29, October 2014

Fundamental analysis

 EUR/USD (a 4-hour chart)

The US dollar was under pressure - the dollar index basket (USDX) finished trading at around 85.49. Despite the mixed news the pair EUR / USD finished the trading day in the "green zone". The October release by the IFO Institute came out worse than traders had expected, at the level of 103.2, showing a minimum value since December 2012. According to the press release the German economy is experiencing serious difficulties because of the world geopolitical tensions. The report about the changes in M3 money supply has been showing an upward trend for 4 months in a row in the euro area which is a positive factor for inflation. The ECB loose monetary policy is beginning to give the first results, but to talk about the CPI growth is now too early. However, traders opened "longs" to the single European currency, based on downward correction development after the US Federal Reserve meeting.

The pair GBP/USD was in demand amid the profit-taking continuation on short positions and the UK positive macroeconomic statistics. According to the British industry confederation the October retail sales release is slightly better than market participants had expected that has been welcomed by traders amid the economic growth slowdown in the third quarter. However, it should be noted that the UK short and long term bond yields extension is a negative factor for the British currency that is now revalued.

Traders continued to take profits on long positions in the pair USD/JPY. A similar action was also observed on the world's leading stock exchanges. During the day the pair dollar/yen has moderately declined and during the quotation it reached the mark of 107.60. There was no Japan and the US important macroeconomic statistics publication and against this background investors regained namely technical factors.