The pair settled the week lower as concerns over the Iberian Peninsula continued to drive investors away from the joint block currency. By the closing stages of the week, the Spanish 10yr government bond yield broke back above 7.00% after the Treasury sold bonds with weaker demand and higher yields early in the week. In other news, it was suggested that the Netherlands is studying the possibility of getting a collateral deal with Spain in the bailout of its banks following in Finland's footsteps, according to a Dutch finance ministry source. Separately, Tuesday saw the release of the latest ZEW Survey which showed the second consecutive negative reading month-on-month. However one of the economists from the institute said he would not be surprised if expectations have bottomed out. In terms of technical levels, supports are seen at 1.2144/32 and then at 1.2105. On the other hand, resistance levels are seen at the 10DMA line at 1.2257/82 and then at 1.2325.
GBP/USDThe pair settled the week in minor positive territory after another round of safe-haven related flows supported the pair amid the never-ending sovereign debt crisis. This week saw the release of the latest jobs report which revealed that the unemployment fell by 65,000 to a nine-month low of 2.58mln in the three months to May, amid indications that the drop was driven in part by the creation of jobs linked to the Olympics. Many analysts expect that the event may continue to support the fragile UK labour market over the summer. Separately, the BoE minutes showed the July increase in APF was not unanimous at 7-2, and a GBP 75bln increase was also discussed, and that should the additional easing measures not work, a further rate cut would be examined. The UK retail sales disappointed with a reading of 0.1%, below street estimates of 0.6%. The ONS pointed out that the wet-weather effect in June outweighed the benefits, if any, from the Queen’s Diamond Jubilee, as an uptick in sales reminiscent of the period after last year’s Royal Wedding failed to materialise. In terms of technical levels, supports are seen at the 21DMA line at 1.5590 and then at 1.5583/66. On the other hand, resistance levels are seen at 1.5738/78 and then at 1.5802.
The pair trended lower throughout the week amid the never-ending concerns surrounding the peripheral Eurozone and in particular the Iberian Peninsula. In terms of Japan specific commentary, according to the BoJ minutes, the bank should not rule out any policy options in advance if risks stemming from the Eurozone crisis are realized, and the bank stands ready to take appropriate action. Separately, Japanese finance minister Azumi has reiterated that the government will take action against excessive JPY moves, and the gains do not reflect the economic fundamentals and could harm the economy.