Weekly summary: 23-27 January 2012

By: Nikolas Xenofontos from easy-forex

EUR/USD
Monday 23/1/2012
Open – 1.2882
High – 1.3052
Low – 1.2853
Close – 1.3024
42 pips
0.33%
The Euro started the week strong, climbing above 1.30 against the US Dollar as news concerning the constructive progress of the negotiations between Greece and the Institute of International Finance (IIF) boosted optimism. Eurogroup, the eurozone Finance Ministers meeting, was held on Monday and among other things, they most notably discussed the possibility of combining the lending capacities of the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) to tackle the eurozone debt crisis. On Tuesday a series of French and German PMIs also came out better than expected. Market participants will focus on Wednesday when the ECB President, Mario Draghi, will participate in a panel discussion titled "Europe's Economic Outlook: What steps are needed to restore growth and confidence across the Eurozone?" at the World Economic Forum in Davos. Among various economic data to be released this week the Federal Funds Rate decision, due on Wednesday, and the press conference that will follow, are expected to affect the pair the most.

GBP/USD
Monday 23/1/2012
Open – 1.5552
High – 1.5602
Low – 1.5517
Close – 1.5577
25 pips
0.16%
The British Pound appreciated moderately versus the US Dollar on the first day of the week, benefiting from a lackluster US financial calendar and the Chinese bank holiday for the new lunar year. Bank of England Monetary Policy Committee (MPC) member Adam Posen expressed his view on the UK returning to its long term trend of growth. An interesting note to Posen’s comments is that the fourth quarter GDP, due on Wednesday, is expected to show the economy contracting, although marginally. The MPC meeting minutes will also be released on Wednesday, providing investors with insight in to the latest decisions taken and hints on future policies. The Cable is another pair that will be affected by the Fed rate decision on Wednesday.

EUR/JPY
Monday 23/1/2012
Open – 99.17
High – 100.50
Low – 98.93
Close – 100.29
112 pips
1.13%
This week commenced with the Euro battering the Yen, accumulating gains above 1%. This was due to the positive news relating to the ongoing Greek debt haircut talks. On Tuesday, the Bank of Japan (BoJ) decided to keep the Overnight Call rate untouched. During the press conference that followed, the BoJ Governor reiterated the negative impact the strong yen has had on Japan’s strained economy. A series of medium impact economic data will be released within the remaining of the week and their print, as well as headlines from Europe will affect the pair.

EUR/GBP
Monday 23/1/2012
Open – 0.8270
High – 0.8374
Low – 0.8270
Close – 0.8361
91 pips
1.10%
The single currency appeared strong against the British Pound on Monday. The Public Sector Net Borrowing for UK came out better than expected on Tuesday narrowing down to GBP 10.8 billion. The pair will be dominated by developments over the debt deal between Greece and the private sector. UK fiscal figures such as GDP due on Wednesday may move the pair, as may comments made by central banks members.

USD/CHF
Monday 23/1/2012
Open – 0.9373
High – 0.9395
Low – 0.9251
Close – 0.9268
-105 pips
-1.05%
The Greenback was weak against the Swiss Franc as the week commenced. There are no economic data releases for Switzerland this week, except the KOF Economic Barometer due on Friday. The pair is expected to be heavily affected by the rate decision of the Federal Bank of the US on Wednesday, the press conference that will follow and the exchange rate of EUR/CHF. The Euro has a floor at 1.20 versus the Swiss Franc, set by the Swiss National Bank, and the pair is approaching that figure more since Hildebrand’s resignation.