A new chapter is about to be written

The week ahead is expected to be exciting as the major event that will run the markets is the US presidential elections. The first data from the elections will be released (09:00 GMT) and inevitably will impact to the financial markets not only in the US, but in Europe and Asia as well. 

Theoretically and in general terms in case of Hillary Clinton win this would bring more predictability in both foreign and domestic policy in the United States. Clinton’s campaign  was largely predicting a continuation of Obama’s economic policy with some slight additions. This will increase US dollar’s strength against the yen, Swiss franc and the euro.

Donald Trump's intentions in foreign policy and the economy so far are not very clear. Therefore in case of win, that suggests that the US dollar will fall against other major currencies.

Who will be the new US president is of great importance for the energy sector in the US. Hillary Clinton’s victory would lead to shrinking of oil production, since her vision is that we must give priority to renewable energy sources. Donald Trump favors the traditional sources of energy and if he becomes president, the expected oil production in the United States will be maintained or increased - which will affect the price of the "black gold".

EUR/USD retreats after US Presidential debate

The US dollar was seen slightly elevated this morning, following the US Presidential debate last night. But the EUR/USD pair is still under pressure as almost lost all gained during the previous session. As clearly seen on the 4-hour chart, the pair is staying above the 50-day, 100-day and 200-day moving averages and cannot find enough strength to set direction. 

First support is located at 1.1200 and if the drop extends to eventual daily close below, this could trigger further bearish pressure for testing next support at 1.1125. Looking upwards, the EUR/USD pair will definitely need to strengthen in order to overcome the resistance located at 1.1275. Only bulls will be able to bring back their power and set next target to the 1.1350.

EUR/USD is treading water ahead of Fed’s meeting

EUR/USD performed quite hesitantly yesterday. The pair tried to push higher, but fails to break through 1.1200 for now. Seems that bears are likely to test 1.1125. Immediate resistance remains around 1.1200 and if the pair succeed to conquer it, this could lead to further bullish pressure for testing 1.1250 / 75. Buy key resistance remains 1.1350. On the downside, a clear break and daily close below 1.1125 will raise any bearish pressure for testing 1.1050. The main technical outlook still remains neutral. Anyway macro agenda for the week offers plenteous news that might set more clear direction for EUR/USD pair.

US dollar fade out lines

The US dollar is going deeper down,
along with the poor GDP noticing,
the dovish Fed’s spelldown
and against the plethora of G20 under performing.

The clock is ticking some couple of tocks
and markets will re-estimate next Fed’s knocks.

Chipping around, kicked by EUR’s rally towards 1.12 mark
where EUR/USD pair more than a month couldn’t park.
RBA failed to weaken the Australian dollar
and the yen was seen in a new fresh 3-week spur.

These are the days – it never rains but it pours.
Circumstances laugh under the pressure the USD is cracking.
US dollar index as well regrettably sours
and in 3 months the biggest fall is posting.

Over the greenback the shadow grows, but shall it leave broken pieces to this priceless ballet?

„In the coming months”

The long awaited speech of the Fed Chair Janet Yellen boosted the expectations for raising the benchmark interest rate in the next months.

Surely this will not happen in June, but she pointed out that the US central bank definitely will lift the rates. Yet the exact time frame is not put.

Yellen pointed out some „sizeable” instabilities encicled the US economy. The NFP data encouraged the thoughts of the central bankers. Also we must face the global development and in particular the UK referendum vote. So the future of the Fed’s monetary policy is tightly related to solvation of these fluctuations.

Following Yellen’s speech US dollar remained stuck around 3-week low. EUR/USD fell 0.08% and was trading lower. The intraday low was reached at 1.325.

USD/CAD dropped with 0.60% and was trading 1.2854. The daily low was hit at 1.2831, which pinned  a 3-week high.

Wall Street closed in green, as mostly profited the financial and energy sector.

S&P 500 closed 0.49% up at 2,109, DJIA finished 0.63% higher at 17,919 and Nasdaq rose with 0.53% to 4,968.

NFP weakened the US dollar

The NFP wave made the US dollar suffer with significant losses as the released data for May disappointed market participants. The results showed only 38,000 jobs created amid the expectations of 160,000 and the weak data dipped the US dollar 1.6% against the major currencies.
Following this the likelihood of an increase in interest rates by Fed next week slightly thinned, which reflected to the dollar. In view of the forthcoming referendum in Britain, central bankers may refrain from actions this month. Expectations for rates hike in July also decreased, but probably Janet Yellen will draw attention for possibly tightening the monetary policy later today in Philadelphia.
On Friday the dollar dipped against the yen to 106.50 as a result of negative data, but today started the week with declines again to return around the levels at 107 during the early trading. The pair nears the crucial level at 105 and this awakes the fluctuation about intervention by the Tokyo authorities in the foreign exchange market.
The greenback lost ground against the single currency. The euro climbed to 1.1373 after last week had depreciated to 1.1097. Despite the losses for the greenback due to weak data, overall  US economy remains framed and a rates hike is more likely to be postponed this month as now the focus is more on vote in UK rather than the employment report.
The British pound fell 0.8% against the US dollar this morning, because it became clear that the preliminary surveys showed Leave side ahead. Sterling dipped to 1.4351 dollars.

US durables weaker than expected, Euro pushed higher

New orders for US durable goods in March increased by 0.8% to $230.7 billion amid the expectations for an increase of 1.9%, following the February decrease of 3.1%.

Shipments and unfilled orders are down with respectively 0.5% and 0.1%, inventories remain unchanged.

The big knock of the increase with 48.4% are the defense new orders for capital goods.

Encouraged by the weak numbers, the Euro reacted with positive mood and climbed more than 0.50% against the USD to trade at 1.1330. Once overtaking this level, we may expect further increase to the stronger resistance level at 1.1340. 

EUR/USD

EUR/USD was trading today below the robust resistance level at 1.13 and the expected upward movement turned to be tight.

During the early US session the pair was trading around 1.125 level where the US dollar marked daily lows.

Earlier today the German Ifo surveys frustrated the markets, but nonetheless the Euro stayed elevated.

Immediate support downwards is seen at 1.1237 /38% Fibonacci retracement level/ with staying exposed for breaking 1.1215 /24% Fibonacci etracement level/.

The macroeconomic agenda for tomorrow will present the US durable goods orders for March and we may expect further support over the pair. 

Gingerly trading ahead of ECB meeting

In early trading today the US dollar and the Japanese yen recorded a slight rise against other major currencies following the drop in oil prices and the  Asian stock markets.

The subsequent stabilization of stock markets in Europe turned back a part of yesterday's risk appetite in currency markets, parrying the appreciation of both major currencies.

The euro consolidated between 1.1350 and 1.1388 US dollars, as investors' attention is focused on tomorrow's regular meeting of ECB. Although it is not expected the central bank to make changes in its stimulating monetary and interest rate policy, Mario Draghi’s press conference is widely awaited with interest, because he will most likely confirm that the central bank stands ready to take further measures if necessary.

The decline in Asian markets and negative start on European stock markets initially led to a fall of the US dollar to 108.77 yen and of the euro to 123.54 yen before the subsequent stabilization of the capital markets in Europe returned USD and EUR to respectively 109,37 and 124,33 levels.

EUR/USD in weekly perspective

During the past days the euro crossed the borderline, failing to keep gains and the positive sentiment disappeared. EUR/USD stepped back from the six month highs and in the near future it seems that bears are coming back. 

The cradle of macro news in Europe will be rocked on Tuesday with the euro zone's current account for February and the ZEW report for April.The figure that might cause much stronger volatility is Mario Draghi, who will speak on Thursday’s ECB meeting.  PMIs for April will be presented on Friday.

US macroeconomic agenda has not much to show next week. On Monday evening NY Fed president will speak about trans-Atlantic divergence. Housing starts and building permits for March data will be due on Tuesday. On Thursday will be reported data on jobless claims and Philadelphia  Fed manufacturing and major indicators. I guess not enough significance to turn on the US dollar.

Within the past week the US dollar showed up with a mighty vision as the pair stirred out from the  consolidation zone located between 1.1330 and 1.1440. 

Slide and stumble

In the last day of March USD fell to a five-month low against the euro and is about to mark the most strong losses against other major currencies on a quarterly basis in five years. The greenback remains under pressure for the third consecutive day of trading after Yellen’s cautious message.

Meanwhile the dollar index decreased by 0.2% to a fresh five-month low at 94.555 points and is on track to record the biggest monthly decline since April 2015 and the most solid quarterly depreciation by nearly 4.3% from the first quarter of 2011 onwards.

The overall weakness of the US dollar pushed the euro towards five-month high at 1.1398. The single currency found some support from the rising core inflation in EU and mixed CPI numbers. A potential more stable break above 1.1400 level may deepen the upward movement of the euro towards 1.1460/1.1500 area. 

Today the greenback remains under pressure against the yen at 112.00 and is about to end with quarterly losses of nearly 7%.

Falling

The US dollar depreciated sharply against other major currencies after Fed has indicated more restrained than initial estimates tightening of US interest rates this year. After yesterday's meeting  Federal Reserve presented new forecasts of central bankers, according to which the US base rate will probably be increased only twice by the end of 2016 against the previous forecast in December for an expected fourfold lifting of the interest rates.

This resulted in aggressive sales of "greenback" as only within the trading today the US dollar index fell about 1.5 percent to its lowest level since October 2015.

Since yesterday, the euro rose nearly 3 cents to 5-week high of $ 1.1342 with a view to its important 4-month high of $ 1.1376 nailed on 11 February, while the British pound reached a new 4-week high of $ 1.4501.

Meanwhile, the US currency fell nearly 2% to a 17-month low at 110.67 yen (the lowest level since November 2014) before it bounced back to 112.00 level, after rumors that the Bank of Japan has conducted a disguised intervention in the currency market through several local banks intending to restrict the appreciation of the national currency. This seems to suggest that the area around 111.00  is perhaps the strongest level of the Japanese currency, which can not be tolerated from BoJ.

Falling of US currency is a fact despite today’s series of stronger US economic data. 

But is this a shaft of light that shows the way of US economy’s recovery? 

Wall Street ahead of the FOMC meeting

Trading on Wall Street began furtively on Wednesday as investors prepare for the statement of the US Federal Reserve, which will be published at 14:00 local time.

The CBOE Volatility (VIX), which is considered as a measure of fear in the markets for a short fell to 15.56 points, the lowest level since December 24.

In the broader index S&P 500 best represent the health and energy sectors, but consumer staples leading six sectors lower. With the appreciation of Apple’ shares, Nasdaq rises.

For the growth of the index of blue-chip Dow Jones Industrial Average at most contributes Goldman Sachs.

US light crude oil WTI is rising by 3.27% to $ 37.53 a barrel, while the European benchmark gained 3.10% and traded in the early hours at $ 39.94 a barrel.

Gold is rising by 0.14% to $ 1 232.70 an ounce.

The dollar is rising by about 0.4 percent, the euro is near $ 1,106 and yen is 123.69 yen per dollar.

Shall we expect positive comments from the central bank about the state of the economy and intentions three times instead of four tightening of monetary policy in 2016? This will be known quite soon.

Markets rally after ECB meeting

Investors' attention on Thursday was focused on the meeting of the European Central Bank, which would make clear what will be the monetary policy of the Bank in the coming months. The institution reduced by 10 basis points to minus 0.4 interest rates on deposits, a decision that coincided with market expectations. Moreover, the monthly volume of purchases by quantitative easing program was increased from 60 billion to 80 billion Euros. Another important decision that surprised the markets was the reduction of the basic interest rate from 0.05% to 0.00%.

Following the publication of the data the euro fell to 1.0820. During the press conference Mario Draghi said that a further reduction of interest rates on deposits "will not be necessary." This led to a a strong rise of the single currency, as EUR/USD climbed to 1.1217 - a movement of almost four figures.

The dollar index, showing the performance of the greenback fell 1.24 percent to 96.07 after the greenback retreated against most of the currencies included in the basket.

Greenback recorded a good performance against commodity currencies that were under pressure due to the fall in oil prices. The dollar managed to advance against the Canadian dollar by 0.6 percent. The Australian dollar retreated against the dollar by 0.3 percent to 0.7460. Only New Zealand dollar performed well after it managed to rise against the US money by 0.4%.

Mario Draghi’s speech overwhelmed the markets

The euro erased its initial losses after European Central Bank (ECB) President Mario Draghi hinted that it is not expected a further reduction of key interest rates in the eurozone.

Surprisingly the massive new stimulus measures taken by the European Central Bank at today's meeting led for a short time to a drop in the euro to 5-week lows at 1.0822 dollars and 0.7652 pounds. The single currency managed to hit a weekly low at 1.0891 swiss franks and dropped to hourly day low at 123.65 Japanese yen.

But the following  comments by ECB governor Mario Draghi that he does not expect a further reduction in key interest rates led to a sharp rebound of the single currency to a two-week high of 1.1115 dollars. Meanwhile, the euro rose to a one week high of 0.7797 pounds to three-week high of 126.24 Japanese yen.

The initial euphoria of the European stock markets caused by today's decision of the ECB to undertake a series of aggressive stimulus measures is fading away. It looks like investors began to realize that today's fall in deposit interest rates of ECB to -0.4% is a "double-edged sword," especially with regard to commercial banks and their profits that form the largest part of the ongoing credit policies.

After an initial rise in the main European stock indices by between 2.5% and 3.0% at the end of trading today they wiped out a large part of their profits. Now the common European Stoxx Europe 600 index rose by a modest 0.83 percent, Germany's DAX rose 1.37%, while the French index CAC40 - by 1.49%. Passing the initial euphoria is due largely to the sharp appreciation of the euro, which is potentially negative for export-oriented companies in the eurozone.

EUR is rising

The euro rose sharply after the Greek Parliament approved next phase in bailout reforms required by creditors.

The single currency rose by 0.71% to 1.1007 dollars,  passing  over 1.1 EUR / USD for the first time in weeks. EUR also rose against the pound, the yen and the Swiss franc.

This morning the Greek Parliament approved the second package of measures, fulfilling the last condition of creditors to start negotiations for a third bailout package for the country. The draft law affects the operation of banks, property of debtors and  the judicial sector.

The new approach towards Greece is that first country accepts the reforms and then gets the money and this seems to enjoy the approval of investors.

However, the increase of the euro will be for a short. The risk created by the Greek crisis is rather speculative. For the foreign exchange markets interest spreads are of significant importance. Currently the interest rates in the US and the euro zone are on zero levels. However, this should change this year, as there are strong indications that the Fed is ready to start tightening its monetary policy in September.