[B]Fundamental Analysis for May 1, 2012[/B]
Standing in line with last month’s announcement the Reserve Bank of Australia cut its interest rates from 4 to 3.75% early this morning resulting in significant downward movement of the local currency – the Australian dollar.
The slowdown in the growth of China’s economy, Australia’s main market including the low inflation made the BRA take a step that investors have been waiting for a long time, given that the local reference rate was and still is the highest of the major central banks.
Moreover the yen continues its upward trend on all fronts and reached a new high since February 22 during the last hours against the dollar. The targets for the downward movement which naturally favor the JPY are located in the 79.10 area corresponding to 61.8% of the rally 76.01 / 84.14.
Meanwhile, the Canadian dollar appears to stop its fall after the publication of an unfavorable data on GDP for the first quarter. Against all odds the measurement showed a decrease of 0.2% cancelling the loonie highs of last September reached in the recent days. The Canadian currency is expected to continue its downward trend in coming days and even break the deadlock against the dollar which is a pivots point for several weeks.
Faced with these scenarios the euro is about to reach 1.32, taking into account also that the majority of European financial markets are closed due to the Labor Day. Particularly striking is the strength of the single currency in these times. The debt crisis in several countries led by Spain whose problem of unemployment and recession has no output in the short term impacts the exchange rate of the euro. Considering all this there is a question: should we expect the announcement on interest rate cuts? On Thursday the ECB President, Mario Draghi, announced the monetary policy of the state.
In this regard, consider that recent interest rate movements were in defense of southern Europe affected by crisis that has recently reached its peak. But Germany, the Europe’s engine continues to reap near-record economic figures and in fight the inflation in this country. The ECB for a second time in a row raised the interest rate. In two days we will know the further information. The country continues drawing attention to the currency affected on all fronts.
The pound sterling is more relieved although in the last hour has shown signs of weakness against the dollar by breaking the uptrend line crossing GBP / USD. Anyway, the British is not likely to be affected and could recover quickly from the movement this morning caused mainly by the UK manufacturing PMI.
As to the U.S. session on Tuesday is expected ISM manufacturing at 10:00 Eastern which is the most important news of the day.
;);)