12/08/2013

Last week, major global equity markets were not able to sustain the rally seen in the past weeks as the markets are waiting for future guidelines from the monetary policy makers. S&P managed to print new all-time highs close to 1710 before dropping back below the 1700 level, registering the biggest drop since mid-June.

EUR/USD experienced its fifth positive week in a row on back of positive signals in the European economy and signs that the crisis in Europe is coming to an end. In addition, market players are starting to anticipate new measures to kick-start the economy from the ECB. Technically, the pair closed above the trend resistance projected from the highs 2013 and has so far been rejected at the 200-week SMA, currently at 1.3397.

GBP-pairs looked fragile in the beginning of last week, but the new guidance measures from the BoE supported future GBP-strength following an upgrade of growth-figures from the BoE as well as mentioning that the BoE stands ready to act should the economy not improve considerably. BoE linked the unemployment rate to the interest rate level and announced that the interest would not be changed before an unemployment below 7.0% had been observed. GBP/USD took out 50- and 100-day SMAs, trend resistance from June highs and has for the past 2 days been testing the 200-day SMA and trend resistance from 2013 highs.

Overnight, the JPY has been in focus as the preliminary Q2 growth figures fell short of expectations, coming out at 0.6% vs. 0.9% expected. This could have the impact that the BoJ will add additional measures to the economy in order to reach their inflation target. Domestically this also calls for a delay of the scheduled sales tax, despite Japanese government debt going above 1,000 trillion Yen. USD/JPY has been pretty steady this morning considering the news, trading in an 80-pip range with a positive bias.

Today, the Greece preliminary GDP YoY figure will be in focus at 11:00GMT. Consensus calls for a figure of -4.9% vs. -5.6% prior, where the domestic side of the figure should pull towards continued contraction, while a pick-up in net export should add positively. Later, the US Treasury Budget Balance will be released for July, but is not expected to have a huge impact in the market.

Have a nice day.