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5 December Forex daily review

Sergiy Zlyvko
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On Thursday, on international currency market Forex U.S. dollar closed lower against most currencies. Dollar managed to hold its ground against British pound as the pound came under pressure during the press conference of M. Draghi.

In November, the ECB decided to cut interest rate by 0.25%. The market reacted to the decision falling by 200 points to 1.3295. On last press conference, M. Draghi expressed concern about deflationary risks in the Eurozone and hinted at further rate cuts. Euro after standing at 1.3380 for about three days then began to restore the losses. As a result, the next meeting of the ECB EURUSD rate rose to 1.3600.

At yesterday’s meeting, December 5 as expected, the ECB and the Bank of England left rates unchanged. Since the beginning of ECB head M. Draghi press conference on strong data from the United States, the euro/dollar fell to 1.3545.

U.S. GDP in the III quarter of 2013 grew by 3.6% year on year against the previous estimate of 2.8% (forecast 3%). The number of initial claims for unemployment insurance in the U.S. for the week ending November 30 fell by 23 thousand compared to the previous week and was 298 thousand. Data came out better than expected.

After declining to around 1.3540 against the dollar, single currency rebounded to 1.3665. The euro had a statement by Mario Draghi that at the meeting nobody has offered to lower the rate and did not discuss the introduction of negative interest rates on deposits. While GDP forecast for 2014 has been improved from 1.0% to 1.1%.

With EURUSD increasing, everyone forgot about positive American statistics published on Friday and NFP. M. Draghi yesterday has spoiled technical picture for the dollar, but the euro/dollar has worked weak NFP, but not a strong yet. Today is the Payrolls day so it is senseless to make the plans to 13.30 GMT. NFP figure is expected at 185,000. Unemployment rate is projected to decline by 0.1% to 7.2%. All that will come out after the NFP is secondary information, it but can also has an impact on the market if the NFP will coincide with the forecast.

At 14.55 GMT preliminary index of consumer confidence by the University of Michigan in December is going to be released. At November NFP value above 200,000 and revisions to previous values upward – the dollar expected to increase dramatically. If there will be a weak value of NFP below 180,000 – the dollar will decline.

Following the single currency AUDUSD exchange rate rose to a 0.9065 level. This level stands as strong resistance and gives buyers break to the next level. Since the RBA complains high Australian dollar and Australia’s GDP for the 3rd quarter was below expectations, then under strong NFP from AUDUSD at 13.30 GMT we consider a sharp drop to 0.90. This does not mean that it will be so. But AUDUSD sales override.

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