Forecast for the week 11.06.2012 – 15.06.2012

In the period from June 11^th to June 15^th, the main macroeconomic reports that may have an impact on the Dollar will be the data on production and consumer price inflation (June 13^th and 14^th respectively). Considering recent talks in the market about the possibility of the additional easing, investors will assess the space availability for such a maneuver on the part of inflation. The reduction of price pressure in the economy may somewhat strengthen the Dollar’s positions. It is important to note that the events around Greece and Spain are rapidly developing in the Eurozone. The information coming out of these countries may any time provoke large-scale movements to any direction in the currency market.

The EUR/USD pair is being corrected after five weeks of large-scale sales of the European currency. The bidders generally ignore macroeconomic statistics, and keep focus on the news concerning Greece and Spain, as well as the outcome of endless meetings, summits, and the debates held by the political leaders of the region. We believe that the European currency may cease its decline until the sum up of the parliamentary elections in Greece, on which expectations it is possible to fix profits. We expect the pair to fluctuate in the area of 1.2300 – 1.2650, however, we admit to a possible breakthrough of the lower boundary.

The British pound significantly weakened its positions after the PMI indicated that the industrial sector of the UK economy “fell” into a recession. On Tuesday, June 12^th, the data on the volume of industrial production will be published, which can either mitigate or exacerbate the situation. In any case, it may have a significant impact on the Pound’s trends, and deserves attention. The Briton will continue to correlate with the Euro against the Dollar. If the EUR/USD pair continues the upward movement, the GBP/USD can test 1.5650. If the Euro resumes its decline, the movement target will become 1.5265.

The Australian dollar strengthened its positions after the release of positive data on the GDP for the first quarter. We believe that this report can slow down the Reserve Bank of Australia in its quest to reduce the discount rate. The Australian will feel much more confident in the periods of the general Dollar’s strengthening around the market and the intensity of its downward movement will considerably weaken. If the Dollar continues to remain under pressure, the movement is possibly to be below 1.0150. Accordingly, the New Zealand dollar may touch the mark of 0.7885. In any case, short positions in these currencies are now seen unattractive.

The Japanese yen also became much less attractive after the financial authorities had threatened the market with interventions. However, we cannot identify any prerequisites for a major strengthening of the Dollar against the Yen. In the upcoming weeks, the USD/JPY is likely to fluctuate in the range of 77.50 – 80.20.