Problems in Eurozone aggravate | 08 November 2013

Review of the last week

The past week for currency market was under the sign of strong American currency. Despite US macroeconomic statistics was generally negative, USD got stronger as compared to its major rivals. Federal Reserve System performed as driving force for its strong upsurge. Monetary policy remains unchanged till the next meeting that will take place on 17-18th of December.

European currency was at the highest risk among all and it finished the week at the point of 1.3486. On the last day of October, Eurozone provided negative statistics. Unemployment level grew up to 12.2% in October, September value was revised as well increasingly. Inflation figure was also released on that day and it appeared to reduce down to the level of 0.7% per year. The last time such low value was observed by market in the far 2009 year, which induced investors to expect deflation in Eurozone. Further dropdown of inflation will make the European Central Bank decrease refinancing interest rate that will create a pressure on Euro.

News background was moderately negative for British Pound. No important macroeconomic statistics was released. Perhaps, a sharp drop in retail sales reported by the Confederation of British Industry must be emphasized. In October this indicator dropped by 32 p, down to 2 p. level. British pound finished the trade week just above the level of 1.59.

Moderate comments made by the management of Japanese CB did not impacted on national currency rate a lot. Over the entire past week, Yen had been loosing its positions against USD, whereas zero variation in quantitative easing (QE3) program only did consolidate growth of Usd/Yen quotes.

Forecast for the week 4 – 8th of November:

A new trading week will be very interesting for currency market. Advance GDP value will be reported for the third quarter along with Friday's release of changes in Non-Farm Payrolls. Experts interviewed by Bloomberg expect drop in both values. Any figures divergent from forecasts are able to push market.

Core event for united European currency will be the meeting of the European Central Bank on Thursday, 7th of November. Market received weak data on regional inflation and unemployment. Investors and traders will closely watch press-conference by ECB president Mario Draghi elucidating listed issues.

Following levels may be underlined for Eur/Usd for this week:

Support levels: 1.3460- 1.3340- 1.3205

Resistance levels: 1.3560-1.3645-1.3710.

Significant macroeconomic reports are scheduled for release in Great Britain. On Monday and Tuesday, construction and service PMI data will be respectively published. On Thursday and Friday, results of the BoE meeting and trade balance data will be released. Experts interviewed by Bloomberg do not expect those macroeconomic figures to be positive. However, the economy of Foggy Albion shows signs of restoration and one can expect pleasant surprises, which will support British currency.

Following levels may be underlined for Gbp/Usd for this week:

Support levels: 1.5910-1.5825-1.5750

Resistance levels: 1.6010-16119-1.6250.

Trade dynamics of Japanese currency will be determined by Usd behavior a lot. No important macroeconomic reports from Japan are expected on the first trading week of November. The only moment to be underlined is the public speech of the Bank of Japan Governor Haruhiko Kuroda scheduled for Tuesday, 5th of November. The past week had formed ascending trend for Usd/Jpy pair. In case of passing of a strong resistance level as of 99.00 and positive reports form the USA, the path to 100.60 will be opened.

Following levels may be underlined for Usd/Jpy for this week:

Support levels: 97.50- 96.95-95.90

Resistance levels: 99.00-99.65-100.60.