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Good day forex trading koalas!
This was a very busy week for me, sick, crazy work, crazy schedule and more!!
In the last review, we noted that the G20 meetings concluded with no concrete conclusions. Although the countries agreed on the need to tighten up the financial processes it is probably tough to get total agreement. A report mentioned that states in the US are facing a budget crisis. Spending needs to be cut back and revenues increased. This is a crisis with a potential to explode.
A general strike in Greece remembered us that the crisis is Euro is not over yet. Over 9000 protesters marched and state services were disrupted. Hence risk aversion was on after US printed weak economic data too. Towards the end of the week, the sentiments changed as overwhelming US negative data left investors with little choice but to shift their funds. The Euro probably benefited from this.
Looking at the EUR/USD Daily chart above, the sentiments were in favor of the Euro.
In the beginning of the week, the US holiday brought about low trading volume. Not surprisingly, while the retail sales of the Euro Zone printed good data, little was moved. Nowadays, the market is probably more concerned with who is worst off rather than who is the shining star. ( There is not many stars around these days ! )
The US ISM Non Manufacturing PMI came out worst than expected. The US dollar took the blunt of it. Investors are getting worried about the US economy as the housing tax credit ends and the employment market continues to remain shaky. A report stated that investors were worried that the stress test of the European banks may highlight more risk without having a good fall back plan. This is probably preventing the Euro from soaring too.
Towards the end of the week, we saw the Euro falling due to the return of apparent US economy recovery. Better than expected unemployment claims brought back renewed optimism. The S&P 500 gained.
Having said so, remember that i warned that these days, trading decisions seem to be guided with an emotional intent rather than a fundamental one. Therefore it is a concern that how soon will the sentiments flip again! The US government faces mounting debts while the Euro Zone continues to struggle against domestic opposition to it’s cost cutting plans and the threat of the crisis spreading.
We have a number of important data releases next week including the German ZEW Economic Sentiment and US retail sales. You can find the list of the other various economic releases in the Economic Calender below.
Should 1.26 fails, we may see 1.24 again.
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