Thursday, May 16, 2013

FXPRO Daily Forex Brief 16.05.2013

The Daily Forex Brief is written by FxPro's team in the City of London. Visit
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Daily Forex Brief
London :Thursday 16th May 2013
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Data/ Event Risks
EUR: The inflation data is the final number, so not likely to be a market moving event, but if revised lower it could dent the euro a little as expectations of further stimulus measures from the ECB (negative deposit rate) resurface.
USD: The better weekly claims data last week were a factor in the dollar surge seen into the close, so markets will be more sensitive than normal to the data. The market expects a small move higher, from 323k to 330k.
Idea of the Day
The latest GDP data from Japan reflected the still huge task facing the authorities. Headline growth was better than expected, the economy expanding 0.9% in the first quarter of the current year, but deflation was more entrenched, with the deflator declining 1.2% YoY. Still, this is the picture of the economy before the announcement of a doubling of the monetary base, made early last month. The other indicators seen so far have been a little more encouraging, with Japanese corporates seeing the benefits of the weaker yen, which has had longer to feed through and there are also early signs that wages are starting to adjust upwards, a key factor in breaking the deflationary psychology that has gripped Japan for much of the past twenty years. The firmer dollar stance has helped, with the dollar index within a whisker of making a near 3 year high yesterday. More of the same is on the cards for USDJPY ahead.
Latest FX News
JPY: Mixed messages from the GDP data this morning. Headline GDP growth was firmer than expected, rising 0.9% in the first quarter, with the final quarter of last year revised higher from 0.0% to 0.3%. The offset was the sharp decline in the GDP deflator (a broad measure of prices in the economy), which fell 1.2% YoY (last quarter was a 0.7% decline). The yen weakened, but only modestly so.
AUD: The Aussie notably weaker during the Asia session, with a sustained move below the 0.9900 level. A combination of factors at play, including generally weaker commodity prices together with the softer global growth outlook, together with expectations of more domestic interest rate cuts. The Aussie has been the weakest on the majors so far this month, even over-taking the yen in the loser’s league table.
GBP: A welcome change yesterday from the Bank of England, most notably with inflation projections being revised down and growth forecasts revised higher (most of the past few years have seen the opposite). This did given the pound a lift, but only a modest one. The 1.52 level still offers key support for sterling against the US dollar.
EUR: Even the usually resilient euro is having a tough time fighting the firmer dollar tone, but is outperforming most others and peripheral markets continue to perform well. Just the CAD has performed better over the past week.

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Please note that due to market volatility, some of the below sight prices may have already been reached and scenarios played out.

Pivot: 1.2915

Most Likely Scenario: Short positions below 1.2915 with targets @ 1.2825 & 1.279 in extension.

Alternative scenario: Above 1.2915 look for further upside with 1.2945 & 1.2995 as targets.

Comment: the pair is posting a rebound but stands below its resistance.

Pivot: 1.5275

Most Likely Scenario: Short positions below 1.5275 with targets @ 1.519 & 1.516 in extension.

Alternative scenario: Above 1.5275 look for further upside with 1.531 & 1.533 as targets.

Comment: the pair remains under pressure and is challenging its support.

Pivot: 101.75

Most Likely Scenario: Long positions above 101.75 with targets @ 102.85 & 103.25 in extension.

Alternative scenario: Below 101.75 look for further downside with 101.25 & 100.4 as targets.

Comment: the pair has rebounded on its support and should post further advance as the RSI is well directed.

Pivot: 0.9885

Most Likely Scenario: Short @ 0.9865 with targets @ 0.976 & 0.9705 in extension.

Alternative scenario: Above 0.9885 look for further upside with 0.9915 & 0.996 as targets.

Comment: the RSI is badly directed.

Pivot: 1399.00

Most Likely Scenario: SHORT positions below 1399 with 1365 & 1346 as next targets.

Alternative scenario: The upside penetration of 1399 will call for a rebound towards 1418 & 1431.

Comment: the immediate trend remains down and the momentum is strong.

Pivot: 93.25

Most Likely Scenario: LONG positions above 93.25 with 94.5 & 95.6 as next targets.

Alternative scenario: The downside penetration of 93.25 will call for 92.1 & 91.4.

Comment: the June Crude Oil stands above the 50% fibonacci retracement level at 93.25. The upside prevails, as long as 93.25 isn't broken.

Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Flag Counter Visit Us Visit Us


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