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Currency market review (weekly) after 10th February, 2012.


Fitch remarks about default of Greece made EURO slide in early days of the week. But in the last day it was just the uncertainties over vote, which caused it to drop. I think lot of short positions has been created into the market. So if something better comes from vote over austerity measures, I will be looking on those short positions after Tuesday when Euro zone finance ministers are expected to review the deal.

Currencies
10th Feb, 2012
2/03/2011-2/10/2012 (%)
1/27/2011-2/03/2012 (%)




USD
79.004
0.1
0.03
EURO/USD
1.319
0.23
-0.45
AUD/USD
1.067
-0.93
1.03
USD/JPY
77.7
1.46
-0.19
USD/RUPEE
49.64
1.39
-1.37
Swiss FRANC
0.91
-1.09
0.11
S.African RAND
7.743
3.05
-3.06
Brazilian REAL
1.727
0.69
-1.61
Mexican PESO
12.796
1.19
-1.98

In spite of decline in retail spending, Reserve Bank of Australia did not lower the rate. But later in the week AUD fell as RBA lowered its growth and inflation forecast for 2012.  So after 7 consecutive weeks AUD drops. Story is also similar for Asian currencies which dropped from 5 consecutive weekly gains, without Greece problem there were some bad macro news from some of these Asian nations.



Currency market forecast for coming week.

Still EURO is not getting enough resources to move. In the last day it reacted due to uncertainties over Greece problems. In coming days it is expected to move according with the outcomes from Greece. So if it breaks 1.34 then it has a chance to test up to 1.40 level. In the down side it may again test 1.27 level and that 1.15 level is still open for it.
AUD dropped but it close above its initial support of 1.04 level. If sentiment becomes negative like this week then it can break 1.04 and test 1.02. On the other hand in spite of reacting on a bullish pattern it can go more in the upside, but for that it has to break 1.08 level convincingly.
USD was getting support at 78 level. I am still holding my last week view that if this reversal goes more then it may make a pattern from where it can drop more in coming days. I do not know how long it will go in coming days but unless it goes above 81.50, I will maintain that view. Now if it reacts on that pattern then USD’s next important level is 75.
Though there is confusion about Japanese finance minister’s remark about specific level but I still think that YEN can break 78 level. Things will be different if it drops below 76, but there market is expecting that cushion of 75.6 level.
Looks like that Brazilian REAL made a base here at 1.72. That trigger point of 1.673 is still open for it. But looking at the last days figure I think that it may test higher levels in coming days, therefore it will get resistance at 1.78. During last few months I was talking about that 1.90 level and moves more in the upside, looking at recent developments I think it is too difficult for now but option is still open.
Reversal was due for South African RAND, thought I am still expecting it to test around 7.9–8.0 level. In the downside if it breaks 7.4 level then it can go below 7.00.


[Rise and drop in currency (under heading currency forecast for coming week)  means rise & drop in chart figure, not currency’s rise & drop though sometimes it is same in meaning.]

NOTE :  Please see the disclaimer of this blog.

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