Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from wonderful Hamburg and welcome to our last Daily FX Report for this week. Yesterday Crimea’s parliament voted to join Russia and its government set a referendum in 10 days’ time. President Barack Obama ordered sanctions on those responsible for Moscow’s military intervention in Ukraine, including bans on travel to the USA and freezing of their U.S.assets. The EU only took minor steps suspending talks with Moscow on visas and a new investment pack.
However, we wish you a relaxing weekend!
Market Review – Fundamental Perspective
Yesterday the Dow Jones Index of shares climbed 0.4 percent and the Standard & Poor’s Index also rose 0.2%. Furthermore yesterday as expected the European Central Bank left interest rates unchanged at a record low at 0.25 percent. The ECB also left the deposit rate it pays banks for holding their money overnight at zero. ECB President Mario Draghi told at a conference that economic conditions in the euro-area did not require a shift in monetary policy. But he also said that inflation has been in a danger zone below 1 percent for five months now. The ECB expects inflation rates may gradually increase and reach levels closer to 2 percent and therefore they rejected comparison with Japan’s experience of deflation. In addition reports yesterday showed that fewer Americans filed claims for jobless benefits as estimated. But U.S. factory orders declined more as economists had forecasted. New York Fed President William Dudley confirmed that the harsh weather will harm growth during the first quarter, but it will not hurt the economy enough to stop the reduction of bond purchases. At a March 18-19 meeting policy makers will decide whether to proceed with another $10 billion cut to their bond purchases. The EUR/USD increased to 1.3858 and the USD was set for its biggest weekly advance in four months versus the JPY and was at 103.01. The EUR/JPY was at 142.74. Today the market expects that U.S. unemployment rate will remain at 6.9 percent. Furthermore reports might show today that the U.S. probably added 149,000 jobs in the past month, following a rose of 113,000 in January.
The GBP weakened against most of its major peers as the Bank of England kept interest rates unchanged at a record low. The EUR/GBP strengthened 0.7 percent to 0.8282 and the GBP/USD was at 1.6732.
Daily Technical Analysis
USD/JPY (4 Hours)
As we estimated at the beginning of this week, the USD/JPY recovered and crossed its last resistance level around 102.82. But now the Stochastic is showing us that the upward trend might lose momentum and therefore a drop back below the former resistance level is more than likely.
Support & Resistance (4 Hours)
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