Today we observe a rather sharp fall of the US dollar which can be explained by investors’ increased interest towards risky assets (S&P500 +4.7 points, DAX +0.10%, FTSE +0.87%). The given surge of the optimism indicates that investors are hoping that the slump observed in S&P500 and WTI will not find its continuation. In other words, many traders believe that all the risks regarding the worsening situation in the US economy are already priced in on FOREX, meaning that S&P500, WTI and EUR/USD are already too oversold and it is time to see a rebound (correctional growth) on them.
We can go on speaking about the relevance of this hypothesis if, after the publication of weak nonfarm payrolls on Friday, S&P500 and WTI continue rising.
EUR
Neutral PMI Manufacturing data was released in Eurozone today. An indicator almost matched the forecast (actual 55.1 points, forecast 55), although, it has decreased in relation to the July’s data by 1.6 points. A given fall can be explained by the publication of weak analogous index in Germany, which plunged to 58.2 from 61.2. A certain support for euro might have the announcement of the German Ministry of Economics, which is going to revise this year’s GDP forecast up.
Following the European session EUR/USD advanced from 1.2660 to 1.28.
GBP
A sluggish sterling trading dynamics can be explained by weak data coming from the UK. Same as in Eurozone, we got PMI Manufacturing data. An indicator appeared to be significantly worse than was estimated (actual 54.3 points, forecast 57, previous 57,3).
During the mid-day trading the GBP/USD pair rose from 1.5360 to 1.54.
- Unicredit: the drop of the GBP/USD pair below 1,54 forces to test a new level of support at 1.53-1.5275
JPY
There are two factors that have been putting pressure on yen on Wednesday: 1) a surge in the equity markets and 2) announcements of the senior member of Democratic party, Itiro Odzawa, that he will compete with the prime-minister Naoto Kan for the leadership in the party. In his statements regarding the perspective policies to combat the yen’s rise, Odzawa underlines exceptional measures, including market interventions.
Against this background, following the European session the EUR/JPY pair rose from 106.55 to 107.65; however, the USD/JPY dropped from 84.55 to 83.95 given the general weakness of the US dollar.
- Mizuho Corporate Bank: despite the continuing appreciation of the yen, the USD/JPY pair is still not oversold
Jevgeni Beloussov, analyst
of company Admiral Markets.
At any use of the analytical material taken from a site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing centre «Admiral Markets», the reference to a company site is obligatory.
