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13 November Forex daily review

Sergiy Zlyvko
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Yesterday was a bad day for U.S. dollar. On Wednesday, sharp fluctuations in the foreign exchange market were caused by statistical data on Britain and statements of P. Praet and J. Yellen. In European trading the pound reacted with growth on labor market data in the UK and accelerated after the release of Bank of England quarterly inflation report. Pound additionally drew strength from the cross-rates, which allowed it to avoid the correction during euro/dollar decline.

While the pound was strengthening against the euro and the dollar, euro/dollar dropped to a level of 1.3410, from which the pair recovered to 1.3455. From this level the pair updated intra-day low at 1.3390. The single currency has weakened by Peter Praet’s speech about the possible introduction of negative deposit rate.

From a minimum of 1.3390, the euro/dollar subsequently rebounded to 1.3495, while GBPUSD – to 1.6065. The dollar weakened on published abstracts from the text of Janet Yellen’s speech at a Senate scheduled for Thursday. As we understand it, Janet Yellen did not act on Wednesday, but simply there was a leak of the text. She will speak in the Senate Banking Committee at 15:00 GMT. The Federal Reserve declined to comment market rumors.

In Asia, the U.S. dollar recovers the losses. The data on the GDP of France, Germany, Italy and the euro zone will be published today in the afternoon. At 9:30 GMT the data on retail sales in the UK will be published. Prior to European statistics, the correction is expected to continue. If before the performance of J. Yellen, currency pairs are rolled back, then on the U.S. session perhaps we will update highs against the dollar.

The downtrend that started from the top of 1.3831 is not broken. The downward trend of the euro remains, but today Yellen speaks. She is a supporter of QE3 and against this background the dollar can go lower. We do not consider the rise above 1.3525.

The British pound has risen to 1.60 on the labor market data in the UK and its quarterly inflation report by the Bank of England and in the U.S. session GBP increased on Yellen’s theses publishing to 1.6065. Price stayed on 1.6075. In Asia, there is a correctional movement to yesterday’s growth and support of the first acts of the 1.60. As today J. Yellen will speak tosay, given yesterday’s data from the UK the pound will try to consider updating the maximum at about 1.61 area. At 9:30 GMT retail outlets will be published. They will ask for the first pulse.

AUD/USD rebounded from a low of 0.9280 to 0.9385. The main breakthrough was followed up later in the evening to 0.9385. Growth stood at 0.9385 and 0.9320, and now the pair is trading at 0.9350. Given that the pair recovered by 100 points, we will make an attempt to consider the increase to 0.94. In an alternative scenario there will be a rollback to 0.9320.

On Wednesday, the dollar lost ground on all fronts. Swiss franc strengthened to 0.9125. The main scenario considering the rolling back to 0.9145 and then drop to 0.9130.

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