Daily Market Review - 05/07/2014

EUR/USD

The Euro is consolidating above 1.3900. It is quite logical that the pair is catching its breath after an impressive ascent. If there is no deep retracement from that height the prior trend should resume soon.

USD/JPY

As has been mentioned the pair is down. At the moment there is no trend reversal triggers expected. Next support is seen at 101.30 on the downside. It might slow down the trend if withholds.

GBP/USD

The Pound has reached another height. Now it is consolidating. Taking to account previous pattern, that is another break before continuation of the ascent. So here we do not expect any surprise and the bias is bullish.

Market Overview

The fall of the USD/JPY pair has been seen 4 days in a row. At that sales volumes impress: the Yen benefited from the protocol of BoJ meeting in April.

Slow growth of economic system and a bit more active than forecasted appreciation of inflation have drawn attention of the Bank of Japan. As has been mentioned in the presented protocols if April meeting of Japanese regulator new tough conditions of employment make market prices grow, what eventually forms quite unstable situation in the economy. Only presence of limited supply pushes the prices up, what might become a reason of instability of Japanese economy.

The Central Bank of Japan is still not ready to make decisions on expanding stimulating measures at least in the near future. Markets have been expecting a more particular statements taking to account that in April the rate on sales tax was upgraded.

Economy reaction will follow immediately; there are reasons for GDP slowing down. But the regulator took a pause in claims regarding additional easing measures in order to watch the reactions. Currently the volume of inflow in the Japanese economy constitutes 60-70 trillion Yen yearly.

In spite of text of the protocol that seems neutral at first glance, the document has become another reason for the Yen growth. If there is no increase of volume stimulating, then the Yen will appreciate. A too expensive Yen will damage export profits.

Economic Calendar

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