Daily FX Report

Good morning from Hamburg, and welcome to Varengold Daily FX Report. Yesterday we attended a last minute win of Turkey's national team against Switzerland in the European Football Championship. Markets are similar to sports. Anything can happen in just minutes.

Markets review

Oil prices are not stopping to increase. Analysts are looking forward to the meeting of oil producers and consumers in Saudi Arabia within the next few days. However, Rafael Ramirez, Venezuela's Oil minister, said that the prices cannot be changed, as they are mainly driven by speculation and the falling dollar. Indeed, the USD has been dropping since Wednesday.

EUR/USD suddenly stopped its best two-day advance since 2005, as interest rates in the Euro zone are expected to go up in July. Central bank officials around the world started discussions of inflation over the past few days, with the Federal Reserve saying it will fight inflation in spite of concerns about a weak economy. Analysts say the combination of rising inflation and a slowing economy is making it difficult for investors to value the US interest rate outlook. Comments made by officials indicate that trading could become volatile over the next few days. However, the EUR/USD fell this morning to a low of 1.5504. This loss is partially due to the wide boost made by the USD against the AUD, and the expectation of Irish vote on the EU referendum. A 'no' vote in Ireland rejecting EU Constitution could potentially incite people to sell EUR.

The most important information came from Australia with the job reports. Employment fell by 19,700 in May, the first decrease since October 2006. Markets analysts are giving high importance to this unexpected information and the USD/AUD, which was already down at 0.9465, dropped to a low of 0.9380 after this data was released. It is currently trading at 0.9400.

Technical analysis

AUD/JPY

The AUD/JPY is still in its upward trend channel. The cross through the 100.51 level gave the currency a further long push as the pair had resisted crossing the level twice since the end of 2007. This break might indicate an increasing trend towards the next top at 107.82.

GBP/AUD

The downward trend in the GBP/AUD, which has existed since March, has now broken through the upper side of the trend channel. However, a long-term view of the chart depicts it more as a corrector than a real turn in the trend. Looking at the old corrector at the end of February, the rate could grow up further.

Pivot Points - Daily FX Support and Resistance Levels

Daily Calendar & Key FX Events

Varengold Bank

IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT

This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.