Market review for 15 – 19. 03, 2010

On the first day of the trading week investors were acquiring low-risk currencies, since the new wave of speculations regarding the Greece help issue pressured the euro.

On the first day of the trading week investors were acquiring low-risk currencies, since the new wave of speculations regarding the Greece help issue pressured the euro. Some of the Financial Ministers of Europe excluded the possibility to render support to Greece, which was released on Monday. And the EUR/USD pair decreased to the level of $1.3650. At the same time against the background of the data from Europe, the US dollar rate increased. The American dollar received additional support from the released US fundamentals on Monday. In particular, the Empire Manufacturing index for Mach turned out to be above the forecast: its factual level of 22.86 against the expectations of 22.00. The volume of the industrial production for February grew for 0.1%. The sterling was under pressure due to the current political situation in England. According to the published information, the upcoming elections in Great Britain would probably result in the absence of the necessary majority votes in the Parliament. In addition, the rating agency Moody’s confirmed, that the credit rating of Great Britain could be decreased. And the GBP/USD pair demonstrated its trading day minimum in the range of $1.5020.

Already on Tuesday according to the published information, the European countries confirmed the developed plan to support Greece. Therefore, the euro rate changed its dynamics and started to grow. The rating agency Standard & Poor’s confirmed the long-term rating for Greece, which also rendered support to the euro. In addition, the positive Euro-zone fundamentals were released on Tuesday. The ZEW survey (economic sentiments) index in Germany for March turned out to be above the forecast: 44.5 against the expected level of 43.5. The ZEW survey (current situation) index in Germany for March dropped less then expected (-51.9 against -52.0). As a result, the EUR/USD pair grew to the level of $1.3782.

The oil rate raised and traded around the $80 mark per barrel. The Euro-zone countries’ decision to help Greece rendered support to the oil prices.

The FOMC decision, which was released on Tuesday as well, had a negative impact on the US dollar. According to the expectations, the basic interest rate was left unchanged at the previous minimum level of 0.25%. In addition, it was noted, that the rates would be left at this level for some extended period.

On Wednesday the EUR/USD pair showed its maximums at the level of $1,3820, but by the end of the trading day the rate dropped to the level of $1,3750. According to the experts’ opinion, this decrease was a result of the announcement of the German government representative regarding the absence of the specific plan to help Greece, and the necessity to make use of the IMF support.

The positive UK statistics was published on Wednesday. The Claimant Count rate for February decreased (4.9% against 5.0%). Therefore, the sterling reacted with a sharp growth. And the GBP/USD pair demonstrated its trading day maximums at the level of $1,5383.

According to the decision of the Central Bank of Japan, the principal interest rate was left unchanged at the previous level of 0.10%. And the resolution of the Bank of Japan to double the credit program, aimed to fight deflation, rendered additional pressure on the Japanese yen. On Wednesday the yen demonstrated its drop against the major competitors. The USD/JPY pair reached the level of Y90,60.

Due to the weakening of the US dollar rate, the oil prices grew and consolidated above the level of $82 per barrel. And the statement of the OPEC countries confirming, that the quotas on oil production would not be increased so far, supported the oil prices as well.

The speculations, regarding the fact that Greece would definitely need to refer to the IMF for help, strengthened on Thursday. At the same time, not all European countries supported such opinion. Which means, that the exact specific plan does not exist. This resulted in a new wave of the euro drop. And the EUR/USD pair decreased to the $1.3600 mark. Consequently, the American dollar strengthened against the decreased investors’ willingness to take risks.

The following US fundamentals were released on Thursday. The initial jobless claims turned out to be almost at the predicted level: the factual level of 457 thousand against the expected level of 455 thousand. The consumer price index did not show any positive result as well, which was already incorporated in its forecast. But the Philadelphia Federal index grew and turned out to be considerably above the forecast: the March figure was at the 18.9 level against the expected level of 18.0. This factor supported the US dollar consolidation.
We should mention, that on Friday the Central Bank of India increased its principal rates very unexpectedly. As a result, the high-risk currencies started to drop. By the end of the week, the EUR/USD pair decreased to its minimums at the level of $1.3502, and the GBP/USD pair dropped to the $1.5000 mark.

The company commenced operations in January 2007, established by a professional gold and foreign exchange dealer with over 10 years of experience. Currently domiciled and regulated in Panama.Author Risk Warning: You should not invest in FX or CFD the money you cannot afford to lose. An investment in FX and CFD is potentially risky to the investor, and in some cases the investor may not get back the amount he has invested. With... More