Market review for 17 – 21. 05, 2010

During the whole trading week the euro rate dropped to its April 2006 minimums. On Monday the growing speculations regarding the slowing down of the Euro-zone economy rehabilitation, continued to influence the dramatically decreasing euro rate. During the whole trading week the euro rate dropped to its April 2006 minimums. On Monday the growing speculations regarding the slowing down of the Euro-zone economy rehabilitation, continued to influence the dramatically decreasing euro rate. And the EUR/USD pair showed its minimums at the level of $1.2230. Following the euro, the sterling showed its decrease as well. The pound was also pressured by the statement of the Minister of Finance of Great Britain, Mr. George Osborne. He pointed out that the budget deficit of Great Britain could become a real threat of country’s rehabilitation. The GBP/USD pair demonstrated its minimums at the level of $1.4250.

Unexpectedly negative US data was published on Monday. In particular, the Empire Manufacturing index for May turned out considerably below its previous level and its forecast as well: its factual level was 19.11 against the expected level of 30.00.

Due to the announcement that Greece received its first aid payment from Euro-zone on Tuesday, the euro rate managed to show a temporary growth. The first aid payment amounted to 14,5 billion euro. But after the release of the negative Euro-zone news, the euro rate dropped again to its 4-year minimums. The ZEW survey (economic sentiments) index in Germany for May unexpectedly turned out to be below the forecast and considerably below its previous value: its factual level of 45.8 against the predicted level of 47.0 and its previous month’s level of 53.0. The Euro-zone ZEW survey (economic sentiments) index for May also dropped and happened to be below its expectations as well. The Euro-zone CPI index for April happened to be above the forecast, but below the previous month’s level. And the EUR/USD pair dropped to its minimums at the level of $1,2157 after the reached trading day maximums at the $1,2440 mark.

Diverse data was released in the US. In particular, the New housing starts grew in April, but the producer price index happened to be negative.

Against the background of the increased demand for the shelter-currencies, the yen rate grew against its competitors. The USD/JPY pair traded in the range of Y90.00 – Y92.95, but the trading week minimum was almost reached at the level of Y89.00.

The released minutes of the previous Reserve Bank of Australia meeting resulted in the reinforced speculations regarding the slow-down of the principal rate increase. Consequently, the Australian dollar rate started to drop.

On Wednesday the euro rate demonstrated its 4-year minimum as well, as an unexpected growth. At the beginning of the trading day the German government imposed a ban on the speculative selling of certain assets, which resulted in the growing concern over the worsening European crises. Therefore, the euro rate continued to stay under pressure. But during the second part of the day, the euro strengthened against the US dollar due to the speculations, that the EC leaders would undertake certain actions aimed to support the euro currency. The rumors regarding the possible intervention of the National Bank of Switzerland also rendered support to the euro. And the EUR/USD pair grew from its minimal level of $1,2140 to $1,2400.

The unexpected negative US data were released on Wednesday. The consumer price index for April turned out to be at the level of -0.1% against its forecast of 0.1%. As a result, the American dollar started to loose its positions against its competitors.

On the same day the British Pound decreased to its 13-month minimum against the US dollar due to the crises situation in the Euro-zone. The GBP/USD pair dropped to the level of $1.4230, but then rehabilitated to $1.4450 as a result of the US dollar weakening.

The favorable Euro-zone statistics, which was released on Thursday, could not manage to render the considerable support to the euro. In particular, the producer price index in Germany for April turned out to be at the level of 0.8% against the forecast of 0.6%. But the drop of the European stock indices pressured the euro. In addition, the Euro-zone consumer confidence indicator dropped. The decreased demand for the risky assets continued to dominate the market as well.

On Thursday the Philadelphia Fed. Index for May showed its increase to the level of 21.4, which was above the forecast of the 21.3 mark. Consequently, the American dollar rate reacted with an increase. But the unexpected growth of the initial jobless claims, which were published on Thursday, could not comply with the earlier characteristics of the sustainable growth. The number of the initial jobless claims grew to 471 thousand against the previous number of 444 thousand and its forecast of 440 thousand. As a result, the US dollar dropped sharply against the Japanese yen.

At the end of the trading week the EUR/USD rate managed to grow to the level of $1.2670, and the GBP/USD pair even attempted to reach the level of $1.4500.

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