Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from beautiful Hamburg and welcome to our latest Daily FX Report. The quarter-finals of the FIFA World Cup are starting this Friday with Germany playing against France and Brazil against Colombia. In total there are four European teams and four Latin American teams left in the tournament. Although the favorites had their troubles and were forced to go through the extra time, all of them were able to qualify for the next round. We can expect more tight games.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
After the release of disappointing U.S. manufacturing data put paid to expectations that the Federal Reserve might raise interest rates in the near future, the USD weakened. The USD fell against the GBP and the CAD. While EUR/USD remained pretty much unchanged, the GBP climbed to a six year high against the USD. Overall the USD showed a weak performance against the majority of its counterparts. A look on the Bloomberg Spot Index reveals this strong depreciation of the USD. The index closed at the lowest level since the beginning of May.
U.K. economy is growing at a strong pace what fuels expectations that the Bank of England may raise interest rates before the end of 2014. Driven by fast manufacturing growth and corresponding expectations for higher interest rates, the GBP could continue its gains versus the USD. GBP/USD closed the session up 0.3 percent at 1.7158. The GBP also appreciated by 0.3 percent against the EUR and is now traded at 79.83 pence per EUR. Overall, the GBP was able to rise in value against 26 of its 31 major peers. An additional view on Bloomberg Correlation- Weighted Indexes shows that the GBP was the best performer in the past 12 months. In total, it strengthened 9.9 percent in the past 12 months. In comparison the EUR rose only 1.3 percent while the USD fell 3.8 percent. Meanwhile the USD lost in value against some of its major peers, the JPY was not able to profit and weakened against the USD. The pair is now traded at 101.52 JPY per USD.
In Asia the release of Chinese factory data caused an appreciation of the AUD and the NZD against the USD. The AUD rose to seven month highs against the USD to 0.9498 USD per AUD. The AUD was near the strongest level since November. The NZD also found support in the strong Chinese manufacturing data and closed at 0.8766 USD per NZD.
Daily Technical Analysis
GBP/CHF (Daily)
Since the end of March the bulls are dominating within this currency pair. The chart is showing that the pair is moving in a trend channel and there is no sign that it will break through. Once reached the resistance at 1.53000 (Fibonacci level 100) CHF could take control and the pair rebounded, but remaind in the trend channel. The RSI is moving towards the 70-line approving the upward movement.
Support & Resistance (Daily)
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