Weekly Outlook – 2nd July 2012

July 2, 2012

General Commentary

Last week’s currency trading review

The EUR/USD ended the week on a high surging 300 pips as the EU summit came to a conclusion with the announcement that the ESM bailout funds will be used to lend to troubled European Banks and to buy Government Bonds. These measures should stem the Spanish banking crisis fires that had threatened to bring down the European Union. EUR/USD finished just under 1.2700 the major resistance point.

The USD/JPY was lifted by the stronger EUR/JPY and other Yen crosses back to Y80 but this proved too much for the safe haven with resistance holding for now. The outlook is mixed with both the USD and YEN sharing safe haven demand so if we really both should be sold and it will be a case of which currency is the safe haven of choice. US monetary policy is key and this week’s NonFarm Payroll will be key to forecasting if the FED will do more to help the US economy.

The AUD/USD surged back into favor up to 1.0240 nears the previous 3 months range bottom and threatening to break higher as investor appetite came back to life. The AUD/JPY enjoy gains above Y81 and is well position now if the Euro Crisis wanes to continue to rally. Chinese data has become important lately and the markets maybe concerned by the continued fall in Manufacturing PMI recently down under 50 in the Private HSBC reading.

Currency Movement last week

EUR/USD was up +0.70% closing at 1.2653, after opening the week at 1.2565.

USD/JPY was down -0.71% closing at 79.79, after opening at 80.42.

GBP/USD was up +0.75% closing at 1.5704 after opening at 1.5586.

AUD/USD was up +1.76% closing at 1.0240 after opening at 1.0060.

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