Fed Chair Yellen Testifies        

13:30  USD FOMC Member Tarullo Speaks        

18:00  USD FOMC Member Bullard Speaks