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29 January Forex daily review

Sergiy Zlyvko
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Yesterday the dollar closed virtually unchanged against the euro and pound. It also rose against the Australian dollar and fell against the Swiss franc and Japanese yen. Traders have been bought the yen and the franc amid falling stock markets and depreciation of emerging markets’ currencies. Before the announcement of the U.S. Fed’s decision, EURUSD dropped to 1.3600 and GBPUSD – to 1.6525. Then it turned out that a small difference in time in the newswire appeared the statements of the Bank of France, Bank of England, as well as Angela Merkel, who pushed the euro and the pound to fall.

During the press conference, Christian Noyer reiterated that the ECB intends to maintain soft monetary policy for a long time to support economic growth and any growth of the euro will be negative for the EU countries. During her speech to the Bundestag, German Chancellor Angela Merkel said that peace of mind in the Eurozone is deceptive. The negative effect of the statements of officials was short-lived, EURUSD and GBPUSD backed all the losses.

Bank of England Governor Mark Carney, speaking in Edinburgh (from 12.15 GMT moved to 13.15 GMT), yet again repeated, that in order to secure economic recovery, the interest rates remain at current levels for some time and soon will introduce changes to the MPC policy of transparency. Then it was about rate separation of 7% unemployment target.

At 19.00 GMT as expected, the Federal Open Market Committee of the U.S. Federal Reserve (FOMC) decided to leave key interest rates unchanged in the range of 0-0.25%. At the same time, the Fed has decided to reduce monthly volume of government bond purchases by 10 billion dollars to 65 billion dollars.

Reaction to the decision by the major pairs was weak, as many experts expected a decline of QE3. Last time on December 18, the dollar strengthened slightly and on 19 December in the market has been consolidated during the day. Now on the foreign exchange market flat has been going for 4 days. We’ve got to expect the price is out of range and breakthrough the levels. If we look at technical analysis, we have a situation turns 50 on 50. We drove the euro and pound on cycles, more options for the rising dollar is obtained. There are a lot of news for today, but the most important of all is U.S. GDP report, which publishes at 13.30 GMT. Just pay attention to the report on Spain’s GDP and the report on the labor market in Germany.

From the maximum rate of 0.8825 AUDUSD fell to 0.8710. The drop was 115 points. If we consider the previous fall to 0.8660, it is likely to continue falling to 0.8685 mark. AUD decreases by complex wave that moves to the intermediate and primary levels of Gunn.

On Wednesday, the yen and the franc were the havens for currencies of emerging markets, so USDCHF dropped to 0.8935. Current exchange rate is 0.8990. We don’t still believe in the growth of the dollar. The main scenario is 0.9020 as a goal.

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