Daily Market Review - 03/07/2014

EUR/USD

So after yesterday’s rally the currency has stopped for a while in order to catch a breath. As anticipated the consolidation ended in a resumption of upward trend. Next target to test is the height at 1.3900.

USD/JPY

The pair is going up steadily. Nevertheless we can see some signals of downward pressure on the trend line, which acts as support for the ascent. If it doesn’t hold then the there might be a trend reversal.

GBP/USD

The Pound is bullish in the short term. Though in the longer perspective it fluctuates within the range approximately in between 1.6791 and 1.6613. The break above the upper boundary might give a momentum for further appreciation.

Market Overview

Recent statistics on the USA turned out to be worse than most pessimistic assessments. According to data from ADP last month there were only 139K of jobs created. More over it is not ruled out that there is a possibility of downgrading of the figure for the last month: only 51.6 instead of forecasted 53.8. Now the FRS will have hard times justifying further QE3 contraction.

Retailer PMI reduction showed weakness of consumption in Europe. At that there is no one opinion about Draghi’s decision. The base rate of the ECB constituted 0.25% and the main intrigue has been revolving around possibility of additional downgrade.

Recent data on inflation showed a quite insignificant growth from 0.7% to 0.8%. Earlier approximately on the same inflation levels the ECB had already downgraded the rate 0.5% to 0.25% in order to level risks of deflation. More over the big share of low inflation is contributed also by downgrading of prices for energy resources.

Retail sales in Europe and positive dynamics of service PMI data also suggests slow recovery of the European economy. Analysts hope that inflation will keep up with accelerating recovery as well. According to the ECB estimates inflation will constitute 1.6% by 2016.

Economic Calendar

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