09, August 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

The Asian region was again frightened that the U.S. could close the monthly program for the bonds purchase in a matter of weeks. These fears have forced Tokyo shares down for -4%, the largest falling for the month, pushing the yen higher. Lack of clarity narrowing beat the dollar, particularly against the yen.

A sharp growth of the yen also contributed to the falling of Asian stock markets as exporters are expected to suffer greatly.

Many traders hoped that the Fed would reduce its program if it gets strong economic data in the next six weeks.

Cable temporarily fell to 1.5200 in the original pigeon instructions and comments. The Bank of England said it would not raise interest rates as long as the unemployment rate drops to 7% (from +7.8%). Currently, it predicts that the UK unemployment rate will remain above that threshold at least until the 3rd quarter of 2016. The head of the Central Bank fully recognizes that no other index cannot not characterize the state of the economy better.

The single European currency has been reluctant to respond to economic surprises - German industrial production came out +2.4% m/m from 0.8%.

Manufacturing industry in Germany seems to be gaining power. In general, the market is betting on the EUR at current levels, referring to a fundamentally unchanging tone of the recent decision of the European Central Bank.