[B]Weekly Forex WrapUP: July 06 - July 10[/B]
The [B]greenback[/B] was traded mixed against the other G10 currencies during the week on the mixed data released and the FOMC minutes that passed unnoticed. Moreover, on Thursday the liquidity was very thin in the markets. The Initial Jobless Claims surged to 297k from 275k expected reaching an eighteenth-week high! The Continuing Jobless Claims was also on a record high reflecting the weakness of the last NFP Report. The Economic Optimism for July remained unchanged at 48.1 despite the forecast to have increased to 48.9.
The International Monetary Fund warned for one more time that the US Financial System is vulnerable and the government does not prevent its system sufficiently, according to the IMF. The FOMC Minutes was almost indifferent from the market amid of China’s Stock Crisis and Greek Turmoil, as not major surprises included in it. Due to the aforementioned big crises the FOMC members believe interest rates will not rise in 2015.
[B]Greek Crisis: Weekly Review[/B]
The week was very busy for the Eurozone countries as on Monday the market open with gaps due to Greece “NO” to more austerity measures. The last Eurogroup was fruitful according to the Greek Prime Minister and it must have done months ago. The Greek Government submitted their proposals for a deal in the Eurozone on Thursday and now there are meetings scheduled from the EU finance ministers and representatives to accept or reject the reforms as the schedule below. If the a deal does not be accepted until Sunday Greece faces the Euro exit! If the reach an agreement, most likely will follow a debt restructuring and bailout funds to Greece. The Bank Closures extended until Monday, 13th July with the daily limit of withdrawal of €60 continues.
The [B]euro[/B] was higher against the other G10 currencies during the week despite Greece situation. The only exception was the New Zealand dollar. The single currency remains stuck in a tight range against the greenback slightly above the psychological level of 1.1000. So far today an attempt to break the 200-SMA and the ascending trendline which started back in mid-April has been defeated. The [B]EUR/USD[/B] pair is threatened to end the week negative, currently at -0.15%, followed by a -0.47% the previous week and the -1.65% the week started on June 21. On the downside, the first hurdle to clear is the 1.0950 level, which would then push as towards 1.0820, a strong technical level for the bulls in the short and medium term.
[B]Pound on selling pressure[/B]
The [B]pound [/B]was faced a heavy selling pressure against all of the G10 counterparts since Monday on the weak economic data. The Bank of England left its interest rate unchanged at 0.5% and the Asset Purchase Facility to £375B.
The [B]UK Budget Report[/B], on Wednesday, was not so pleasant for the traders. The Chancellor of the Exchequer George Osborne unveiled plans to increase the wage growth and reach £7.20 to £9 per hour in 2020 from £6.50 minimum wage per hour currently, but other core changes worried the investors. The students’ grants will be replaced by loans that the students will repay later if they earn above £21,000 yearly. The chancellor froze working age benefits but decreased the pace of welfare cuts as well. The main rate of income tax will be increased as well as the VAT for the next 5 years. The changes of important economic facts spread the fear to the GBP traders and the sterling suffered from a significant sell-off against the major currencies. Beyond that the economy is stronger fundamentally rather than 5 years before, according to the Chancellor, the UK latest GDP shows that the growth of the economy slowed down. The forecast for the economic growth revised slightly downwards from the previous budget report in March as it was expected to grow by 0.7% the first quarter but grew just by 0.4%, despite that the first term weakness considered temporary. The yearly growth cut down to 2.4% or 2.3% from 2.5% in the last Budget Report.
Although, the NIESR GDP Estimate for the last three months to June increased slightly to 0.7% from 0.6% before. The Industrial production remained stable on May, on the monthly basis, at 0.4% but showed an improvement on the yearly view (2.1% vs 1.2% prior). Conversely, The Manufacturing Production in May missed expectations to have accelerated and slowed down to -0.6% mom below the previous month’s performance.
[B]GBP/USD slightly recovered[/B]
The [B]GBP/USD[/B] pair slightly recovered yesterday following the rebound from the 200-SMA on the daily chart. The pound is down more than 1% for the week after falling to a monthly low on Wednesday. The level of 1.5330 is key to understanding whether we are watching for a further continuation, with the next obstacle to be the 1.5230 and then the psychological level of 1.5200, both a strong and significant levels. The ability of this pair to close above the 200-SMA on the daily chart would bring a more bullish outlook for the pair where the 1.5500 and 1.5540 provide clear targets for any upside momentum. If we drop down to the 4-hour chart, the 50 and the 200-SMAs are ready to provide a significant resistance to the price action in case it attempts to break above there.
[B]USD/JPY on a correction[/B]
Even though the [B]USD/JPY[/B] pair opened higher the day by +0.40%, it’s down for the week -0.80% as well as for the month -1.29%. Taking a look at the daily chart, the pair has been in a long-term uptrend for more than a two years, however the recent developments in Greece and China showed some signs of weakens with traders, technically, expecting some kind of correction and thus we have seen the pair falling for a fifth consecutive week, recording more than 0.8% the previous and 0.83% the current week. It is a very significant development that the pair is currently finding strong support from the 200-SMA on the daily chart slightly above the psychological level of 120.00. On the topside will see buyers above the 122.80 where the 50-SMA on the daily chart will try to prevent the bulls for moving further up.
[B]Gold pauses its rally[/B]
The rally in the [B]precious metal[/B] has been stopped in its tracks, mostly due to the expectation of further dollar strength but also to a perception that the gains of the past few days were not much more than an oversold bounce. Even though the precious metal is trading higher for a third day in a row is still under pressure as a daily close below the $1,174 will mark the third negative week in a row, which could be a significant point for gold. Certainly the decisive rebound from the rising trend line which started back in November 2014 signalled that the bears were losing control, and a close back above the $1,162 would signal further upside towards the all-important $1,200 level.
[B]Economic Indicators[/B]
Today, the Norwegian Inflation Rate for June will be eyed as Norwegian Krone was rising against the majors during the week ahead of the release. In [B]Canada[/B], the [B]Unemployment Rate[/B] and the [B]Employment Change[/B] will attract traders’ attention, as usually these indicators are released with NFP report and lose their glory. In the [B]US[/B], the Wholesale Inventories for May and[B] Monthly Budget Statement[/B] for June will be posted. A while later, the Chair of Fed Board Governors [B]Janet Yellen[/B] will give a [B]speech[/B].