A cheerful good morning from Hamburg! In such a market environment comments from experts are interesting. Yesterday, Warren Buffet said the economy “has fallen off a cliff”.
Market review
On Monday the GBP slid to a six-week low against the USD. It fell 2 % at 1.3741 as banking sector worries intensified after Lloyds Banking Group Plc, said the UK government, and was taking a stake of up to 77 %. Also HSBC Holdings Plc stocks crashed more than 14 % on concern that loan losses at its US unit will increase. Traders said that the pressure on banking stocks is negative for the British currency. The GBP weakened 1.8 % to 0.9142 against the EUR and 1.3 % against the JPY. In the Asia session, the GBP remains relatively stable. Today the market is looking forward to the government report that may show manufacturing declined for an 11th straight month.
The JPY decreased against all 16 most actively traded currencies before a Cabinet Office report that will show the leading index of business conditions fell. Additionally, market analysts expect more bad economic news which will support the estimate that Japan’s recession is deepening. They also recognize that especially European investors withdraw earnings on overseas assets before the end of the financial quarter. As a result, the EUR trades close to a two-month high against the JPY.
The AUD/USD gained 0.9 % after touching a one-week low at 0.6307 today. Rising domestic stocks revived demand for the currency. Also the Baltic Dry index rose a seventh day, signaling there may be higher demand for commodities which account for more than a half of Australia’s exports. But yesterday the AUD weakened more than 1.3 % against the USD and 1.1 % against the EUR as US stocks extended the worst weekly slump in S&P 500 since November.
EUR/CAD
Since the end of January, the EUR/CAD has been trading in an bullish trend channel. It is striking that the EUR broke through the trend formation yesterday. However, it crossed not only the channel zoning but also the monthly primarly resitance Pivot point at 1,6354. This two major overruns of signifikant resistance lines might indicate a further long impuls.
EUR/GBP
Since the beginning of February, the EUR/GBP has been trading in an upward trend channel. After a strong upturn in recent days, the pair is currently quoted in near to the upper line of the trend duct. The pair crossed the upper Bollinger band but it doesn’t break through the channel resistance. Also the Momentum stopped the last increase and stays now stabile at 0.02. All this could be a sign of a counter movement inside the trend channel.
