Market review for 03 – 07. 05, 2010

During the whole previous week the euro dynamics was totally a result of the Greek problems and the Euro-zone actions in that matter. According to the released information on Monday During the whole previous week the euro dynamics was totally a result of the Greek problems and the Euro-zone actions in that matter. According to the released information on Monday, the EC Ministers of Finance agreed to allocate credits to Greece in the total amount of 110 billion euro during the period of 3 years, 30 billion of which would be offered by the IMF. Nevertheless, the euro did not receive any significant support, since Greece might not manage to comply with the imposed obligations regarding the deficit reduction, as some experts noted. In addition, there is a possibility that not all Euro-zone countries would agree with the bail-out plan. And the EUR/USD pair dropped to the range of $1,3150.

At the same time against the background of the positive US fundamentals, the American dollar continued to strengthen, since the US economy demonstrated new signed of a soon rehabilitation. The released Monday statistics showed, that the personal US income for March demonstrated growth according to its forecast, and the personal spending also grew. The ISM manufacturing index increased for April to 60.4 against the expectations of 60.

On Monday the financial markets in Great Britain, Japan and China were closed due to the national holidays.

On Tuesday the euro was under strong pressure due to the market participants’ concerns over the Greece issue. Strikes spread over Greece, since the rigid fiscal frameworks were perceived by the public very negatively. In addition, there is a possibility that not all Euro-zone countries would support the suggested bail-out plan for Greece. The budget problems in Spain and Portugal showed, that the Euro-zone crises was deepening. As a result, the EUR/USD pair established its new yearly minimum in the range of $1,2963. The US fundamentals, which were released on Tuesday, were considered as signs of the American economy rehabilitation. The US dollar continued to strengthen. Factory orders for March showed growth for 1.30% against the forecasted decrease of 0.1%. Pending home sales grew for 5.30% against the expected growth for 5.0%.

According to the published information on Tuesday, the Reserve Bank of Australia increased the principal interest rate to the level of 4,50%. Nevertheless, the Australian dollar demonstrated its sharp drop against the US dollar.

The problems of the developing crises in Greece were worsened by the violent riots, which indicated dissatisfaction of the citizens about the adopted fiscal measures and restrictions. The euro rate reacted with a sharp drop. Possibilities of the Portugal credit rating reduction and budget problems in Spain concerned the market participants even more. Consequently, the positive Euro-zone statistics, which was released on Wednesday, could not render any support to the euro. In particular, the Euro-zone PMI services index grew to the level of 55.6 and turned out to be above the forecast of 55.5. And the Euro-zone retail sales volume increased, but happened to be below the expected level. The EUR/USD pair continued to trade below the $1.3000 mark. Its minimum was set at the level of $1.2913. At the same time the ADP employment for April in the US grew for 32 thousand against the expected growth only for 30 thousand.

The released positive UK statistics on Wednesday managed to render some support to the national currency. The PMI construction index turned out to be considerably above the forecast. Nevertheless, the main pressure on the sterling was rendered from the uncertainty in the results of the elections. And the GBP/USD pair grew only to the $1.5170 mark.

The oil inventories growth in the US influenced the oil rate drop to the $82.04 price per barrel on Wednesday. The gold price grew to the $1190.30 mark per ounce during the week.

According to the ECB decision on Thursday the principal rate was left unchanged at the level of 1,00%. The euro rate reacted with a deepened decrease and fixed a new yearly minimum. At the conference the ECB president, Jean-Claude Trichet, could not reestablish investors’ confidence in the euro currency. The possibility of the fiscal crises development over the whole Euro-zone reinforced the concerns of the market participants. And the EUR/USD pair dropped to its new yearly minimums at the level of $1.2521.

On Thursday the GBP/USD pair decreased to $1.4705 due to the stress, which was a result of the held elections in the UK parliament, which took place on that day.

We should mention, that yen demonstrated a sharp consolidation against the US dollar. The USD/JPY pair dropped to its minimums at Y88.20.

According to the results of the UK elections, none of the parties managed to receive the majority in the parliament, and the GBP/USD rate decreased to its 13-month minimum at the level of $1,4471.

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