EUR
On Thursday currency market participants are focusing on the ECB’s decision regarding the monetary policy, as well as the data coming from the US (on Thursday – jobless claims, pending home sales, factory orders; on Friday – nonfarm payrolls). Of special interest is the announcement of the ECB Chairman J.C.Trichet at 14:30 cet about his view on the situation in the Eurozone economy and the monetary policy.
Speaking of EUR/USD, to our mind, there can be several factors which can support the single European currency. First of all, the currency market participants might have discounted the possible extension of the emergency lending measures for European banks into 2011. Secondly, a certain support for euro might be explained by favorable or neutral (the absence of bad news is already a good news) news background in Eurozone. In this case we should pay attention onto the revised GDP data for the 2q10 (actual 1% m/m and 1.9% y/y, forecast 1% m/m and 1.7% y/y) as well as the successful sale of 5-year government bonds by Spain (value 3.31bln, maximum yield 2.997%).
Following the afternoon session EUR/USD rose from 1.2775 to 1.2835.
GBP
British pound is showing losing signs on FOREX on Thursday. It is being affected by the data coming from the British labor market (Nationwide), as well as the publication of weak PMI Manufacturing. Housing price index from Nationwide made up -0.9% m/m and 3.9% y/y in August (forecast -0.3% m/m and 4.9% y/y). PMI Manufacturing, in its turn, also appeared worse than was estimated (actual 52.1 points, forecast 53.2). All in all, this is another confirmation that the situation in the UK economy is similar to that of US. We are forecasting that the British currency may keep being under pressure in the cross-rates before the meeting of the Bank of England on September 9.
During the trading session the GBP/USD showed a decline from 1.5450 to 1.5370. In the nearest days we are expecting the pair to reach a support level at 1.5330-1.5340.
CHF
A certain support for the Swiss franc on Thursday was provided by the region’s favorable news background. The revised GDP data for the 2q10 in Switzerland appeared to be better than was forecasted (actual 0.9% q/q and 3.4 y/y, forecast 0.8% q/q and 2.6 y/y). The retail sales also came out rather surprising, showing a figure of 4.8% (previous 0.9%). Against this background the EUR/CHF pair dropped from to 1.2940.
A subsequent dynamics of the EUR/CHF cross-rate, in our opinion, will depend on the situation with the risk appetit.
Jevgeni Beloussov, analyst
of company Admiral Markets.
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