Tuesday 12/07/2011 13:22
The Euro falls to below 1.4000 levels…
Last week started off quite dormant as the US was celebrating its Independence Day and liquidity was low due to the US holiday. The thin volumes held well until the next day and finally interesting news came in late Tuesday when Moody’s decided to downgrade Portugal.
The market was overall selling Euro throughout the week and even the ECB’s rate hike by 25 basis points did not help to stem the fall as the week ended with almost a 4 figure fall that was continued the following week. The Dollar finally reached above 81.00 Yen but failed to keep its gains after Friday’s payroll data sent the market right back to where prices were at the beginning of the week and even hit a low near 80.00 Yen.
Data & Week Ahead
Today we are expecting Japan’s Policy statement along with an overnight Call rate which is expected to remain at 0 to 0.10%. Later in the day, at 18:00 GMT the US will be releasing its FOMC Meeting minutes.
On Wednesday the UK will be releasing its Claimant count change at 08:30 GMT which is expected to show slightly worse results than last time at 15.1k instead of 19.6k. At 14:00 GMT the Fed’s Chairman Benranke will be testifying, an event which should be closely watched by the market. Benanke’s testimony will continue the next day at the same time just two hours after the US releases its retail Sales and Unemployment Claims.
Month by month Retail Sales expectations are for 0% versus the prior -0.2%, while Unemployment Claims are expected at 419k same as before. Finally the week will finish off with Europe’s Bank Stress Test results which have not been given a specific release time.
The USDCHF has been in a continuous decline for a very long time and is still not showing any signs of reversing. The latest range movement seen in the daily chart above seems to be forming a Reverse Head and Shoulders pattern though which would cause the pair to jump towards 0.8800.
This would require confirmation by breaking above 0.8548 though. A break below 0.8327 would progress the pair to 0.8200.
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