Currency market is off-side
Review of the past week
The past week on the Forex market was very interesting in terms of events. On Wednesday's evening, Fed Reserve declared about start of seizure of QE3 stimulative program. Chief of the US regulator Ben Bernanke stated on the press-conference that indices of the labor market and GDP are rather optimistic, whereas inflation is scarcely amendable to control, FRS will closely watch this figure. It was also stated that on its next meeting in Jan 2014 the Federal Open Money Committee will consider the issue about tapering of its buying program.
This step taken by FRS was reflected by major currency pairs by moving into both sides, further to which US currency consolidated. Leading stock exchanges responded to this statement by growth of their quotations. This rally encourages bulls a lot when it came to Usd/Jpy pair and a new year high was reached.
British stats continues to encourage investors. This time market participants received a positive report on unemployment level, which reduced by 0.2% down to the level of 7.4%. In contrast to euro, the pound finished the week with a slight growth.
On the last trading day of the past week, Japanese CB's meeting took place. As it was expected by market participants, the volume of bond buying remained as it used to be. Regulator declared that it is ready to adjust its monetary policy whenever necessary. And one can expect that this necessity can arise in 2014, which will lead to further weakening of the Japanese currency.
Forecast for the week December 23 – 27:
Because of the Christmas holiday, this week will be short for the currency market. Europe is not expected to provide crucial macroeconomic releases. On Tuesday 24, one should pay attention to the report on durable goods orders in the USA. Strong deviations from expected figures can cause a respond to this events, otherwise reaction will be minimal, because many investors will have a rest in the eve of Christmas. In general, Euro can be expected to be based within a flat trend range 1.3550-1.3750.
25th and 25th of December are the Great Britain's bank holidays. Other days are also not scheduled for releasing macroeconomic stats. Participants of trades with the Pound/Dollar pair must watch dynamics of the UER/GBP cross-rate. Decline of this currency pair would support demand in the British currency paired with the US dollar. In general, British currency can stay within a flat range 1.6200 -1.6450.
In the beginning of this week investors will focus their attention on stock dynamics. The futures contract on stock index Nikkei 225 can achieve a fresh year high. A lot of macroeconomic reports are scheduled for publishing in Japan. No doubt that the most important data is inflation data. The economists interviewed by Bloomberg expect growth up to the level of 1.2% per annum. It can be expected that positive figures will serve as the incentive for investors to fix their profit on long positions and Dollar/Yen will go through technical correction. In general, USD/JPY pair can stay within a flat range 1.6200 -1.6450.
Alexander GoryachevAnalyst of «FreshForex» company
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