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Week ended 10rd June, 2011 – Currencies this week .

EURO is looking for some better news from problematic countries especially from Greece. After ECB’s president signaled that he may back Greek debt rollover, EURO strengthened to one month high against the dollar. Expectation was too high about rate hike in ECB’s meeting, but many were disappointed after Trichet signaled a slowing pace of rate hike, and as a result  EURO fell. Now this drop in EURO was acting as a cause of rise in USD. This week USD rose from it low point of around 73.5 level.

Australian central bank’s decision of not to increase rate effected AUD, as it fell on that news. On Thursday due to bad full time Job report it fell more. So in this moment after that last week’s report about contraction of Australian economy by 1.2% in the first quarter of 2011 and now due to this bad full time job report, I do not think authority will even consider about rate hike in coming days. Since there is less expectation of rate hike now, I think the attractiveness of AUD will reduce a bit. Now things that to be look in, is how export of mining materials contribute to AUD’s movement.
Japanese YEN rose to one month high against the dollar in Monday, Japan’s finance minister said some strong word against the speculators for this. Some currencies form Asia like Chinese YUAN and Indonesian RUPIAH were little changed. Some other currency like south Korean WON, Thailand’s  BAHT and Malaysia’s RINGGIT fell this week.

Coming week

AUD is still moving in that 1.05 to 1.07 level but this week it fell a little bit due to bad job report and less expectations of rate hike near future. It is just showing side based movement and do not reflect any directional move. But due to bad economic reports, in coming days it can face some correction.

Last week I suspected that Euro may test it’s  1.48 level but it did not go so far and later period of the week it in fact came down far from that level. Many were expecting rate hike but ECB had different things to say. In the down side 1.42 is the immediate support and if EURO breaks it then it will be moving towards 1.40 level. Chart pattern looks to me not much bearish, may be in coming days it will be clear. In upside 1.48 is still good resistance.
Last day I told about testing 73 level for USD but it bounce back from 73.5 level. Last day’s volume was very large. Charts says positive for this type of move with volume but fundamentals do not permit that.

Anyway it will be testing 75 level in the upside and if it breaks it then next resistance is in 76 level. In the down side 73 support level still exists. Last day I was talking about lower highs and lower lows, now it is too early to say that this pattern is over now. I want to see more movements to negate that pattern. What I think that in last day, movement was based on some dissatisfaction due to no rate hike by ECB. This type of thing can change at anytime.
I was suspecting in last day that Brazilian REAL will rebound from 1.56 level and this week it showed some movement in the last day of the week.

But for any turn around it needs to stay there. What I think if things improve it may retest 1.63 level. Brazilian central banks bought USD in last day that may help REAL’s price.
Japanese YEN find some support at 80 level and though it closes below that level but it also bounce back from that low level. If  I follow the trend then it looks to me that it may again move for some higher levels may be around 81 (Week ended 10rd June, 2011 – Japanese YEN this week .).
It looks like that Swiss FRANC got some support around 0.835 level (Week ended 10rd June, 2011 – Swiss FRANC this week .), this week Swiss FRANC showed some side based movements . South African RAND has not broken that 6.5 support level in fact it moves up. Last day I said if it breaks 6.5 level then it may be dropping more. Let see in coming days how it goes. Like REAL and other Emerging currencies  Mexican PESO also rose in higher levels.
I fell little strange about USD’s hike in last day. After trouble in Euro-area, I thought investments will go more in Swiss FRANC but there was not much movements in Swiss FRANC. One explanation can be that investors are not only staying out of EURO but they may be selling AUD now, and they are probably taking shelter under USD for short-term.

NOTE :  Please see the disclaimer below this blog. 

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