Daily FX Report
'Sell in May and go away' has long been a popular way to explain why dipping volumes may be the reason for a slide in stock markets during the summer. A Goldman analyst wrote in a note that most of the people would begin to suffer from sadness as the day will start to decrease markedly from late July. If enough people are affected, this phenomenon has the potential to depress equity return. What kind of luck a depressive FX dealer could switch from long to short?
Markets review
The USD could confirm its performance from the last week on Tuesday. The US Dollarindex finally pushed above the 90 day moving average at 73,44 for the first time since February, but it failed to close above it. As there is a high negative correlation between US Dollar Index and the EUR/USD, the EUR touched its low of 1,5410 yesterday after a hard landing of about -1,22%. The CAD was headed for its lowest close at 1,0121 in over a month on Tuesday after the Federal Reserve Bank's comments which were suggesting that further interest rate cuts may not be needed this year.
In Australia the GDP expands 0,6% in Q1 so the annual growth rose up to 3,6% above the expected 2,8%. The Consumption rose 0,6% while capital spending roses 1,6%. The AUD surged on the data up to 0,9550 against the USD and against the JPY it gains 0,5% to 100,45. Japanese want to take profits so the Japanese retail FX traders trimmed cross/yen long positions on the Tokyo Financial Exchange. Therefore, the cross/yen fall from 213,142 to 212,461. This is the biggest 1 day purchase since mid 2006.
Technical analysis
EUR/CAD
At the beginning of May the EUR/CAD crossed the level at 1,5677 and trades afterwards in the horizontal trend channel with a support at 1,5284 and a resistance at 1,5677. The currency tried twice in a row to break through the resistance. There might be a third effort.
AUD/USD
The AUD/USD is still on the long-term up trend line. After several attempts the pair crossed the 0,9499 level in the middle of May. This movement gave a further long push. In the last trading days the currency trade closed near the new support level but didn't break through. This might be a sign for a continuation of the positive trend.
Pivot Points - Daily FX Support and Resistance Levels
Daily Calendar & Key FX Events
Varengold Bank
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