Good morning from sunny Hamburg and welcome to our Daily FX Report. General Motors Corp., formerly the world’s largest carmaker, brought absolutely certainty yesterday and file for bankruptcy. The stock markets around the world detonate fireworks after this news.
Market review
Yesterday the EUR/JPY climbed near to a two-month high at 137.24, after stock markets around the world rallied, adding signs that the recession is easing. Also the USD gained versus the JPY and increased 1.32% to 96.58, while U.S. Treasury Secretary Timothy Geithner is on an official trip in China and meet there Yu Yongding today, China’s former central bank adviser. Yongding said in an interview, “I wish to tell the U.S. government: Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds. The EUR is an alternative”. The EUR/USD was very volatile and traded between 1.4100 at its lowest level and 1.4246 at its high. After a U.K. report showed that the manufacturing rose to its strongest level in a year last month and house prices didn’t fall for the first time since 20 months, the GBP strengthened against a basket of major currencies. The GBP/USD rose 1.31% and the GBP/JPY 2.75%. The Bank of England may decide this week to leave the key interest rate at 50bps and continue a £125bln bondpurchase plan. The AUD/USD compensated primary losses, after the statistics bureau announced that the current-account shortfall shrank to A$4.61bln, which is more than economists expected. At its closing the AUD increased 0.52% versus USD. The NZD/USD extended its gains as well and rose 1.60%.
EUR/JPY
Having the EUR/JPY crossed its resistance pivot point R1 on Thursday, it extended gains with the beginning of the week. Yesterday pushed a huge bullish candle the currency pair over its resistance R1 as well and if the support at the pivot point today may be strong enough, it could be the origin to climb anew near to R1 level. On the other hand, the Momentum indicator suggests profit takings.
USD/JPY
The currency traded close to a bearish trendline until May 26th, when it recovered and rose up to the resistance level at 97.21. Though crossing failed and now it remains to be seen, if the support at the lower Bollinger Bands will be strong enough to push the USD/JPY over its resistance with the second attempt. Further assistance comes from the MACD indicator, which crossed its zero level.
