Won has given up so of recent impressive gains (ca. 20% to the dollar), and the stock market retreated by more than 2%. The influence has been felt also by the USDJPY, retreating from 93,85 (close to support at 93,50) to 95,18, where it faced a short-term resistance. However, one needs to notice that the USDJPY was already sold off and needed some correction anyway. Other than that, the impact of these tests should be limited, even though stock markets may be looking for an excuse for a deeper correction.
On top of the news, the week started from European most important economic indicator – Germany’s Ifo business sentiment index. The index rose for a second consecutive month (from 83,7 to 84,2 points), although by not as much as markets expected. This may cool a bullish sentiment on stock markets and cause some hesitance on otherwise bullish EURUSD. The pair broke out from the medium term parallel channel last week and supported by the anti-dollar sentiment (caused by mounting concerns over the US’s long term fiscal stability) might climb at least to 1,4180. At that level it faces a significant resistance caused by 50% retracement from July-October 2008 along with 76,4% from December 2008 – March 2009 and reinforced with a range of March’s rising wave. In a bullish scenario a longer-term target will be 1,47, while a clear support is provided by the broken 1,3735.
If North Koreans aimed at shocking financial markets they chose the wrong time – Britons and Americans are enjoying a Banking Holiday on Monday so the two most important fx centers are out. Later in the week investors face a bunch of second tier US data including consumer sentiment (Conference Board on Tuesday, University of Michigan on Friday), home sales (used on Wednesday, new on Thursday) and durable orders (Thursday). On Friday, the Japanese monthly data are released, including industrial output, PMI, inflation, unemployment and households spending.
Although this week’s releases are not likely to spur major market reactions, one needs to notice that stock markets are looking for a direction. The US’s S&P500 has found a support on around 875 points so far and Germany’s DAX30 is still in a bullish channel although with a bearish divergence coming from the RSI. The dice is about to point either at a deeper correction or at new tests of January’s peaks which are yet to be conquered.
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Przemysław Kwiecień  |
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