Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from a sunny Hamburg and welcome to our second last Daily FX Report for this week. The diplomatic pressure on Russia continues as the European Union foreign ministers decided yesterday to add people and companies to their visa ban and asset freeze list over the crisis in Ukraine. The European Unions Commission will publish a list of the affected companies until the end of July. In the meanwhile the US Government is also enlarging its sanctions against the energy and defense sector.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
The Bank of Canada Governor Stephen Poloz has not given any signal on the direction of his next interest rate move. Nevertheless the economic weakness will trigger the inflation above the central banks target. Policy makers who are close to Poloz pointed out how important the monetary policy was for the economic recovery. The CAD has appreciated 0.1 percent to 1.0746 per USD.
The Bank of Japan Governor Haruhiko Kuroda is making 30 trillion JPY available to banks to encourage refinancing and improve liquidity within the banking sector. Offering 0.1 percent on four years loans – this marks a historical low for borrowing rates. The JPY has appreciated against most of its counterparties. The EUR has fallen to a five-month low against the JPY before a report forecasted to show the European inflation is still below the European Central Bank’s target. The EUR/JPY deppreciated 0.1 percent to 137.40 after falling to 137.36 which has been the weakest performance since February.
The NZD extended its deppreciation movement against major currencies – this losing streak is the longest since August 2013 and might have been related to traders forecasts on how much the the New Zealands Central Bank will raise interest rates. NZD/USD has fallen 0.2 percent to 0.8695 – with an overall deprication of 1.5 percent over the last six days. Finally the AUD deppreciated against most of its 16 major counterparts following the National Australia Bank’s statement on the business confidence index which fell to 6 in the second quarter. The AUD/USD has fallen 0.1 percent to 0.9359 after reaching it’s lowest level since the beginning of July.
Daily Technical Analysis
EUR/USD (4 Hours)
After reaching the resistance level at 1.36998 the pair has entered a bearish Fibonacci fan. The EURUSD has moved within the first and second channel of The Fibonacci fan after reaching the second resistance level at 1.36506. The bearish trend continued and reached the support level at 1.35199. If this level is passed, futher losses are possible. Finally the bearish movement of the MACD seem to support this hypothese.
Support & Resistance (4 Hours)
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