CURRENCY MOVERS OF 1st June 2015.

EURUSD, Daily
The Q1 GDP growth figure from last Friday wasn’t quite as weak as the median suggested, falling “only” 0.7%. But, the composition of that report, along with recent data, doesn’t indicate Q2 is likely to bounce sharply. Also, it’s still not clear how much of this sluggishness can be blamed on “transitory” factors. Nevertheless, a Fed rate hike in September is still in the cards, as indicated by the Median forecast. Fedspeak of late, even from the doves, has suggested policymakers want to start the normalization process. But will that be possible as soon as next quarter? The FOMC will need to see stronger data over the next couple of months to make lift-off credible.
According to reports, the Greek Prime Minister Tsipras is in talks with Merkel and Hollande. With the end of May deadline gone Mr Tsipras once again hopes to bypass the negotiations with the Brussels group and puts his hopes on talks with Merkel and Hollande. The three had a reportedly “constructive” telephone conversation yesterday and Merkel and Hollande are set to meet today. Tsipras meanwhile blamed the lack of progress on the “absurd” proposals by certain institutions, which ignore recent democratic decisions in Greece. In an article for France’s Le Monde, he said that the plans for the pension system are not suitable for a civilized country while warning that it would be a bit mistake to think that finding a solution was just a Greek issue and that it is important for the whole of Europe. Not comments that signal a softening of the Greek stance.
EURUSD moved below Friday’s low this morning and is currently trading inside the daily pivot candle from May 27th and inside the Bollinger Bands with Stochastics pointing higher. Last week’s doji candle suggests that buyers are prepared to buy not so far from the current levels. At the time of writing the pair is trading higher intraday support level 1.0904 and lower 4h Bollinger bands. This could lead to a rally but now that the pair has moved below Friday’s low there are resistance levels ahead. Therefore such rallies could be short lived and price is likely to be range bound today between Friday’s high of 1.1006 and last week’s low of 1.0820. The nearest daily time frame support and resistance levels are at 1.0820 and 1.0965. The 50% Fibonacci level and 50 day SMA coincide at the latter level.

Currency Pairs, Grouped Performance (% Change)
Today’s movers in terms of currency pairs are EURUSD, EURJPY, GBPJPY, AUDCHF that have all moved considerably from Friday’s close. EURJPY is correcting lower from a resistance and is at the time of writing trading slightly below Friday’s low. GBPJPY has corrected to a support created by a sideways range from mid-May while AUDCHF is moving higher after the pair closed down over the last four trading days. The main themes today have been weakness in JPY against everything else but the last week’s weakling NZD, EUR weakness across the board while GBP has been weak against everything else but CHF and EUR. USD is currently strong against EUR, GBP and CHF.
Main Macro Events Today
China’s PMI (Q1) figures improved modestly from April, but don’t suggest much pick up. The official manufacturing index edged up to 50.2, from 50.1 in both March and April, after the gauge had dipped below the 50 threshold in January and February. The PBoC has been fairly active in easing policy in recent months to try to help boost growth.
Eurozone May manufacturing PMI wasrevised down to 52.3 from 52.3 reported initially. The country breakdown was mixed, with Italian and Spanish readings coming in much higher than anticipated, and the French reading revised up, although the latter remained in contraction territory. The German PMI was the big disappointment, with a downward revision to 51.1, from 51.4 reported initially, which means the drop from the 52.1 April reading was even more pronounced than expected.
UK Manufacturing PMI came in at 52, slightly under the consensus expectation of 52.5. The PMI report showed that strong domestic demand is being offset by weak export performance, which has largely been a consequence of sterling’s strength against the euro. In April Markit PMI unexpectedly dove to 51.9 from 54.0 in March, itself revised from 54.4. This marked the slowest rate of expansion since November.
US Manufacturing ISM is expected to rise to 52.0 from 51.5 in April and March. Forecast risk: downward, given new order weakness in early month releases. Market risk: downward, as weakening in data could impact rate hike timelines.

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Janne Muta
Chief Market Analyst
HotForex
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