Forex: Daily Wrap-up

on May 20, 2013
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EUR/USD

Since Friday’s low at 1.2796, the price has been climbing slowly to reach as high as 1.2878 today. At the moment the pair is ascending and is being quoted at 1.2866. The EUR/USD selling seems to be hesitant at the beginning of the week. The USD and the global stock markets continue their uptrends with the dollar index around 84.35. The outlook is still bearish, with most of the charts and momentum pointing down.

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‘We’ve got a consumer that’s been stunningly resilient to tax hikes and sequestration’, said the chief economist at Action Economics in Boulder, Mike Englund.
The French CAC 40 has increased by 0.11percent up to 4,005.62, the German DAX has gained 0.52 percent to 8,441.46 and the British FTSE 100 has jumped by 0.17 percent to 6,734.75. However, the Eurozone continues to struggle, with many of the major economies suffering from recession, including Germany.

Today at 5.00 pm GMT FOMC member Charles Evans will be speaking in Chicago.
USD/CAD
“The data reinforce expectations the Bank of Canada will be on hold for an extended period,” said Camilla Sutton, head of currency strategy at the Bank of Nova Scotia.
‘If not for globally low interest rates and an ‘expansive’ view of the central bank’s mandate, ‘these types of CPI numbers would arguably merit at least a hard look at measures to stimulate the economy via the interest rate channel,’ sais Derek Holt, vice president of economist.

The pair may retrace and test the descending trend line over the tops since early March. The outlook remains bullish while the 1.0218 minor support holds.
USD/JPY
A steep drop took place yesterday after Japan’s minister of economy commented that further weakening of the JPY would reflect negatively on the nation’s economy. The decline has stopped at 102.07 and since has been trading slowly. Right at the moment the price is at the 102.52 level with a neutral outlook for the day. Midterm, however, the outlook is strongly bullish as momentum indicators show, with a target set to 110.00.

AUD/USD
Despite the rebound, the AUD is still trading below 0.9800, which may hold as strong resistance and create more downward pressure. The US S&P 500 continues its rally giving more power to the US dollar. The outlook is for a continuation of the downtrend with a target set to the 0.9588 low.
Tomorrow from Australia the CB Leading Indicator m/m Report is coming out. Also monetary policy meeting minutes are scheduled to take place at the federal reserve bank of Australia.
On Wednesday the Westpac consumer sentiment is anticipated.
GBP/USD
The pair has rebounded from 1.5160. So far today GBP/USD reached 1.5232. This area may bring strong resistance as the price action is still drawing lower lows and lower highs.
‘Failure to damp sufficiently any new shock pushing up on inflation would result in inflation expectations becoming more entrenched’ said BoE’s external monetary policymaker, Martin Weale.
The British FTSE 100 shows a 0.17 percent increase to 6,734.75.
Tomorrow six economic reports are scheduled to be released with the most anticipated of them the yearly CPI, with a 2.6 percent increase expected.

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