Currency and Stock Markets Weekly Outlook
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Hard to believe?
Fri, Apr 18 2008, 13:09 GMT
by Przemysław Kwiecień
President Jean Claude Trichet would be inconsistent implementing a currency intervention shortly after another set of hawkish statements. Yet it seems hard to believe for financial markets that another wave of euro’s appreciation is possible any soon. On the last Wednesday, the EURUSD scored the new all time high at 1,5977 after “higher-than-expected” CPI in the euro zone. A previous resistance around 1,59 has been conquered and from a technical point of view, a rise to the 1,62 could have been expected. However, subsequent earnings reports showed that non-financials are doing fairly well and even banks are showing some hints of hope. Subsequently, the eurodollar went down to as low as 1,5730 on Friday and the USDJPY reached 104,30 shortly after breaching resistance at 102,60. In the days to come the market will start anticipating the next move of the Fed, with a prospect of 25 bp cut acting in favor of the dollar. The levels of support on the EURUSD are at 1,5650 and 1,5540, although the upward trend is a baseline scenario for as long as we are above 1,5340. The appreciation of the dollar did not help emerging market currencies, including the Polish zloty. The USDPLN scored multiyear lows at 2,1390 but at the end of the week we noticed a clear profit taking with the pair returning to 2,1750 and erasing gains from the first part of the week.
Published on Fri, Apr 18 2008, 13:11 GMT
Archive
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