Good morning from Hamburg and welcome our Daily FX Report. Yesterday the market volume was marginal because of a public holiday in the U.S. and U.K., today we expect more dynamics favoured by important economic data’s.
Market review
The EUR/USD traded on Monday near the highest level since the beginning of 2009 and reached its high at 1.4048. The USD was also charged against the JPY by ongoing speculation that the U.S. bond sales this week could jeopardize the U.S.’s AAA credit rating, Standard & Poor’s lowered its outlook for the U.K.’s rating to “negative” last week. For the time the EUR got under pressure during the early Tokyo trading hours, before a French government report today could show that the consumer spending weakened in April. In order of this, the EUR/GBP fell to 0.8791 at its low. The ECB Executive Board member Jose Manuel Gonzalez-Paramo said yesterday, that the bank will seek a quick exit from its non-standard policy measures, which the market interpret as a sign that the ECB won’t cut the key interest rates again. In Germany the business confidence rose for the second month to 84.2 points, while economist expected a gain to 85 points. Nevertheless, the President of the German Bundesbank, Axel Weber, said there are some signs, which would allow being optimistic about a recovery of the domestic economy.
The NZD declined before a report could show that the government decreases the budget on May 28th. This report will be expected with suspense, after Standard & Poor’s put New Zealand’s AA+ credit rating to negative outlook and said it wanted to see evidence of an improving fiscal position.
GBP/CHF
The currency pair has been trading close to a bullish trend-channel during the last week, until the trend was broken in the last trading hours on Friday. Yesterday the bearish trend went on and tested the support at 1.7213 for several times. If this support breach sustainable, it could boost the downward trend. Admittedly the MA Oscillator crossed its Moving Average and approaching the zero level, which may support the bulls.
EUR/CAD
It seems that the EUR/CAD stopped the bearish trend and tries to build a new basement around the 1.5700 level. Having the currency pair lost both supports at 1.5889 and 1.5810 it crossed the middle Fibonacci Fans and if it negotiate the last Fan as well, it could initiate a new bullish trend. In this case the old supports should be a good indicator for strength of the trend.
