The skeleton of the global economy experiences earthquakes increasingly stronger. Even though the United States seem to strengthen its economy and thus is towing the weak ones, China is in a worse position. The desired rate of 7% growth for 2015 is in danger as the CPI was reported down to 0.8% and the PPI steeped in the negative territory at -4.3%. We could say that it’s a seasonal coverage, but the PBOC’s consistent interventions betray a plummeting economy. Market participants are expecting a further interest rate decrease by the mid of 2015.
Meanwhile, the EURUSD is struggling to stay above the 1.1300 support level, even if occasionally it gets out of control. Europe seems to prepare a financing solution for Greece, to gain time, but eventually they’ll have to accept the loss of an important portion of the borrowed money. The economic data seem to recover as much: German Trade Balance grew to 21.8 billion, Sentix Investor Confidence increased to 12.4 points, French Industrial Production advanced to 1.5% and the Italian Industrial Production grew to 0.4%.
In fact, the pressure on the Euro will ease when Greece finds a solution to its need for credit and Ukraine reaches a peace agreement with Russia. The development of a lateral movement on the EURUSD graph would be a plausible scenario where the 1.1540 is the resistance level and 1.0970 is the support level.
SNB’s foreign exchange reserves rose to 498.4 billion Francs last month, by 3.3 billion over the previous value. This value doesn’t make us think about serious interventions after the blow of the minimum threshold of 1.20. Now the Swiss Central Bank could target a weaker franc than the 1.05 per Euro as the currency pair is knocking on the door of the 1.0499 resistance level. Next target resistance may be 1.1600 level.
The price of oil starts to sink again so that we see the Brent trading at 57.60 while the WTI is approaching the 50 dollar support level. The petroleum trend seems to be getting a temporary downward shade as the oversupply (particularly created by the U.S.A.) is back in the spotlight. Citigroup came with a sober forecast about the oil prices which may fall to as low as the $20 range, but for now it is not healthy to rely on such statements. In the worst case, if neither the U.S. nor the OPEC group is coming with a solution in the short term, we can consider the 44 dollars per barrel low for WTI and the 47 dollars per barrel low for the Brent oil.
