The euro traded at 1.1025 against dollar

Good morning from Hamburg and welcome to our last Daily FX Report of the week. Yesterday, the Prime minister of China, Li Keqiang announced in the China’s National People’s Congress that its military budget will increase by 10.1% in 2015 to a total of $144.2 billion, the largest in a series of double digit increases that will narrow the still significant gap with the United Stated on defense spending. The increase unveils the intention of China to prioritize military spending even when its economy is slowing down. This announcement also comes amid always unease relationship between China and its neighbors about the pursuit of its territorial claims in the South China Sea and East China Sea. China is the second country in the world in defense expenditure with 15% of the global.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

The euro rebounded from a 11 year low on Thursday as investors looked ahead to Friday’s non- farm payrolls report in U.S. which analyst expect a figure around 240K, lower from the previous data of 257K. Any figure around 200K might think to investors that the optimism on labor market has been overdone. The share currency hit this 11 year low earlier in the session after European Central Bank President, Mario Draghi said the central bank wouldn’t buy bonds with yields lower that the central bank’s deposit rate of negative 0.2%. The euro traded at 1.1025 against dollar, after falling to 1.0987 during the session, the lowest since September 2003. It also touched its lowest level against the British pound since December 2007, to 72.20 pence, but recovered slightly to 72.36 pence in recent trade. The Canadian dollar dropped 0.3% against dollar to C$1.2465. It touched almost six year low at C$1.2799 on January 30th. Australian dollar also declined 0.3% to 77.94 U.S cents, approaching a 5 and half year low of 76.26 reached last month. The Turkish lira fell to an all-time low against the dollar on Thursday once the Turkey’s central bank decided to lower interest rates at a faster clip. The lira has depreciated by about 10% this year, making the second worst performing of the emerging market currency, traded as low as 2.62 against the dollar yesterday. It is clear that the currency market is just reflecting faithfully the different stage of the economies around the world, with the U.S. dollar as the indisputable winner, followed by the British pound, and with so many losers immersed in interest rates cuts and quantitative easing programs.

Daily Technical Analysis

AUDUSD (Daily)

Technically the AUDUSD is back again to the top side of a clear downtrend channel which, considering the Australian growth weakness, with the RBA saying that the monetary policy is not working, and the U.S dollar getting stronger, it’s going to make difficult for the Aussie to hold prices over 78 cents. However, if this resistance is finally broker, we identify the next level around 0.8025, even though we believe it will be more probably for the pair to come back to its lows, placed around 0.7625.

Support & Resistance (Daily)