Daily Market Review - 06/04/2014

EUR/USD

As we see on the chart the aforementioned level holds. Trading of the asset falls into narrow channel, so moist likely this is a consolidation approaching. That is why in the near term sideways trend with subsequent downward move is the most probable one.

USD/JPY

The pair is steadily appreciating. The asset is right at 102.8 where it might encounter strong resistance. Other than that there are no reasons to expect any trend reversals’ triggers in the short term.

GBP/USD

As had been expected a triangle pattern has ended with continuation of previous bearish trend. Right now the Pound can get some support for a rebound at 1.6700. Otherwise the trend will continue.

Market Overview

There is more and more excitement about ECB meeting on Thursday. Recently we’ve seen May statistics on inflation, according to which the figure had slowed down to 0.5%. Earlier in March inflation reached that level already, but back then the ECB ascribed everything to seasonal factors. Subsequent growth in April up to 0.7% was perceived as the beginning of index growth.

But on former meeting Draghi made a few important remarks about potential actions on the side of the regulator, if inflation remained on very low levels. So yesterday’s data exceeding the ECB forecasts suggests a necessity to at least downgrade the key rate, and also a need to add liquidity to economy of the Euro zone in this or that way.

The fall of the European unemployment rate from 11.8% to 11.7% is not likely to be perceived as more or less significant positive piece of data.

The most difficult situation is in Spain and Greece, where unemployment rate is at 25.1% and 26.5% respectively. On the other hand in Germany and Austria the situation with unemployment remains more or less stable or to be more exact 5.2% and 4.9%. Such numbers’ discrepancy makes work of the ECB much more difficult.

It is clear that all rhetoric of the ECB narrows down to the struggle against low inflation which threatens to undermine finally emerging recovery of the EU economy. If inflation is low, there is high risk of national debt issues exacerbating. In the ECB mandate unlike in the American FRS there is no direct mentioning of obligation to supporting labor market.

Economic Calendar

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