OVERVIEW

When there is a crisis in the global economy the multinational currency often collapses. The two main reasons for that are either debtors who can’t fulfill their obligations, or creditors who are concerned that they won’t get their money back. The first situation described is already taking place in EU and the second one might appear in the relationship with the US and China. But economic organization of the US remains unique. It manages in equal conditions with others to overcome the hard times quickly and get to the path of recovery while the same can be applied neither to the European economy nor to other countries. Even China with its unprecedented development pace still is far behind American stability level. Nowadays there are a lot of arguments whether the US Dollar will give in to the Chinese Yuan as a reserve currency or the latter will just be included into the basket of reserve currencies. There’s no secret that the global reserve currency is the one that constitutes the lion share of central banks’ assets. In a broader meaning this is a currency that is accepted as payment for goods and services worldwide. Recently during the past year the image of Euro has been shaken severely and ambitious aspirations to compete with the USA Dollar as a reserve currency remained pretensions. Moreover the Euro continues to lose its image and weight and analytics worldwide presume probable collapse of the EU in 2013 and the Euro along with it. The aforementioned facts make all the good news about the Euro relevant only in the short term. Greece is as close to the default and abandoning EU as never before. Quite likely that it’ll be followed by Portugal, Ireland, Spain and Italy. All these facts create quite nervous atmosphere around the Euro. The situation is extremely tense. 

CURRENCIES

EURUSD

Last week Euro was moving quite actively. In the beginning it attempted to appreciate against the US Dollar. The prices went up from 1.3025 to 1.3226. Thus an important resistance at 1.3230 was not endangered. Then the downward pressure resumed and eventually the Euro closed 1.3145. Technically the currency might continue falling to 1.2600. Results of weekly trades suggest such a scenario. Resistance is at 1.3570-90

USDJPY

The USA Dollar started to go down against the Yen from 76.76 to 76.01 where a new support emerged. Then the Dollar went up and got to 76.54. An upward trend has a high probability to occur though the market at such low trade activity is quite unpredictable. The Yen still didn’t get any investment attractiveness and all talks about its place among reserve currencies are nothing more than putting a brave face on a sorry business.

GBPUSD

The British Pound appreciated against the US Dollar last week from 1.5652 to 1.5880 with further recoil to 1.5814. Two preceding weeks suggest the end of buyer’s pressure and the necessity of at least partial fixation of profit on long positions for the Pound. This is quite dangerous for this currency pair as there’s a sentiment change. Perhaps the pair will be under sales’ pressure. Resistance level is 1.6015. Support is at 1.5570.

Monday Feb 6

3:00pm CAD Ivey PMI

9:45pm NZD          Labor Cost Index q/q

Tuesday Feb 7

1:30pm CAD Building Permits m/m

3:00pm USD Fed Chairman Bernanke Testifies

Wednesday Feb 8 

3:30pm USD Crude Oil Inventories

9:45pm NZD Employment Change q/q

Thursday Feb 9

1:30pm EUR ECB Press Conference

1:30pm USD Unemployment Claims

Friday Feb 10

1:30pm USD Trade Balance

5:30pm USD Fed Chairman Bernanke Speaks