Good morning from Hamburg and welcome to our FX Report. We have reached the end of the week and of the month, too. Afterwards, the global economy may unfortunately deepen more than expected. However we wish you a nice weekend and successful trades.
Market review
Having technical indicators showed excessive week-losses of the JPY, the currency raised the most versus the USD within this week and strengthened as well against the EUR. The JPY recovered from its 7.8% loss versus the USD this month on expectations that exporters brought home earnings as the end of the month approaches. As a long-term view, the USD had its best month versus the JPY since 1995 after reports in Japan signaled a deepening financial recession. The JPY rose almost 1% to 97.65 from 98.58 against the USD, which was its biggest climb since February 10th. The EUR/JPY fell also about 1% to 124.43 from 125.73 after touching its low at 123.73. The EUR weakened, heading for a second month of losses against the USD on speculation the Euro-Zone’s financial crises will deepen. The EUR also fell, after a report showed that Iceland is developing a plan to ask local owners of foreign assets to exchange their holdings for $3.6 billion of the country’s bonds, which are owned by overseas investors. Anyway the EUR/CHF closed yesterday at 1.4838 from 1.4874 at its opening after touching its low at 1.4821. Some of the traders said “we are bearish on the EUR because of the turmoil in Eastern Europe and the inflexibility of policy making.”
The USD-Index gained for a second month on optimism that U.S. President Obama’s efforts to shore up the banking system, which will stem the credit crisis. The USD-Index, which tracks the USD against the most-active currencies, rose to 87.83 from 87.727 yesterday. It rose to the 88.254 level on February 18th, which is the highest level since November 21st.
AUD/USD
Since the end of September, the AUD/USD has been moving close to a bearish trendline with a resistance level at 0.70. Now it seems that the currency pair tries to cross the bearish trend-line. As you can see, the market is currently trading for the third time near to the trend line. If the currency pair crosses this bearish trend-line, it could increase, up to the resistance level at 0.70.
GBP/JPY
Since the middle of January, the GBP/JPY is moving inside a bullish trend-channel with a resistance level at 1.40 and now we have reached the highest level since the end of December. If the market breached the 1.40 resistance level articulately it could boost the bearish trend and maybe continue trading inside the bullish trend-channel.
