Forex: Daily Wrap-up

on May 27, 2013


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During the first hours of the American session the pair settled at 1.2940/43. The resistance level is seen at 1.3020 as the downbeat trend continues and support was found at 1.2797, confirming the bearish outlook.
The major data this week will be German inflation figures on Wednesday and Eurozone inflation on Friday.
Earlier in the day, the pair was trading at 100.90/96, but ahead of the US trading session it climbed to test the key level at the 101.00 barrier, with the price currently touching 101.02. The next short-term support is seen at 101.17 with a slightly bullish up move.

The yen rose against the dollar on Friday, after weak manufacturing data from Chana and concerns of further reductions in the Fed’s QE program.
Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets, suggests a bearish development for the pair until the end of the week with the next target at 99.75.
Traders will be monitoring carefully during the week’s main events to confirm further movement.

There wasn’t much volatility for the pair during today’s holidays, but the GBP/USD hit 1.5156 in late European trade. It was a short move with the price soon dropping to test the 1.5100 support level.
The pound is waiting for some major data this week with highlights being Nationwide’s house price data and the Gfk Consumer Confidence survey.

The pair was following an uptrend on Monday, recovering from the previous 0.9591 level to hit the 0.9634/37 zone, though later in the European session falling to 0.9626. The support was found at 0.9543 and resistance was suggested at 0.9617.
This upside bullish move came in the beginning of a week which on Friday sees updates on Swiss GDP and trade balances.

The Aussie has traded lower since the start of American session, following Friday’s decline on the back of weak Chinese manufacturing data and soft Japanese economic indicators published last week. The pair is currently trading at 0.9626/32 area.
The U.S dollar has gained nearly seven percent against the Australian dollar since the middle of May.
Takuya Kawabata, an analyst at Gaitame Research Institute Ltd. in Tokyo, says that the Fed’s slowing of stimulus would erode the Aussie dollar’s yield advantage.
Friday is expected to produce new data on the MNI China Business Sentiment Indicator, seen as an important major sign for future development. The numbers are likely to affect all major currencies, but the Australian dollar seems least protected.
According to Kawabata, if the MNI data confirms a slowdown in the Chinese economy, the Australian and New Zealand currencies are likely to come under additional pressure.
Since last Wednesday, and Ben Bernanke’s latest report on federal monetary policy the US dollar has strengthened against its Canadian counterpart.
The loonie remains under pressure during late European trading, currently crossing at 1.0325.
Last week Canadian inflation numbers indicated weak economic activity. Also, on Wednesday the Core Retail sales index dropped from 0.7 to -0.2 percent. This data has pointed to slower consumer spending.
During the week the Bank of Canada will announce its interest rate decision.
Traders also expect an update on Current Account Q1, Industrial Product Price and Raw Material Price Index.


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