27.11.201708:21 Forex Analysis & Reviews: Moment of Truth

EUR / USD, GBP / USD

The euro is growing at an undefined time against the entire market. The consequence of the global redistribution of positions could be the decline of the single European currency to 1600-1700 points. During the spring and summer of 2005 on a similar fundamental picture shows the FRS rates grew faster than the ECB, political crisis in Germany (the dissolution of the cabinet of Gerhard Schroder), the failure of attempts to introduce the European Constitution, strikes in France, and the divergence in the economic indices of the euro area with the United States. Thus, the US trade balance in March 2005 was -57.50 billion dollars, and gained -64.10 billion in December in the same year. While, the eurozone obtained 2.2 billion euros in March, and -3.9 billion in December which indicates compression in the euro area was stronger. Also, the dynamics of GDP growth in the US was higher.

On Friday, investors used a positive increase in the Ifo Business climate index sentiment in Germany for the month of November, showing an estimate from 116.8 to 117.5. At the same time, US Manufacturing PMI declined from 54.6 to 53.8 in November and Services PMI fell from 55.3 to 54.7. The euro added 82 points, and the pound rose by 27 points, while the Canadian dollar strengthened by three points, even with oil growth of 1.64 %.

Today, October sales of new homes in the United States are projected to decline by 6.3%, from 667 thousand to 625 thousand. No data is published from the euro area. The Euro data can still go higher, up to the range of 1.1970 / 90. But the second GDP estimate of the US for the third quarter presented on Wednesday the forecast at 3.3% vs. 3.0% in the 1st estimate. Further price reversal is anticipated.

On Tuesday, the results of the bank stress tests in the UK will be published and the Bank of England will be published. According to rumors (Independent), the results of the banks may get even worse against the previous tests of last year. As the main concerns are caused by RBS and Barclays. The credit data is expected to weaken on Wednesday and remains to be seen until the situation is already resolved.

According to the same Independent, the EU is trying to keep the UK in line with the unfavorable deal so that after March 2019, Britain will have it as soon as possible. Different versions of the solution for the issue on the Irish border are put forward by different sources. According to some data, this issue will not be resolved before the trading, while others can decide with the approval of the final amount of compensation which is currently 40 billion pounds.

As a result, we are expecting for a reversal on the British pound in the range of 1.3030 / 80. The initial target is the range of 1.3185-1.3225.

USD / JPY

The Japanese yen was able to add 32 points on Friday against the reluctance of the dollar to rise. This growth confirms the idea of investor's desire (and possibly the Central Bank) to keep the price above 111.00 to prevent another collapse of the price to 200-300 points. This morning, the price index for corporate services in October showed a slowdown in growth from 0.9% YoY to 0.8% YoY against the forecast of 0.9% YoY. The Chinese stock market started the week with a strong fall by China A50 at -1.67% and Shanghai Composite to -0.75%, pulling the entire APR. The reason for this was extensive rumors about market overvaluation due to the authorities' fault. Currently, the Nikkei 225 is down to 0.34%.

* The presented market analysis is informative and does not constitute a guide to the transaction.