Last week's overview, this week's key events

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Over the last week markets were more active that 5 days earlier, with the market volatility entering the turbulence zone for 27% of the time, versus 22% a week ago. However, volatility of all 11 major currency pairs was distributed more evenly than earlier this month. At the same time, the Aussie gained 1.17% on the back of Glenn Stevens' comments, while the second South Pacific currency, the Kiwi, posted the most significant drop that equalled 0.83%, as the RBNZ signalled it will take a pause in the coming months and will not raise the OCR further. The Kiwi extended its decline later, as business confidence slipped on higher rates and stronger exchange rate.

 While last week the AUD/USD currency pair was the most volatile (volatility index reached 4.8– more than double the maximum level reached by market volatility), this week it will be all about the most traded currency couple. During the first two days the EUR/USD pair will be driven by events from the U.S., with pending home sales and consumer confidence expected to provide mixed signals. A day later, Destatis will unveil German CPI for the month of July. The indicator is expected to deteriorate both on a monthly and yearly basis, meaning ECB action failed to boost consumer prices so far. Keeping in mind Germany accounts for the majority of overall economic activity in the 18-nation bloc, Thursday's Eurozone inflation data is also unlikely to surprise markets to the upside. It will be also worth mentioning that the shared currency is losing its link with the bond market, as the correlation between Euro's performance and the yield spreads of Spain, Italy and Portugal is already moving to zero. Dealers in the EUR/USD currency pair have expressed their concerns that the pair is influenced only by the events from the world's largest economy. That is why this week's main attention grabber will be GDP report from the Bureau of Economic Analysis, which will either bolster the case for the Fed to consider a rate hike sooner than expected either will raise concerns about economy's ability to meet its growth target. Currently the consensus forecast stands for a 3.1% growth in the second quarter, meaning the world's largest economy almost stalled in the first half of the year. GDP report will be the final set of data ahead of the FOMC meeting. Currently everything speaks in favour of EUR/USD weakening this week, with the potential target for short traders located at 1.3404/00, represented by weekly S2 and strong psychological level. At the same time, a move above weekly S1 at 1.3467 will put weekly pivot at 1.3554 on the map.
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Actual Topics

Mon, 28 Jul 2014 07:27:19 GMT

Forget about Word Cup euphoria

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Fri, 25 Jul 2014 06:59:09 GMT

Kiwi plunged as RBNZ signals pause

With a surprise for some analysts the RBNZ raised the official cash rate further, however, signalled a pause in interest rate hikes in order to assess the impact of monetary policy to date.

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