Another week is coming to an end, with dollar still the strongest currency across the board, as the fear and uncertainty of economic future is making market participants turn to the greenback for safer option. The weakness of the yen and the Swiss franc indicates that for now traders have made the choice…And that choice is the dollar! Stocks experienced mixed trading, with New York closing negative yesterday and Asia gaining more than 100 points. However, come today and already Europe is trading down and it is looking that New York may follow on the same path.
The EUR/USD has managed to break important support of 1.27 and has moved lower towards 1.26 as we have said in previous days. For now, important level to hold is 1.26 ahead of 1.2580, however a clear break of the latter levels may open the way for further losses towards 1.2530. Today as it is the last trading day of the week and month, traders may want to readjust their positions and therefore we may see some choppy action all across the board towards the closing. As long as 1.2780 holds for now, further weakness is very likely in the pair.
Today the economic calendar has some important economic releases, with CPI out of Euro zone and also GDP out of US a bit later on. The last one especially will be monitored closely by the markets and it is expected to be disappointing once again. The fact that all data this week out of US was negative, show us the level of damage that exists in the US economy and all the packages in the world that Obama’s administration is suggesting cannot take away the fact that the economy is sinking and we are merely observers! Yesterday we had jobless claims and the number was above 650.000 which just saws how high the unemployment is and will be even higher and also it indicates that next nonfarm payroll number may be even worse!
The pound is also trading on the downside and after yesterday’s speech by King, it became clear to the investors that the UK economy is nowhere near ready for recovery and further deterioration may arise soon. The bank basically said that the deficit has grown immensely and also that it may be ready to start buying government bonds to support the whole system. Traders took that as desperate times needs desperate measures and sold off the pound once again. Many analysts predict that the bank will cut once again in 5th of March and there is further speculation that the zero rate policy is just around the corner!
Let’s see how the markets behave today, last trading day of the month and if we see choppy action after London closing and just before New York closing! The month of February has been so far dismal for the markets and it looks as the New Year has started on a negative note and continues to do so! Let’s hope for a better March regarding the markets sentiment; however for us traders the way to go is to follow the trend…And as the trend is down for now we may as well go with it…
Historical Economic Charts