The US economy is getting recovered slowly but steadily - 26.6.2013

On Wednesday morning, the foreign exchange market trading is generally calm. The US dollar gets confident enough being close to previously established three-week highs around 82.50-83.00. However, investors are still concerned about the liquidity problem of Chinese banks. In this regard, the USDJPY failed to consolidate above 98.00, and it is already trading below 97.50 this morning. Chinese Central Bank reassured the market participants that the banks suffering difficulties will receive support, but it could not prevent the decline in quotations in Asian stock markets.

On the other hand, the US dollar is widely supported by the strong macro statistics contributing to the possible quantitative easing reduction program by the Fed this autumn. Yesterday there were a very good data published on the dynamics for the US Durable Goods Grders in May – the figure had risen by even 3.6%, exceeding the growth forecasts of 3%. Case-Shiller report showed an increase in prices in the housing market, and the Home Sales were also increased in May. Finally, the Consumer Confidence Index rose in June far more than the analysts expected, showing the dynamics from 74.3 up to 81.4. It seems that the US economy is gaining momentum and the good statistics will definitely support the national currency in the medium term.

Euro vs. the US dollar keeps falling. The prices reached three-week low 1.3054 this morning and it does not seem to be the limit - the pair does not look oversold. The pair is pressured by the strong data from the USA, as well as statements by the European officials. For example, the ECB President-Mario Draghi said that the Central Bank is not intending to cut the soft policy off in the near future, citing the low inflation and high unemployment. If you refresh in mind the Fed Chairman Ben Bernanke’s speech last week you will come to realize that he had officially confirmed the possibility of reduction in monetary simulus measures until the end of 2013. On a similar contrast, we believe that the EURUSD may drop, at least, to the lows of 2013 around 1.2750 within the upcoming months. Well, at this moment, the pair is on a task to test the 1.3000-1.3030 support area.