Daily Market Review - 05/01/2014

EUR/USD

The Euro is approaching resistance at 1.3900. This level is crucial in determination of further trend. If the level is not crossed, then the retracement in the long run will extend as far as 1.3784.

USD/JPY

The pair still looks bullish. It is now near support at around 102. Most likely it will withhold as we already can see some consolidation and probably a trend reversal from above levels.

GBP/USD

The ascent of the Pound is quite impressive. There are no serious obstacles seen in its way. Current levels are higher than in any given moment since 2011.

Market Overview

Long expected data on April inflation in Europe has allowed Draghi to feel relieved. Index has increased from 0.5% to 0.7%. That enables the ECB not to undertake any further stimulating measures, whether its downgrading of the rate or securities purchase. In spite of the fact that statistics have been expected to be at 0.8% current number might satisfy the ECB.

Earlier Draghi’s stated that regulator was ready for actions but only in case of further deterioration of situation with inflation. If in coming months the figure is not going to continue growth and for instance will pull back to 0.6% and also to 0.5%, then the ECB will have to undertake countermeasures. But currently all that is just an assumption.

So if on the next ECB meeting the monetary policy is not going to be modified, then the Euro will get a good impulse at least for local growth. Bulls have received an additional support after publication of data on downgrade in Spain from 13% to 12.7%. Besides positive dynamics of French consumer spending also has became one of the drivers of current growth.

But Germany is still the most stable supplier of good news. On Wednesday it was found out that the unemployment in the state is reducing 5th month in a row. It is now at historical minimum of 5.1%. It is more than twice as lower as in the rest of Europe with an average figure of 11.9%.

Economic Calendar

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