WEEKLY MARKET REVIEW

IN THIS ISSUE:
1. Weekly market review from Forex-Metal.
2. Weekly technical analysis.
3. Representatives Wanted!

Previous trading week started with a US dollar competitors’ weakness.
On Monday euro demonstrated sharp decrease against the competitors during the European trading sessions. Concerns over the Euro-zone budget crises reinforced. The 2-day meeting of the EC Ministers of Finance, which started on that day, might not result in a mutual agreement regarding target levels of reducing the country’s debt loads. In addition, according to the released information, chances of restructuring of the German state bank West LB AG were reducing, which rendered pressure on the euro as well. The Euro-zone Industrial production, published on Monday, turned out to be negative at the level of -0.1%, against the forecasts of 0.0% and previous month positive figure of 1.4%. As a result, the EUR/USD pair demonstrated minimums at $1,3426. The sterling demonstrated a decrease following the euro drop. The GBP/USD pair decreased to $1.5985 minimums.

By the end of the day the euro managed to rehabilitate and won back the previously lost positions. The EUR/USD grew to the levels of $1,3480. The pound managed to grow against the greenback during the American trading session as well. The GBP/USD reached the $1,6030 mark. Speculations regarding the possibility, that the Bank of England would increase the principal rate, reinforced.

On Tuesday the EUR/USD pair demonstrated growth up to the $1.3530 maximums during the Asian trading session. But the released Euro-zone fundamentals were diverse. German GDP data for the fourth quarter turned out to be below expectations. And the Euro-zone overall GDP for the same period was below forecasts as well. The German ZEW survey (Economic sentiment) for February was at the 15.7 level against the expected 20.0, which pressured the euro. But, at the same time, the German ZEW survey (Current situation) for February grew from the previous month and happened to be above forecasts: 85.2 against the 83.0, which rendered support to the euro. European session showed maximums of $1.3552 by EUR/USD pair.

Sterling demonstrated steady growth against its competitors due to the released strong British fundamentals on that day. UK Consumer price index turned out to be at the expected level of 4.0%. DCLG House prices were above forecasts too. And the Retail price indices were above expected level as well. Therefore, the GBP/USD pair reached the $1,6170 maximums. As a result, the speculations regarding possible increase of the principal interest rate reinforced.

According to the expectations, on Tuesday the Bank of Japan left the principal rate unchanged at the previous level of 0.10%. USD/JPY pair managed to grow to the Y83.80 mark.

Diverse US fundamentals were released during the American trading session. Eventually, the US dollar received support. Empire manufacturing index for February grew and hit 15.43 amid forecasts at 15.00 level. Net long-term TIC flows were above expectations. But advance retail sales dropped for 0.3% when the expectations were 0.5%.

On Wednesday the GBP/USD pair demonstrated maximums during the Asian trading session at the level of $1,6186. But later on the release of the negative UK fundamentals changed the trading dynamics. Nationwide Consumer confidence for January dropped to 47 against expected level of 50. Jobless claims increased for 2.4K when the indicator was forecasted to drop for 3.0K. Pound reacted with a sharp decrease. According to the publication of the Bank of England Inflation report, the inflation would likely remain high over this year. Following this report the GBP/USD pair dropped to minimums of $1,5985. The drop of the pound influenced the euro dynamics. The EUR/USD pair decreased to the $1.3459 mark.
The dollar price action was mixed on the same day. But the US fundamentals, which were released during the American session, changed the trading dynamics of the major currencies. Strong economic docket increased the demand for the risky assets, and the greenback turned out to be under pressure. The EUR/USD pair managed to rehabilitate and hit the $1,3587 maximums after the release of the Industrial production index, which turned out to be -0.1% against the forecasted 0.5%. The Federal release of the FOMC meeting, which was also in the market focus on Wednesday, did not have any relevant influence on the market.
Greenback was under pressure on Thursday. US dollar was not supported as a save-haven currency.

Political problems, which were spreading over the Middle East region, supported the growing demand for the save-haven assets. Iran confirmed that two warships were forwarded to the Mediterranean through the Suez Canal. As a result, the Japanese yen rate increased against its competitors. The USD/JPY pair traded around the maximum range of Y83.50 - Y83.70. Swiss frank received considerable support as a save-haven currency and reached two-week maximum.

Additional pressure on the US dollar was received from the released US fundamentals. The Initial jobless claims turned out to be elevated above the forecast and over the previous level as well: 410K against the expected 400K.
On Friday after the announcement of the ECB Board member, Lorenzo Bini Smagi, that the ECB would raise the principal rate due to the increasing pressure from the global inflation, the greenback competitors started to grow. The EUR/USD pair reached maximums of $1,3700, and the GBP/USD hit the $1,6250 level.


EURUSD
The pair is trading in the triangle. Upper border (resistance) is 1.41130, lower border (support) is 1.30651. The pair needs to break one of these levels to be able continue rising or falling.
Resistance: 1.37441, 1.41130, 1.44835
Support: 1.33427, 1.2800, 1.25667

GBPUSD
The pair has broken channel line. A return for a test to channel line maybe expected to 1.61380. If the pair stays above this level the pair will rise to Fibonacci retracement 38.2% at 1.64274 and Moving Average 9200) at 1.65789.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532



USDCHF
The pair has rolled back to 0.94501. Lower is stronger support at 0.93264.
Resistance: 0.96525, 0.99031, 1.01369
Support: 0.93264, 0.91074, 0.88022

USDJPY
The pair is closed in the triangle. Resistance 83.330 supports 81.010. The pair needs to break one of these levels to be able to continue rising or declining.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126

AUDUSD
The pair has risen to 1.01873 and may roll back to 1.00031.
Resistance: 1.01873, 1.03847, 1.05810
Support: 1.00031, 0.97889, 0.94048

FTSE 100 below 6,000 as Libya casts shadow
The FTSE 100 is back below 6,000 points as the ongoing turmoil in Lybia continues to jangle traders’ nerves.

Oil prices are higher again, not good news for British Airways owner IAG, which is one of today’s notable fallers. The high gold price as investors seek a safe haven has lifted African Barrick Gold, while silver producer Fresnillo is also going well.

Other miners are lower, including BHP Billiton. The firm is usually thought of as a miner but it has oil and gas assets too, and it bolstered those Tuesday with the acquisition of Chesapeake Energy’s Fayetteville shale assets.

Higher oil prices won't worry coal-fired power station operator Drax, though the chairman, Gordon Horsfield, did warn of "pressure on coal generation margins due to today's commodity market conditions," as he unveiled forecast-busting 2010 earnings. The shares are up today.

Drax's earnings before interest, tax, depreciation and amortisation in 2010 totalled £391m, up from £355m last year, and ahead of market expectations of £384m. Total revenue was comfortably ahead of market expectations at £1,648.4m, up from $1,475.8m; the market had pencilled in a figure of £1,426m.

Specialist business publisher and trade events group Informa posted a sharp rise in 2010 despite flat revenues as it adjusted to the tough climate by consolidating publications, getting rid of marginal ones and reducing the scale of some events. Pre-tax profits rose to £125m from £96.5m the previous year on revenues that rose to £1.226bn from £1.221bn.

The global economic recovery helped animal breeding business Genus lift revenues and profits in the half year to 31 December. The firm posted a pre-tax profit of £19.1m, up from £15.5m over the same period the previous year, on revenues that climbed to £153.2m from £134.9m.

Similarly, the global recovery helped speciality chemicals group Croda International more than double pre-tax profits in the year to 31 December, sparking a strong reaction from the shares today. Pre-tax profits jumped to £192m from £91m the previous year on revenues that rose to £1bn from £828m.

INTERIMS
Dechra Pharmaceuticals, Genus, Hargreaves Services, Pan African Resources, Savile Group

INTERIM DIVIDEND PAYMENT DATE
Income & Growth VCT

Q4
Frontline Ltd.

FINALS
Aeci 5 1/2% Prf, Brammer, Croda International, Dragon Oil, Drax Group, Informa, London Capital Group Holdings, Morgan Sindall Group

EGMS
X5 Retail Group NV GDR (Reg S)

AGMS
Bankers Inv Trust, Sinclair (William) Holdings

FINAL DIVIDEND PAYMENT DATE
Titon Holdings

Bourses lower as Lybia crisis continues
The ongoing turmoil on the other side of the Mediterranean Sea has helped send Europe’s main bourses lower.

The German Dax is down 44 at 7,277, the CAC 40 in Paris is 55 lower at 4,041, the Swiss market is 68 lower at 6,615 and the Ibex 35 is 174 lower at 10,636.

With violence continuing in Libya, a big oil-producer, crude prices have risen – bad news for the likes of Air France-KLM and IAG, the owner of British Airways and Iberia.

In company news, Danish bank Jyske Bank is in demand after fourth quarter earnings beat expectations.

Libya unrest drives dollar gains
The dollar nudged higher against the euro and the yen on Monday in subdued currency trading as investors nervously watched reports of escalating tensions in the Middle East, in particular Libya.

The euro was temporarily boosted by robust economic news. German business confidence rose to a record high in February, on the back of soaring exports. The Ifo institute’s business climate index climbed to 111.2 from 110.3 in January, confounding expectations of an unchanged reading.

The pound was little changed Monday but did find some support early on from comments by policymaker Martin Weale. He said a small rate hike now from 0.5% may reduce the need for a bigger rise later. Last month Weale joined Andrew Sentance in voting for a rate rise.

US financial markets were closed Monday for the Presidents Day holiday.

Halifax, Libya, interest rates
Hundreds of thousands of Halifax borrowers are set to receive a windfall because of a poorly drafted paragraph in mortgage offer letters that will cost Lloyds Banking Group £500m. The payout announced by the Halifax’s new parent yesterday is a record figure for customer redress by a single financial services company this century — and it is being made even though hardly any customers noticed or complained, the Times reports.

The spectre of full civil war in oil-rich Libya and reports of the creation of an Islamic emirate in country's "Barqa" region has moved the Mid-East crisis into a more dangerous phase, setting off an explosive rise in US crude prices. "This is potentially worse for oil than the Iran crisis in 1979," said Paul Horsnell, head of oil research at Barclays Capital, the Telegraph reports.

One of the two publicly declared hawks on the Bank of England’s rate-setting committee set forth the case yesterday for an immediate rise in interest rates. Martin Weale, one of the external members of the Monetary Policy Committee, said that a move was needed now to head off a rise in people’s inflation expectations, the Times reports.

However, the Independent reports that John Lewis's managing director has urged the Bank of England not to raise interest rates amid retail fears over how a rate increase would affect consumer confidence. Andy Street – speaking out about inflationary pressures on the industry as he unveiled plans to open a new store in Birmingham in 2014 – said: "Putting up interest rates would not make a jot of difference to inflation. But it would make a big difference to consumer confidence."

News Corporation is to buy Shine, the production company set up by Rupert Murdoch’s daughter Elisabeth, in a deal worth £415m. News Corp said that it had reached an agreement in principle to acquire the company whose hit television shows include MasterChef and Merlin. The deal is expected to be completed by the end of April, according to the Times.

The total exposure of Spanish savings banks to real estate and building amounts to €217bn, of which 100bn is classed as “potentially problematic”, the Bank of Spain said. However, Miguel Ángel Fernández Ordóñez, the governor of the Bank of Spain, insisted that such a risk level did not endanger the Spanish financial sector as a whole, says the Telegraph.

BAA should have been better prepared to deal with the winter snowfall that disrupted flights and caused chaos at Heathrow airport for four days in the run-up to Christmas, the airport operator's chief executive, Colin Matthews, has said. Flights were cancelled and thousands of passengers saw their travel plans thrown off course when severe weather led to the closure of Heathrow's runways, the Independent reports.

Health secretary Andrew Lansley has filed a high court legal claim, alongside 10 strategic health authorities and 144 primary care trusts, against household goods maker Reckitt Benckiser. The FTSE 100 company insisted it had not been served with papers and knew nothing about the action. It refused to be drawn on speculation that the action might be related to its controversial marketing of Gaviscon heartburn treatment products in 2005 which resulted in Reckitt receiving a £10.2m fine from the Office of Fair Trading for anti-competitive behaviour four months ago, the Guardian reports.

The chief executive of e-commerce group Alibaba.com – one of China's biggest online successes – has resigned after an internal investigation showed sales staff "intentionally or negligently" allowed more than 2,300 fraudsters to set up verified stores. David Wei and chief operating officer Elvis Lee departed amid what the firm described as "systemic breakdown in our company's culture of integrity", according to the Guardian.

House prices will slump by 20% over the next two years, experts have warned. The property market is heading for a ‘double-dip’ as rising unemployment and spending cuts strangle demand, according to the analysis. Interest rates are likely to be increased in the coming months to keep rising inflation in check and higher mortgage costs seem certain to add momentum to plunging property prices. Paul Diggle, property specialist at research consultants Capital Economics, said: ‘Prices are trending slowly downwards at the moment, but our view is that this is really the start of the second leg of the correction, and we expect prices to fall significantly further,’ the Daily Mail reports.

Posted in: Weekly market review,Weekly technical analysis