Daily Market Review - 05/16/2014

EUR/USD

The Euro got back into the trading range after a remarkable dip followed by an ascend. So the pair continues to consolidate within the boundaries. General outlook is bearish and therefore the asset is expected to break below the range after the end of consolidation.

USD/JPY

The pair has dropped below support. At the moment it is consolidating without any more or less clear trend. Prior bearish trend is most likely going to resume quite soon.

GBP/USD

Support of the Pound was tested and a bit violated. Anyway in general it holds and the rate aspires to go back up. Nevertheless mid term outlook for the currency pair remains bearish.

Market Overview

Economic recovery of the Euro zone is slowing down. Tentative data on the European GDP in the first quarter shows quite weak growth, only by 0.2% (with expectations of 0.4%). Basically statistics looked well only because of strong data on Germany, where economy could add 0.8% at once, what has become a pleasant surprise to Berlin. In other states of the Eurozone the situation is close to new recession.

Data on French economy the second by size came out on 0 without showing neither growth nor fall. In Italy the GDP dropped by 0.1% what is going to complicate realization of additional measures of spendings reduction. Consequently there is a quite high probability that Rome is not going to disrupt again all deadlines and there will be no chance of bringing the budget deficit to European norm of 3% of the GDP.

Netherlands is suddenly amid outsiders where economy dropped by 1.4% because of abrupt reduction of industrial production and retail sales by 3.8% and 2.2% respectively. Earlier an idea of reduction of spending has been preached in Amsterdam. So now we see statistics worse than even in Greece.

In April Paris announced approaching reduction of tax load on business by 30 billion Euros in 3 years. According to authorities it must compensate a reduction of governmental spending by 50 billion Euros. Now pressure on socialist government will only exacerbate, taking to account that they have won elections precisely with slogun of stoping austerity measures.

Economic Calendar

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