Cititrader Market Review May 23, 2013 

OVERVIEW 

 Entering Euro monetary union also had an impact on French economy. If from the year 1999 expenditures for workforce in Germany grew by 10%, than in France they by 30%. Besides, 35 hour working week is also an issue. In addition after introduction of the Euro the share of Paris in global export has reduced twice. The situation is complicated also by the fact that the 5th part of export is comprised by supplies to Southern Europe, where countries are having hard times. Thus there is no point to wait for any vigorous growth of export indices.  The other peculiarity of the state is mass “buying French commitment”. It is relevant for practically all goods. As a result competition development is stagnating severely. Even if some product manufactured in France is surpassed in quality by a foreign analogue, consumers are still going to buy the one produced in France. A lot of countries can’t even dream about such “patriotism”. But the fact is that when business is too sure in stable demand for a product, then motivation to develop is significantly undermined. At the labor market situation is also far from being calm. Unemployment rate is at 11%, what of course is not as much as in Spain, where it constitutes 27%. By the way Germany’s index is at 5.4%. Apparently long rivalry between Paris and Berlin is going to end by the victory of the latter one.  It is not likely that socialists in France are going to undertake some radical reforms to give labor market more flexibility. Only strong economy growth can change the situation, but serious stimulating measures are needed to attain it. 

TECHNICAL ANALYSIS

EURUSD

The Euro has returned above 1.2850 after recent news from Germany. Bias for the Euro is bullish and next target on the upside is 1.2900. At this level there is a key resistance, which is the main obstacle for a recovery attempt of the currency.

USDJPY

The pair pulled back after encountering resistance near 103. If the pair is above 103, then we will most probably see it moving to 104. Otherwise the goal on the downside will be 101.

GBPUSD

The Pound has crossed the level of 1.5220 taking advantage of the Dollar weakness. So we can see the Pound targeting 1.53. Support line is at 1.52. Today there are lot of reports capable of having an impact on the Pound. 

ECONOMIC CALENDAR

01:30   AUD Monetary Policy Meeting Minutes    

03:00   NZD   Inflation Expectations (QoQ)  

08:30   HKD   Hong Kong CPI (YoY)  

08:30   GBP   Core CPI (YoY)  

08:30   GBP   CPI (MoM)  

08:30   GBP   CPI (YoY)  

08:30   GBP   PPI Input (MoM)  

08:30   GBP   PPI Input (YoY)  

14:00   USD   Treasury Secretary Lew Speaks       

15:30   USD   FOMC Member Bullard Speaks        

16:30   CHF   SNB Chairman Thomas Jordan speaks    

16:45   CAD   BoC Gov Carney Speaks        

17:00   USD   FOMC Member Dudley Speaks        

23:50   JPY   Trade Balance

Regards, 

Cititrader Analyst Team