May 2015 was an average volatility trading month for most of the trading currency pairs. EUR, GBP and USD crosses made no important moves. They were traded as usual, not breaking from their current levels from the long-term point of view.
The main movers were obviously JPY crosses which made more than average movements, while JPY is still loosing strength and it is falling on all of the traded pairs. Let’s have a look on the most important market influencing fundamental events of the last month:
AUD cash rate
The cash rate for AUD was announced on 05/05 at 6:30 AM CET. There are usually quite sharp moves expected when announcing such important numbers as cash rates or central bank comments on cash rates.
The previous cash rate on AUD in April 2015 was 2.25 % while the expected change was the cash rate reduction to 2.00 %. The RBA actually reduced its major cash rate to 2.00 % which is the lowest number in history. The AUD cash rate was never lower.
They want to support the domestic economy being negatively influenced by a strong decrease in commodity prices and lowering demand from China which is one of the main importers of Australian goods.
This number was largely expected, however, when the news was released, AUD fell for a moment while the traders were waiting for the RBA rate statement. A few moments later, the market started to go its supposed direction, that is all the way up from 0.7782 to 0.8026 a few hours later, however this had no long-term effect on the AUD direction.
We usually do not trade these large news as there is much rumour expected and the market may jump up and down and take your stop losses. We remained out of the market for these news.
USD ADP Non-Farm employment change
The USD ADP was released on 06/05 at 14:15 CET. This is a news with one of the largest expected volatilities in the market. When the numbers are not clear to the investors, currency crosses related to USD may start to jump crazily and so the currency crosses spreads. This is a difficult time for trading. Staying away of the market is usually recommended. However, it may have a long-term impact on USD crosses.
This time, the number was seriously red, the expected number was 199K from the previous 175K, so the investors expected the figure to rise. When the new number was released at 169K which was a decrease in fact, US dollar started to fall sharply and steadily from 1.1218 to 1.1365 on EUR/USD in just three hours which is the entire 145 pips. This release had no long-term effect on the market. The market continued its way the next trading day.
GBP parliamentary elections
The British Parliamentary elections took place on 07/05. The pound was moving down all the day of the British parliamentary election from 1.5250 down to 1.5162 on GBP/USD currency pair. This was due mainly to the prices of British shares which got to the monthly minimum. The main London index FTSE 100 fell by 0.67 points which moved GBP down. The parliamentary elections results should have been one of the most tightest in the last decades according to the surveys made before the elections.
The election results announced later in the evening CET were a surprise to everyone. The conservatives lead by David Cameron defeated the labourists quite sharply and GBP/USD reaction was clear. A gap of more than 100 pips appeared on the chart and this gap did not get filled even a few days after the elections. GBP/USD jumped to 1.5410 and started to rise steadily for the next few days. This was a very nice fundamental long-term reaction.
One of the most volatile and most expected news in USA was released on 08/05 at 14:30 CET as usual. The previous figure was 85K while the expected figure was 228K, quite a nice difference, but it was already included in the market. When the result was actually released at 223K which is just a slight difference, the expected came true. Most of the traders got into panic, started to buy and sell at the same time, the market was moving up and down from 1.1180 do 1.1287 during the next few hours without a clear direction remaining in the middle in the end of the day.
GBP official bank rate
The pound official bank rate was announced on 11/05 at 13:00 CET. Even if there was no change in the bank rate as expected at 0.50 % since March 2009 when BOE decided its quantitative easing program, investors were waiting for the bank rate comment to clear out the next strategy of the Bank of England. The BOE announced that there will be no change in its strategy direction, leaving its monetary policy unchanged.
Investors considered this approach as positive for the GBP which moved from 1.5480 to 1.5610 a few hours later continuing its way up for a few next days
One of the most expected trading events is FOMC meeting which was planned on 20/058 at 20:00 CET. Decisive results of this meeting may cause a very nice sharp movement into one direction, but unclear comment from various members may take any stop losses on the charts influencing many trading pairs, not just USD crosses. Nohting important was announced this time which may be considered as an exceptional situation. EUR/USD only moved in a several pips range up and down and nothing happened. Charts remained in panic for just a short time in tight ranges.
May 2015 was an average trading month with no sharp movements or decisive market reactions. However we may see a steady JPY crosses movement which might continue for some time, 61.8 weekly fibo on EUR/JPY is quite far, GBP/JPY daily and weekly chart is trying to break the tops and USD/JPY stayed over its maximum values so there is quite a strong potential for further JPY weakening