This week turned out to be another week driven by risk aversion as concerns of Greek debt crisis dominated the market… and once again it affected the Euro negatively. With Greece PM Papandreou having survived the No Confidence vote, which in turn paved the way for the Austerity Plan vote on Tuesday, the entire market is finally seeing some hope for the Euro and preparing for the inevitable rate hike in early July by ECB.
Forex Video
This week’s market was like a roller coaster ride as the on going saga with Greece dominated the entire trading arena. Speculators sold Euro on news that bailout for Greece is delayed, and bought Euro on a whiff that agreements were reached… it was a tough week to say the least, but overall I believe we are likely to have a nice strong EUR momentum ahead of us… Here’s why:
Last week we saw a general risk adverse market trend developing on the back of Bernanke’s speech which indicated further quantitative easing is desired. Then on Thursday, despite Trichet confirming a July ECB rate hike, market chose to focus on the negative, which is the future of Greece. With Germany adamantly calling for private sector involvements in future Greece bailouts, Trichet and ECB’s stance is just the opposite. It seems that the June 20 finance ministers meeting in EU will not end with definitive answers for the sovereign debt issues in Greece, thus market is reacting with lack of confidence to the Euro.
The economy struggled to maintain any consistency last week as global manufacturing dropped significantly across the globe due to weak demand amidst high energy costs. U.S. consumer confidence remained low according to the Bureau of Labor Statistics. They also reported a dismal Nonfarm payroll release. Yet, the U.S. reported a positive ISM Non Manufacturing PMI release which indicates that purchasers remain optimistic for the summer.
Canada’s Feb. GDP was revised to -.1% from -.2%, and Mar. GDP came out at +0.3%. Still, BOC policymakers decided to hold on interest rate hikes but are focusing on the medium term outlook as economic progress remains on an optimistic trend.
Last week’s news releases revealed that economic recovery on a global scale is still suffering. The US dollar carried over momentum from the previous week but weakened on Friday against its major counterparts. The primary cause of this is that consumer spending rose less than forecasts, indicating that the Federal Reserve will hesitate to push up interest rates. Also, US GDP missed forecast of 2.2% and remained unchanged at 1.8%.
Last week, the global market suffocated with the continued rise in global inflation. UK news spark interest as the MPC Meeting Minutes revealed 3-0-6 vote count which kept interest rates at 0.5% despite inflationary pressures to hike rates. Pleasurable weather and the Royal Wedding helped boost retail sales for the month.
Last week, we payed special attention to the AUD employment change which dropped significantly to -22.1K after strong growth in March. The US reported a 0.5% increase in retail sales amidst growing concerns over soaring gas prices and Friday’s Core CPI Report was monitored all week as US economists fear that global inflation would inevitably cross the Atlantic and affect U.S. household budgets.
Here’s what we want to focus on for next week:
Tuesday May 17, 2011- 4:30 am- UK CPI y/y
Forex Market Review and Upcoming Forex Calendar (May 14 ~ 18, 2012)
Forex Trading Strategies #3 – The Correct Trend
Forex Trading Strategies #4 – Support and Resistance
US FOMC Meeting Minutes – May 16, 2012 – Forex Strategy
Forex Trading Strategies #5 – Market Psychology
Forex Trading Strategies #2 – The Right Timing
US Core CPI – May 15, 2012 – Forex Strategy
Forex Trading Strategies #1 – The Real Reason