Daily Market Review - 10/03/2014

EUR/USD

As has been mentioned the Euro is down. The rate has declined below 1.2600, but couldn’t fix the gains, and the rate has rebounded back up a bit. Taking to account fundamental background and technical pattern on the chart the level will be tested again with quite high chances of success.

USD/JPY

The bounce of the pair was quite strong, but signs of resuming downward trend have appeared already. Most likely inability to break above 110 decisively has turned into downward trend.

GBP/USD

The Pound continues to go down. The downward trend extends from July 2014. Next goal on the downside will be 1.6000. That’s the aim for the Pound today on the downside.

Market Overview

The Euro is traded with downward inclination on Friday due to its inability to hold its ground after the ECB meeting. The Euro is inactive this morning and is under insignificant sales.

Recently there was another meeting of the ECB during which the interest rate as expected remained at 0.05% yearly. The mechanism of the low rate alone works pretty badly. That is why the ECB has adopted the idea of assets purchasing as a stimulating measure.

Purchasing of securities backed up by assets is meant for two years. Precise volume of financial means for that is unknown, but the market assumes that it will be a bit lower than 1 trillion Euros. The ECB is following its own assets balance, and the assumption is that it is necessary to return it to 2012 level.

Additional mechanism of economic stimulating besides assets purchasing is still unknown. Also it is not clear how these schemes will influence on inflation. Index of Consumer Prices in the EU in September remained on 0.3% yearly. Quite a small figure. But now it seems that the ECB is not afraid of deflation risks.

At that the Euro hasn’t gone too far from 2 year minimums. It is clear that the ECB was late with stimulating. So effectiveness of current measures is twice as less.

Today the market is waiting for data on European Retail Sales. In the evening the USA is going to issue statistics on the labor market in September, so Euro volatility will exacerbate.

Economic Calendar

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