Good morning and welcome to our Daily FX Report. Today the market expects new bad results of the Euro-Zone banks. Anyway, we hope you’ll investigate good trading opportunities.
Market review
The EUR recovered from a near three-month low against the USD on speculation that German Chancellor Angela Merkel will support Germany’s economy, which is the largest in Europe. She plans to take action to help avert the financial crisis in Europe. Finance Minister Peer Steinbrück said yesterday “Germany would show its ability to act” while some of the 16 European countries are getting difficulties. Today, Angela Merkel is going to hold a press meeting with European Commission President Jose Barroso in Berlin. The EUR climbed to 1.2589 from 1.2530 against the USD and touched a low of 1.2513, which was the lowest level since November 21st 2008. The EUR/JPY climbed to 117.94 from 117.50.
Gains in EUR may be tempered by concerns that European companies could report a deeperthan- expected loss because of the global financial turmoil. According to a survey, Axa SA, which is Europe’s second-biggest insurer, could probably show a net loss of 1.76 billion EUR today. The BNP Paribas SA, the largest bank by market value of France, could post a loss of 1.36 billion EUR.
The USD weakened against the JPY on expectations the biggest U.S. automakers could fail unless they get increased aid from the government. The USD/JPY fell to 93.46 from 93.76 after touching a day-low at 93.28.
CAD/JPY
Since the middle of November, the CAD/JPY has been moving under two resistance levels of 80.00 and 75.00. After it broke the long-term bearish trend line, the pair crossed the 75.00 level, touched the 80.00 resistance and came back below the 75.00 line. Now the market seems to try to break through the 75.00 resistance again. If this will happen, it could approach a second time towards the 80.00 resistance line.
GBP/CAD
The GBP/CAD has been trading inside a bearish trend channel since the middle of August. After touching the lower line of the channel for the 4th time, the market pulled back and touched the upper line. Now the pair has been stopped in the near of the middle Bollinger band. In the next days we have to pay attention if the pair crosses the upper line of the trend channel. This might be a long signal and the beginning of a trend reversal.
