Weekly FX Snapshot: June 22 - 26

[B]US Dollar higher on upbeat US data[/B]
The [B]greenback[/B] was traded higher against all of the G10 currencies from Monday on the back of the positive data for the economy. However, a few economic indicators showed a small weakness in the first quarter of the year but US traders paid no particular interest as was broadly known.

The final [B]US GDP [/B]for the first quarter came out -0.2% as expected but far better than the previous flash estimation to have contracted by -0.7%. It was not a surprise in the market as the first quarter of 2015 was soft in terms of personal spending and sales due to bad weather and personal spending is a main factor of the economic growth. Furthermore, the previous quarters the US economy has expanded by an impressively steep pace of 2.2% in Q4, 5% in Q3 and 4.6% in Q2 2014. One of the main reasons the economy contracted in the first months of the year, [B]Personal Spending [/B]retrieved by jumping to strong 0.9% in May, the biggest gain in nearly the last six years. The Personal Consumption expenditure in May was also very encouraging for the general outlook.

The [B]Housing Sector[/B] performance in May surprised on the upside as both the New and Existing Home Sales reached a climax. The New Home Sales rose by 2.2% to reach the highest number since February 2008 of 546k above markets forecast to have declines of 525k. The Existing Home Sales increased by 5.35M in May, the highest number since November 2009, beating market forecast to have risen by 5.09M and dragged the Home Sales Change to 5.1%.

Going to soft news, the [B]Durable Goods[/B] slowed down by -1.8% in May despite expectations to improve to -0.6% from -1.5% before. The Durable Goods ex Transportation accelerated by 0.5% from -0.3% but it also missed market forecasts to accelerate on a steeper pace. A while later, the New Home Sales confirmed that in May the Housing Sector had a healthy expansion. Moreover, the preliminary Markit Manufacturing and Services PMI signaled that in June the sector will face a slight weakness.

The [B]USD/JPY[/B] currency pair is still being traded above the major horizontal resistance of 122.00 and we see the prices forming a flag pattern. The structure is a trend continuation formation and we expect the pair to take a bullish approach towards the level 128.00. The 122.00 support is crucial and if we see a daily close below it, the scenario changes to bearish as in such case the next target will be 118.50.

[B]Euro plunged on Greece uncertainty; Crucial Weekend ahead[/B]
The [B]common currency[/B] suffered of important losses the week just past as Greece’s uncertainty expanded in the whole Eurozone. The Greek Government officials and the EU Creditors spend a lot of hours of discussion this week but they didn’t come up with a solution. Greece must pay €1.7 billion to IMF on Tuesday as debt repayment. The [B]following weekend is very decisive for Greece[/B] as talks will continue on Saturday and the time is running out. If they failed to reach a deal the Greek future and therefore Eurozone’s is uncertain.

In [B]Germany[/B], the [B]IFO Survey[/B] revealed that the Business Confidence, after six months of consecutive increases fell for the second time in a row in June. The Current Assessment and the Expectations are also decreased showing a weak month for the economy. However the preliminary Markit Services and Manufacturing PMIs for Eurozone and Germany as well were cheerful for the sectors for June.

The [B]EUR/USD [/B]currency pair has experienced a sharp drop in volatility during the last several days. The markets are vigorously awaiting the outcome of the Greek talks and see if Greek parliament will accept the asked austerity and budget measures by the Troika commission. For now the tendency is negative and we expect the pair to continue moving lower towards the support level of 1.0920.

On a daily basis, the [B]EUR/GBP [/B]currency pair is traded In a solid downtrend pattern. The prices are right below the 7-period SMA and the last cross of the 50-period SMA with the 14-period SMA and the 7-period SMA signals for a beginning of a down movement. The price action suggests that further declines are likely to take place. We expect the bears to target the horizontal support level at 0.7000.

[B]GBP mixed after a quiet UK week in terms of economic data[/B]
The British Pound was mixed versus its major peers this week as there were only a few economic data to drive the UK market. The British Bankers’ Association announced that approved 42.5k mortgages in May while the market was expected for a greater number of 43.1k. The[B] Mortgages Approvals[/B] affects the market on the macro future as an increased number of mortgages means more new home sales and new homes need furnishing and therefore consuming spending increases.

The [B]GBP/USD[/B] pair is still being traded below the major horizontal resistance of 1.5800. As long as the pair is traded below 1.5800, we will consider that bears are having the upper hand and the prices should experience further declines towards the 1.5550/1.5500 level. On the other hand, a daily close above 1.5810 will be a bullish signal.

[B]XAU/USD to find a light support at $1,170[/B]
After confirming the major descending trend line resistance by several days of declines, the price of [B]gold [/B]find a light support at the $1,170 level. On a daily basis, we do not see a strong rebound but just a market reaction that the prices are facing some support zone. We expect the down movement to be resumed and the metal to fall towards $1140.00. However, a Grexit crisis might play big impact over the price of GOLD.