*Daily Forex market overviews by MasterForex.com* - page 37
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Overview of the main economical events of the current day - 27/03/2013
EUR continues to decline as the situation in Cyprus develops
Just like we expected in the beginning of the story with Cyprus, European officials are making contradicting statements with the main concern being that saving Cyprus sets a negative example. As a result, EUR trades at a 4 months low vs USD. ECB promised to provided Cypriot banks with a much needed liquidity as they have EUR 68bn in deposits, while the largest banks will open only on Thursday, which is likely to result in a huge outflow from the savings accounts – hence the need for liquidity. Moreover, it looks like Bank of Cyprus will be restructured, while Laiki will be closed and its healthy assets transferred to a competitor.
As a result, many investors are concerned that European officials will continue to use this scheme in other problem countries. To make things worse, these officials are sending mixed messages: for example, Head of Eurogroup announced that the plan for saving Cyprus will be used as an example for other economies, while ECB commented that they do not agree with this point and that there is no reason to think that problems of Cypriot and French banks have anything in common. ECB also didn’t miss a chance to use the situation to once again announce, that they want to be an independent watchdog for European banks.
JPY declined vs most of major currencies as new Head of Bank of Japan gently starts promised economy interventions in an attempt to reach a 2% inflation level in the next 2 years. GBP was also under pressure after disappointing CBI retail sales data, which shows no growth in March compared to a year before. However, UK Finance Minister was able to affect the market mood by saying that he thinks that Cyprus saving plan is not completely thought-out as it would leave the island with quite a debt coupled with rapid GDP decline.
By MasterForex Company
Overview of the main economical events of the current day - 28/03/2013
EUR is still under serious pressure
EUR continues to decline on the situation in Cyprus and political uncertainty in Italy. Cypriot government plans to take aggressive steps in order to prevent a capital outflow from the country: starting today, for the next 7 days a special banking regime is taking place – all non-cash operation with foreign parties are prohibited, special limits on cashing and credit card operations will be placed and clients will not be able to withdraw their deposits before the maturity date. This is an unprecedented solution which surely makes market participants nervous, resulting in a sell-off of the European currency. Add a real possibility of Italy loosing its rating coupled with political battles in the country and a really weak EUR emerges.
GBP reached a 2 months high vs EUR as investors are looking for defensive options. Yet again we want to warn that a single piece of negative UK statistics might very well change investor’s view of the currency as a defensive asset. Indeed, despite showing growth vs EUR, GBP declined vs USD on quite poor 2012 GDP numbers – only 0.2% growth compared to a 1.0% gain in 2011. As a result, investors remain concerned that UK’s economy might enter a third recession in the last 5 years – hence the volatility of the currency as a defensive option.
By MasterForex Company
Overview of the main economical events of the current day - 29/03/2013
EUR finally shows some gains as banking crisis in Cyprus winds down
EUR demonstrated some growth vs USD on the back of falling yields of Spanish and Italian bonds which some investors saw as signal that banking problems of Cyprus are likely to be not so extreme as thought before. Cypriot banks opening their doors after more strict banking capital movement rules were applied, which also fueled EUR’s growth.
Weak statistics from the USA also allowed the union currency to finally offset some of the earlier losses. According to a published report, US initial jobless claims were unexpectedly high, which might be a signal that labor market is losing momentum. GDP data came stronger than last year – 0.4% growth compared to a 0.1% gain a year before. Nonetheless, the number is also below expectations (of 0.5%), but, still, looks like the year starts quite nicely for US economy giving hope for a fast recovery.
GBP showed gains vs USD thanks to strong service sector data that showed highest growth rates in January since August. Another report, showing that housing prices climb is continuing, supported the trend, allowing for nice gains.
By MasterForex Company
Overview of the main economical events of the current day - 01/04/2013
EUR drifting lower still; market activity is low due to Easter holidays
Friday trading volumes were quite low, while weekend was relatively free of market moving headlines – all thanks to Easter holidays in both Europe and USA. And while there is not much to say regarding the States, some information on Europe did hit the wires.
First of all, there are fresh indicators that deposits greater than EUR 100K in two largest Cypriot banks are likely to sustain larger losses than originally feared – again, negative news not only for Cyprus but for EU as whole. And if this was not enough, additional pressure was put on EUR on Saturday with a release of a quarterly IMF survey that showed that reserve managers were net euro sellers during 4Q12 – a signal, that investors are losing confidence in the currency.
Meanwhile in Japan, USDJPY traded heavy in the wake of quarterly Tankan report and China PMI data. Tankan showed that large Japanese manufacturers see USDJPY trading well off current levels, which is the latest piece of evidence that corporate Japan remains skeptical that this USDJPY can last without experiencing a major correction.
Today, much of Europe is still on holiday as well as USA due to Easter Monday so expect low market activity today and possible volatility tomorrow if any market moving news hit the wire today, making US and EU investors adjust their positions tomorrow when markets open.
By MasterForex Company
Overview of the main economical events of the current day - 02/04/2013
Europe returns from holidays, expect much attention to data releases
Europe returns from Easter holidays today so expect some extra volatility as well as be prepared for investors paying much of their attention to data releases during the week. Most important thing on the agenda is probably a ECB meeting this Thursday with some parts of the market expecting a rates cut – at least consensus surveys are certainly not unanimous in expecting unchanged rates.
Bank of Japan, represented by its Head Mr. Kuroda, continues its rhetoric promising to do “whatever it can” to beat deflation and conduct “bold easing” though it might take 2 years to reach the targets. Nothing new here, but watch out for BoJ meeting this week (April 3-4) as Kuroda might use a recent decline in manufacturing production as a leverage in his talks aimed adopting a bolder policy.
From US we saw some disappointing headline PMI numbers, which resulted in USD declining versus JPY, however we urge to look deeper into the numbers: sure, they do show a decline, but employment index is higher and indications are that housing and automotive sectors are doing well – which might mean that while US fiscal issues start to take toll on both activity and sentiment, US consumers may in fact have been reasonably resilient.
By MasterForex Company
Overview of the main economical events of the current day - 03/04/2013
EUR heavily declines on poor statistics
EUR showed quite a loss yesterday due to poor data releases as well as increased volatility. According to a recently published report, unemployment level in Europe reached a record high number in February, which adds to concerns regarding recovery of the European Union. However, January data was revised to 12%, meaning there actually was no mom change across the Europe, but it still means a slight increase in EU.
Weak PMI data also put pressure on EUR, as the numbers show declining activity. This is yet another hint of shrinking GDP of the Eurozone, meaning that the economic decline continues, after ravaging for 15 months.
JPY declines vs USD, which is quite expected as investors are waiting for a two-day meeting of Bank of Japan this week. Another factor is the new Head of BoJ saying that they should not “sacrifice everything” in a attempt to reach a 2% inflation target – which potentially means that economy support is likely to be less aggressive as expected before.
GBP declined vs USD for the first time in 4 days after a report was published, showing that while UK manufacturing activity is falling, the decline was less than a month before – showing some hints of accelerating recovery. Nonetheless, the number was below expectations, resulting in a quick sell-off.
By MasterForex Company
Overview of the main economical events of the current day - 04/04/2013
Markets are in caution mode ahead of central bank meetings today
Bank of Japan has just made its very aggressive announcement after a first meeting headed my Kuroda, who definitely left his mark. First of all, there is a very strong commitment to a 2% inflation target – BoJ says they will attempt to reach it as soon as possible with a 2 year guidance. Add to this quite aggressive bond purchases coupled with increased maturity and monetary framework changes and it looks like Mr Kuroda delivered. At first glance market reaction confirms it: USD was showing gains vs JPY after trading downside before the meeting.
Yesterday’s US data was quite weak, adding to recent data disappointments and hinting once again, that fiscal problems are bound to affect the economy. The non-manufacturing ISM fell short of expectations, while ADP report showed a decline in private-employment growth. As a result, markets become more and more concerned regarding US recovery and even Fed’s words that the substantial improvement in labor market may arrive already by the summer did not have much effect on trading.
Today all eyes are on ECB meeting, during which there is a possibility (albeit, quite small) for a rate cut. However, Draghi is more likely to present some kind of a new non-standard measure target at improving credit conditions for SMEs. Bank of England is also having a meeting, but is unlikely to surprise the market with any decisions. In USA, Fed’s speaker will talk on economic conditions and monetary policy.
Finally, before all the meetings, we‘ll get service PMI for the Eurozone and UK. Focus will be on first estimates for Spain, Italy and UK.
By MasterForex Company
USD/JPY yesterday formed a daily big white candle has formed. This is a bullish candle as prices closed significantly higher than they opened. If the candle appears when prices are "low," it may be the first sign of a bottom. If it occurs when prices are rebounding off a support area (e.g., a moving average, trend line, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
A Daily engulfing bullish line has been formed yesterday. It then signifies that the momentum may be shifting from the bears to the bulls.
It may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle's real body.
A Stochastic BUY signal was generated yesterday.
Currently the Stochastic indicator is generating a BUY signal against the direction of the major trend.
Prices has set a new 14-period high while the RSI has not. This is a BEARISH DIVERGENCE.
A SAR Buy signal generated today. If you are short, this might be a good place to exit.
The close is currently
ABOVE its 200 daily moving average
ABOVE its 50 daily moving average
ABOVE its 20 daily moving average
The current market condition for US Dollar / Japanese Yen is Very Bullish
The present wave patterns are:
fast amplitude (8%): bullish wave C
moderate amplitude (13%): bullish wave 1
normal amplitude (21%): bearish wave 4
US Dollar / Japanese Yen is long term Bullish as the 144 days moving average of 88.17 is increasing. The Relative Strength Index is at 62.24 in the neutral territory. The Relative Momentum Index is at 55.03 in the neutral territory. An important indicator for Elliott waves, the Elliott oscillator is at 0.78, in positive territory; this is a bullish sign. An equally important indicator, the STORSI is at 44.81. This value is in the neutral territory.
Overview of the main economical events of the current day - 05/04/2013
JPY continues its decline on aggressive measures introduced by Bank of Japan
JPY continues to fall fast, reaching 17 months low vs USD after Bank of Japan surprised the markets with its quite aggressive measures aimed at fighting currency devaluation. The decision was made with a vote count of 8 pro against 1 contra. Quite a result for a first meeting headed by Mr Kuroda.
EUR is swinging back and forth vs USD after Head of ECB Mario Draghi announced that EU officials are ready for decisive steps if the economy does not show signs of improvement. As expected, no rate cut was proposed, however it was said that ECB will closely monitor economy developments in order to assess risks for reaching a target inflation level, set slightly below 2%.
GBP rose on the news that Bank of England decided not to expand its asset purchase program and left the key interest rate unchanged at a record low level of 0.5%, which was quit expected. Another factor supporting the growth was strong service PMI data that shows a record high growth rates in the last 7 months.
By MasterForex Company
Overview of the main economical events of the current day - 08/04/2013
USD is falling vs EUR on weak data releases
USD reached a 9 day low vs EUR on Friday after disappointing employment data release, which suggests that the growth of the largest economy in the world is slowing down. This falls under the trend we’ve been observing for last few days: looks like recovery in USA is slowing as fiscal problems take their toll on the economy. As a result, USD is declining as investors are getting more and more concerned that FOMC will be forced to continue its asset purchase programs due to weak growth.
JPY is unsurprisingly declining vs USD, reaching a new low since 2009 after Bank of Japan announced its aggressive measures aimed at fighting deflation in the country. We’ll remind that BoJ decided to expand its bond purchase program up to JPY 7tn compared to expectations of just JPY 5.2tn in an attempt to reach a 2% inflation target in next 2 years.
Today watch out for a speech by Head of FOMC, during which we can expect both information on asset purchase program and hints regarding possible future interventions.
By MasterForex Company