Market review for 10 – 14. 05, 2010

The previous trading week started with the euro strengthening, since the EC decision to establish the anti-crises fund in the amount of 720 billion euro determined the positive sentiments in the market. The demand for the high-risk assets started to grow. The previous trading week started with the euro strengthening, since the EC decision to establish the anti-crises fund in the amount of 720 billion euro determined the positive sentiments in the market. The demand for the high-risk assets started to grow. And the EUR/USD pair increased above the level of $1,3090. Nevertheless, according to the opinions of many experts, the euro growth was only temporary. And the EUR/USD pair closed the trading day at the $1,2800 mark.

According to the released information on Monday, the Bank of England left the principal rate unchanged at the previous level of 0.5%.

In the beginning of the week against the background of the decreased demand for the shelter-currencies, the Japanese yen rate demonstrated a decrease. The USD/JPY pair consolidated in the range of Y93.50. The market participants’ positive sentiments growth supported the oil prices increase. The oil rate reached the level of $76 per barrel. And the gold rate continued to consolidate above the level of $1,150 per ounce.

On Tuesday market participants’ concerns over the spreading Euro-zone budget crises onto the other European countries pushed euro downwards again. According to some experts’ opinion, the previously announced anti-crises funds could be only the temporary way-out. The rating agency Moody’s Investors Service stated regarding the possible reduction of the rating of Greece and Portugal. Which in turn resulted in a new wave of investors’ uncertainty. The EUR/USD pair dropped to its minimums at the level of $1.2650.

The released UK fundamentals managed to render temporary support to the sterling. The UK industrial production grew for March for 2% after the previous month’s growth for 1% and the expected growth of only 0.3%. The manufacturing production also demonstrated a significant increase for 2.3% compared to the forecast of 0.4%. The GBP/USD rate showed its growth up to $1.5000.

On Tuesday the gold rate established its new yearly maximum at the level of $1225.20 per ounce. The silver price also grew to the $19.18 mark per ounce.

Unexpectedly positive Euro-zone data was released on Wednesday. In particular, the Euro-zone industrial production grew in March for 1.3% against the expected growth for 1.0%, and the Euro-zone GDP for the first quarter turned out to be 0.2% against the forecasted growth for 0.1%, which ensured the euro with the positive dynamics. But the market participants’ concerns over the developing budget crises in the other European countries did not allow the euro to consolidate at the reached levels. At the same time, the Spanish government announced the accepted measures aimed to reduce the expenses. Therefore, the EUR/USD pair grew to the $1.2740 mark, but then dropped to the $1.2630 level.

The released information regarding the announcement, that the new coalition was formed in the British Parliament, rendered temporary support to the sterling. The Claimant count rate in Great Britain dropped a little compared to its forecast. But the speculations, connected to the fact that the principal rate would not be increased by the Bank of England in the nearest future, pressured the sterling. And the GBP/USD strengthened to $1.5044 and then dropped to $1.4850.

The gold continued its sharp growth, and its rate stabilized at the level of $1,240.30 per ounce.

On Thursday the euro continued to drop against all its competitors. Concerns regarding the Euro-zone budget crises deepening influenced market participants’ decisions. At the same time the governments of Spain and Portugal were preparing measures’ packages, aimed to reduce budget deficits. As a result, the speculations over possible strikes in Spain started to influence the market participants. And the EUR/USD pair showed its many-month minimums at the level of $1.2530. The GBP/USD pair decreased to its trading day minimums of $1.4600.

It should be mentioned that the initial jobless claims in the US, released on Thursday, turned out to be at the level of 444 thousand, which was below the previous level for 4 thousand, but above the expected level of 440 thousand. This fact rendered support to the American dollar.

Diverse statistics was released in Australia on Thursday. In particular, the unemployment rate grew to 5.4% against its forecast of 5.3%. Along with that, the employment volume increased to 33.7 thousand while the expected level was at the 22.5 thousand mark.

By the end of the week the concerns over the Euro-zone crises were intensifying. In addition, some rumors were released regarding the possibility of France leaving the European community. As a result, the EUR/USD pair closed the trading week at the minimal level of $1.2352. The GBP/USD pair followed the euro decrease and reached the $1.4500 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