Forex Fundamental Overview
Bank of Japan announced on last Wednesday that they will actively participate in the market as part of their quantitative-easing efforts. The Japanese central bank will increase their asset-purchase program size by 10 Trillion Yen. As a result expect a negative effect on the Yen as net M3 money supply will grow. However, in the long run quantitative easing often leads to boosting economic activity. We expect all the JPY pairs including USD/JPY, GBP/JPY will be moving upwards as a result of this in coming days.
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In the American market S&P 500 Index gained 0.12% and reached to 1,461.05 last week. However, the housing market recovery in USA is still being driven by “pent-up demand. U.S. housing statistics were disappointing and didn’t come as good as expected. The U.S. Bureau of Census commented that applications for home mortgages actually went down in August 2012. On the other hand, according to U.S. Department of Labor jobless benefit claims fell less than the expected on September 15.It seemed that the labor market is facing more problems in the hiring side compared to layoffs. U.K. retail sales were slow during August compared to the expectation.
Economic conditions are equally gloomy across the pond in the United Kingdom. Markets are expecting that Central Bank of England will be bringing new stimulus plan to boost economic activity. So far GBP 375 billion (USD 610 billion) was raised. According to U.K. Office for National Statistics, retail sales was down -0.2% in August compared to positive 0.3% in July. The British consumer confidence is still very weak. Inflation is expected to grow and go over earning growth potential for next six months. Thus, retail sales may fall further in coming months.
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Interesting pairs of the Week
AUD/USD
It has formed a classic Fibonacci retracement pattern on the daily chart. The pair bounced from Fibonacci 38.2% from the previous down move. Based on most of the Technical indicators it is fair to say that it is set for further appreciation. Regardless, our Fibonacci analysis estimates that it has already demonstrated a further down move. Most indicators are likely to be overbought at this point. Based on the market condition it is expected that a strong down move may occur from the current market price.
EUR/JPY
Currently most Technical indicators are signifying its potential appreciation in coming weeks. The forecast is based on the fact that trader’s sentiment on the pair is long based on fundamental aspects of the market. It is to be noted that there are noteworthy resistance up to 102.5 and any appreciation will be choppy at best.
USD/CAD
It is currently residing at the monthly pivot point at 0.9769 after appreciating slightly over the week The pair is in general is in a down trend and the current move should be treated as a retracement. Since there was a very strong down push after it reached the SMA 20 which is halfway of the Bollinger Band, it should continue down the established down trend. To read more about cad / usd rates
This article was written by me, L.Adamski. I am a trader for the past 6 years. If you are a begginer you can start your way with http://www.forextradingbasics.co.uk/ to get the basic knowledge of Forex trading. You can also try your luck with a virtual stock market game
