Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from a sunny Hamburg and welcome to our latest Daily FX Report. Important economic signals came from the so-called BRICS countries – Brazil, Russia, India, China and South Africa – as their leaders signed a deal to create a new development bank and emergency reserve fund. The first president of this bank will come from India and its headquarter will be located in Shanghai, China. The bank will start with an initial capital of $50bn and one of its main purposes is to offer short term liquidity to developing nations.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
The Federal Reserve Chair Janet Yellen points out how important the record monetary stimulus is in order to combat the persistent job-market weakness. During the testimony to the US Senate Banking Committee that was held yesterday, she said “We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates”. Also the Standard & Poor’s 500 Index fell as much as 0.6 percent as the Monetary Policy Report that was published by the Federal Reserve, pointed out that the valuation of companies in social-media and biotech industries appear to be “substantially stretched. The currency continues its appreciation against other foreign currencies – AUD/USD fell 0.3 percent at 0.9346.
The European Central Banks President Mario Draghi talked in testimony to the European Parlament in Straßbourg yesterday. He pointed out that the “convenience to use the ECB cheap money to buy government bonds is much less” than for previosu rounds of funding. The EUR/USD is down 0.03 percent to 1.3564 which should be linked to a continuous appreciation of the dollar instead of a news related impact.
Looking at the overall performance of the major currencies, by using the Bloomberg Currency Rates Matrix we can point out the NZD is the worst performer for the last day, losing against all its counterparties. The EUR/NZD traded at 1.5595. This movement might have been linked to publication of economic datas by the Reserve Bank of New Zealand. Furthermore the EUR/AUD appreciated and went up 0.2 percent to 1.45196.
Daily Technical Analysis
USD/JPY (1 Hour)
After reaching the first support line at 101.058 the pair entered bull trend within the channel. After reaching the first resistance line at 101.597 and falling back to the level of the third support line at 101.516, the currency pair was able to continue its bullish movement. Crossing the second resistance line would be a clear signal for the continuation of this movement. Finally the bullish MACD seem to support this hypothese.
Support & Resistance (1 Hours)
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