Good morning from beautiful and cold Hamburg. It seems that we are not off base with our assumption that the FOREX market will be affected by the politics this week. Especially the development in the United States becomes more and more attention.
Market review
Yesterday the U.S. Treasury Secretary Timothy Geithner announced a new huge bank-rescue plan and encouraged therewith the FOREX market extraordinarily. The rescue plan will determine a joint public- and private-sector fund to buy as much as $1 trillion USD of illiquid assets and further a $1 trillion USD program to supply new credits for consumers and businesses. In order of this the GBP/USD declined 2.93 % from 1.4894 at its opening to 1.4458 at its low. As well the EUR/USD fell from 1.3003 at its opening to 1.2810 at its low. The GBP was also bonded by decreased home sales in the U.K. as a report showed the lowest level since at least 1978. The GBP/JPY fell about 4.25 % to 130.36 at its lowest level, having a U.K. government report showed that the nation’s trade deficit shrank in December to the smallest in 18 months.
Likewise impressed by the Geithner plan the AUD and NZD slumped versus the USD to 0.6485 rather 0.5181. Besides the worse than expected Australian sentiment index which declined 4.6 % to 85.8 points pressured the AUD as well. The USD/CAD climbed 2.62 % based on speculation that the rescue plan will prove inadequate, increasing investor risk aversion.
NZD/USD
The NZD/USD exits its downward movement with the beginning of February after breaking the support-line at 0.5230. After the currency pair recovered and climbed over the resistance at 0.5353 it fell 3.81 % yesterday, close to its support at 0.5230 again. If the support assists to build a basement at this level it could retest to cross the resistance.
EUR/CHF
In December the currency pair has been trading close to a bearish trend-line. It found a support at the lower Bollinger Band and crossed the trend-line. Now it seems that the EUR/CHF trades in a small range between the upper and lower Bollinger Bands. On the upside, close to the Bollinger Bands, it might have its resistance-line at 1.5188.
