Daily Market Review - 05/09/2014

EUR/USD

The downward trend exacerbated yesterday after market events. After the dip the trend calmed down. Next support is seen at 1.3785. So the bias for the Euro remains bearish. The view is also confirmed by the interest rate staying at the same level.

USD/JPY

The pair remains on more or less the same levels. Support on the downside is still relevant, as overall trend remains bearish. The level has been withholding for quite some time, so if it is broken the downward trend might exacerbate a lot.

GBP/USD

The Pound continues to retrace from recently attained peak. That was slightly beneath a symbolic level of 1.7000. Analysts assume that around 1.6900 the Pound might receive some support, capable of helping the currency to rebound back up a bit.

Market Overview

As had been expected the ECB has left the interest rate unaltered. That means that the monetary policy remains unchanged. As April inflation has got to 0.7%, and then Draghi preferred to keep the opportunity to downgrade the rate in case of deterioration of the situation in the future. But more and more often the talks are heard in European capitals about direct obligation of the ECB to hold back somehow the growth of the Euro. The reason is simple: it is detrimental to exporters.

Earlier Draghi didn’t exclude additional measures undertaking in case the Euro put direct pressure on inflation. But it is not clear what level of the Euro will become the trigger for actions implementation start.

Whether there will be a reversal of just correction depends on Draghi himself who without spending a single Euro could stop the growth of the rate on the debt market just promising to do everything in order to save the Euro zone. On the other hand last week he mentioned that meanwhile the possibility of European QE remained insignificant.

Most likely Draghi is trying to make it clear that if status quo remains, the ECB is not going to undertake any actions. But if the rate of the Euro will continue to appreciate, then it will put pressure on inflation. And if that inflation will start going down instead of expected growth, then the ECB will launch an emission.

Anyway right now we see that the Euro is down, what is supposed to encourage exporters, who need the rate as low as possible.

Economic Calendar

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