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Forex Trading: London Market Wrap

Posted by Chris Advincula on May 3, 2013 7:09:00 AM

May 3 Friday 11:05 GMT


The euro made a modest rebound to 1.3136 against the dollar from 1.3063 (+73 points) after the ECB governing council member Ewald Nowotny said that markets have over-interpreted Mario Draghi’s statement yesterday, where the ECB would consider a deposit rate below zero.

The euro dropped sharply yesterday by 180 points from 1.3220 to 1.3040 after the ECB President Mario Draghi said policy makers have an “open mind” on reducing their so-called deposit rate below zero for the first time. Today, in an interview at CNBC, Nowotny pointed out that the ECB policy makers have “no plan” in this direction.

The euro’s rally was also aided by the weakness of the yen and short covering by many market participants on the side of caution ahead of the U.S. Employment data due at 12:30 GMT today.

The median forecast for the U.S. Nonfarm Payroll for April is +145,000 compared to last month’s disappointing 88,000 in March. The unemployment rate is expected to remain at 7.6 percent.

The 21-day moving average and 30-day moving average both converged at 1.3070 and have risen to 1.3125.

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Cable rose to 1.5570 from 1.5518 (+52 points) against the dollar in a relatively quiet European session after the better than expected UK PMI Services data.

The April purchasing managers indices show the UK economy with a modest expansion at the start of the second quarter. April’s PMI rose to 52.1 to an eight month high, driven up by the  52.9 PMI Services, the highest result since August. The services data showed employment, new and outstanding business all grew at a faster pace compared to March as inflation pressures eased.

The 21-day and 30-day moving average both rose from 1.5525 to 1.5550.

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Chris Advincula



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