Yesterday afternoon the pressure on the single currency grew high. However, it wasn’t strong enough to endanger the support of 1.30. The reason is absolutely unimpressive news on the EU economy. First of all, Germany’s trade surplus is on the decline. The country had a great advantage in the second and third quarters due to depreciating of the euro. But the return of the euro above 1.30 reduced competitiveness of the European goods in the export markets. Also the continuing austerity inside the region keeps putting pressure on the domestic demand. Later the unemployment stats were released. As expected, unemployment hit more…
Tag Archives: Bears
A brief surge of optimism
EUR/USD
A number of vital events have happened in the market since our last review. Firstly, Obama formally gained the upper hand in the fiscal policy issue. The fact that the agreement had been finally reached (now taxes for those who earn more than 450K will be raised) led to opening of the currency and stock markets with an upward gap. S&P 500 returned to October highs, but this is all the bulls could do at the time. Since then the market has been steadily trading sideways and even the employment stats couldn’t change the situation. In the currency market opening with more…
Forex bulls are slightly ahead
EUR/USD
Yesterday the US dollar was much weaker than expected. The few speculators, still staying in the market, tried to take EURUSD to 1.33, but were stopped at 1.3280. After that even the moderately negative news from the USA was enough to push the pair below 1.32. The Consumer Confidence stats were poor. Concerned about the impending fiscal cliff and frightened by press releases, Americans were very cautious about their spending and tempered their optimism. As to spending, we have a preliminary estimate of the pre-holiday activity. It wasn’t very impressive with growth of just 1% against 2% last year. The same more…
Pre-holiday market speculation
EUR/USD
Yesterday the US markets went through a one-minute drop by over 2% on the news that the House of Representatives wouldn’t vote for adopting a new fiscal policy. Republican leader Boehner, the speaker of the House, announced that since the bill didn’t have enough advocates, the vote would be postponed. Boehner’s “plan B” hasn’t worked. Now both the parties have to quickly come to a mutual agreement, otherwise the automatic spending cut and tax increase will deal a hard blow to the economy. The Forex market took the news calmer. The euro tried to get to 1.33 yesterday afternoon, but in more…
Nothing serious, just a pullback after the rally
EUR/USD
Yesterday the markets finally pulled back. The continuous growth, lasting for almost 8 days, stumbled over a quite expected obstacle yesterday. On the way to consensus Obama and Boehner passed from mutual concessions to mutual threats. The president promised to veto the republicans’ plan for the budget and fiscal policy. We already warned that this was likely to happen. Common sense prompts that a compromise will be eventually reached, however the way to it won’t be smooth. Also most economists consider that for now it will all end with a temporary agreement, which will help to avert the fiscal cliff at more…