Currencies:
MARKET VIEW
Weekly changes: EURUSD +0.37%, GBPUSD +0.44%, USDJPY -0.51%, USDCAD -0.35%
The EURUSD had approached the 1.2245 level three times during a week but closed it at 1.21770 due to firm U.S.data. The first mentioned price zone has the potential of further rise, but the lack of interest in the U.S. dollar makes the scenario quite unlikely.
The GBPUSD pair rose above 1.4200 for the first time since February, early this week. The pair was boosted by a weak greenback and bets on a faster U.K. economic recovery. The positive retail sales data release made the pair exceed 1.42360 towards the end of the week. Due to the U.S. dollar's current status, the pair slightly slipped down without losing weekly gains.
The USDJPY pair continued to be safe between the 108.60 and 109.30 tight price corridor, without any clear direction. The price fluctuations were caused by the mixed Japanese statistics throughout the week. The movements started with the negative GDP data release, followed by improved imports and export figures, but shadowed by consumer prices at the end of the week.
KEY POINTS
The greenback fell this week on the back of speculation that the U.S. Federal Reserve will have to tighten its ultra-loose monetary policy sooner than anticipated. On the other hand, eurozone business growth accelerated at its fastest pace in over three years, but European Central Bank president Lagarde said an uncertain recovery still needed emergency support from the ECB. The following week will show the release of important American macroeconomic figures, and their positive output may help the greenback boost.
General weakness is likely to continue in the near term with the U.S. dollar but dissipate afterwards. On the one hand, the U.S. absolutely outperforms the eurozone and Japan. On the other, the Americans received vast amounts of money on hand over the past year. And these funds not only work in the economy as the jobs recover, but they also raise inflation and weaken the country's currency.
The British pound benefited for the third consecutive week against the U.S. dollar. The U.K. PMI data outperformed its expectations, as hotels and other previously closed customer services saw a jump in demands. The country's recovery is already priced into the sterling, but it's impossible yet to count its impact on GDP.
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