Review for the week 4 – 8 of November
The past week was eventful for the currency market. EuCB performed as its main news maker: it reduced main interest rate by 0.25%. This event had led to crash of Eur/Usd quotes down to the point of 1.3295. Strong GDP data for the 3rd quarter and changes in Non-Farm Payrolls supported US currency. Both values were fairly above expectations and inspired investors to think about possible QE cut that may take place on December meeting of the FRS.
British Pound was able to get stronger against US dollar. The reason is the positive statistics released. In October, construction and service PMI shows highest levels for a few recent years. Such positive data speak for a gradual economic recovery of GB. The rate managed to reach the point 1.6116. Though on the last trading day of the week, positive data from the USA on Non-Farm Payrolls dropped GBP quotes and the week was closed on the point 1.6011.
Participants of trades on Usd/Jpy pair had been watched closely for the EuCB meeting held on November, 7th. Over three days, the pair had been traded in a narrow range 98.16-98.84. News about decline of European interest rate encouraged bulls to storm a strong resistance level 99.00. Though bears managed to defeat the attack and within a few hours Usd/Jpy pair dropped down to 97.62. Friday's report on the US labor market allowed bulls to attack 99.00 level twice and the week was closed by Usd/Jpy on the point 99.04.
Forecast for the week 11 – 15 of November:
Eur/Usd New trading week can present a new head of the FRS. On Thursday, 14th of November, USA Congress will vote for Janet Yellen's nomination for the Federal Reserve Chair.
As for the united European currency, core event of the week will be GDP release for the 3rd quarter planned for November, 14th. Upon reviewing macroeconomic statistics for the 3rd quarter, we can conclude that final GDP value will be below expectations, on the point of 0.1%/quarter (whereas forecast is 0.2% /quarter). Changes in the industry output data for September that will be reported on Wednesday also should be considered. Experts interviewed by Bloomberg expect this decline of this figure down to -0.2% per month. This report will impact on quotes of the European currency.
Following levels may be underlined for Eur/Usd for this week:
Support levels: 1.3295- 1.3205-1.3140
Resistance levels: 1.3440-1.3550-1.3645.
As for the British Pound, significant macroeconomic reports are scheduled for release. The data on October inflation is published on Tuesday. Market does not expect changes against the previous month. Though if we see a slight upraise, that will be positive for quotes. The most eventful day is Wednesday, 13th. First, the data on labor market will be released, then Bank of England will report on the quarter inflation. Positive PMI for October can also boost the data on British labor market.
In the quarter report of the BoE, we can anticipate higher forecasts of the national economy growth rates made on the background of positive macroeconomic data. In general, one can expect a slight strengthening of the British currency against USD.
Following levels may be underlined for Gbp/Usd for this week:
Support levels: 1.6010- 1.5900-1.5825
Resistance levels: 16119-1.6250-1.6310.
Advance GDP data for the 3rd quarter is expected to come on Thursday. Market expects decline of this index for 2.2% - down to the point 1.6%. Review of macroeconomic statistics for the 3rd quarter allows to conclude that final GDP can be above expectations, on the point of 2%. Release of positive data will definitely support Yen rate. Coming speech of the future Federal Reserve Chair Janet Yellen scheduled for Thursday, 14th of November, also should be taken into account. It is possible that market will obtain the information on further actions of the FRS management in monetary policy.
Following levels may be underlined for Usd/Jpy for this week:
Support levels: 99.00-97.50- 96.95
Resistance levels: 99.40-99.65-100.60.