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    Weekly review (economic news and pairs USD/JPY, EUR/USD and GBP/USD) on 01.02.2016

    • Interest rate decision in Australia and comments by the ARB (Tuesday, 2 February, 05:30 (GMT 2)). This data will affect stock markets and currencies of the Pacific region (Australian and New Zealand dollars).
    • The speech of Mario Draghi, the head of ECB at the meeting of the European Central bank (Thursday, 4 February 10:00 (GMT 2)). Depending on the meaning and content of the speech, it can have either short-term or long term impact on the dynamics of European and global stock indices and currencies, such as Euro and others.
    • The decision of the Bank of England on interest rate at 14:00 (GMT 2) and the comments of Mark Carney, the head of the Bank of England (Thursday, 4 February, 14:45 (GMT 2)). Depending on the adopted decisions, this data can affect the behavior of assets in London stock exchange and the Pound both short-term and long-term.
    • The data on Non-Farm PayRolls in the USA (Friday, 5 February at 15:30 (GMT 2)). This is one of the most important index, as, based on the results of the previous month, it evaluates current state of the US economy and labor market. As a rule, this index has a strong impact on the financial markets and on the behavior of the USD and world stock markets. At the time of news release market volatility is usually high.

    It is also worth of paying attention on the daily data on the US oil reserves for the last week (published every Wednesday night). As a rule, the increase in the oil reserves causes the decrease in oil prices. Changes in the oil prices affect movement dynamics of the Canadian dollar and other commodity currencies (including NZD and AUD), as well as dynamics of the world stock indices.

    USD/JPY

    Last Friday, the Bank of Japan decided to introduce negative rates on the commercial banks deposits, which exceed bank reserve requirements (-0.1%). Later, the Central bank commented that this decision was aimed at the long-term reduction of the cost of borrowing and also at reaching the target inflation rate of 2% as soon as possible.

    This decision triggered the rise in the Japanese stock index in Nikkei Stock Average, which went up by 2.8% at the Asian session. The indices in the other global markets have also increased.

    The pair USD/JPY has grown by 230 points at the end of the day.

    If Chinese stock indices do not fall rapidly and global stock markets do not be so agitated, the rise in the pair USD/JPY can continue. The price has broken the trend line and the pair is traded above the moving average lines with the periods 144 and 200 on the daily chart. Consolidation of the price above resistance level of 121.50 (Fibonacci 50% against the rise in the pair from February to May 2015, with the high of 125.85), can trigger the rise in the pair up to 122.50 (Fibonacci 38.2%) and 123.70 (Fibonacci 23.6%).

    EUR/USD

    It seems that the pair EUR/USD cannot determine movement direction and continues to move in the range of 1.0800 and 1.1000, trying to reach the levels of 1.0870 (ЕМА200, ЕМА144 on the 4-hour chart), 1.0890 (ЕМА50 on the daily chart).

    GBP/USD

    The pair is traded in the long-term downtrend. The head of the Bank of England said last week, that there were no reasons to raise interest rates in the UK. As the conditions required to do this include economic growth, the rise in payment of labour and leading trend.

    Sharp decline in the price of oil and commodities causes the rise of inflation in the UK. The referendum over the future membership of the UK in Eurozone, scheduled for the summer 2016, increase pressure on the Pound and stock market of Great Britain. Due to the different monetary policy decisions and prospects by the Bank of England and the US fed, the pair GBP/USD can continue to decline in the medium-term.

    The pair has reached the levels of 2001 and 2009, and if the decline continues, it can reach the lows of these years at the level of 1.3650. Nevertheless, on the weekly chart the price has pushed off from the bottom line of the downward channel. The indicators OsMA and Stochastic give signals for the long positions. The pair GBP/USD is oversold and correction is possible. If the Bank of England does not offer anything new in terms of the further monetary policy, the pair GBP/USD will remain under pressure.


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