Market review for 24 – 28. 05, 2010

The beginning of the previous trading week started negatively for the euro. The announcements that the Spanish savings bank CajaSur is under the threat of bankruptcy and that the national Bank of Spain The beginning of the previous trading week started negatively for the euro. The announcements that the Spanish savings bank CajaSur is under the threat of bankruptcy and that the national Bank of Spain is introducing its temporary administration into the bank rendered additional pressure on the euro. The spreading of the budget crises over the European countries was still the major concern of the market participants. Therefore, the EUR/USD pair decreased to the level of $1,2343. At the same time the existing home sales volume in the US demonstrated its growth, which rendered support to the American dollar.

On Monday the British government announced the budget deficit reduction program introduction. This fact supported the sterling temporarily. And the GBP/USD pair set its trading day maximum at the level of $1.4530.

We should mention, that the political instability on the Korean Peninsular influenced and increased the demand for the shelter-currencies. Consequently, the yen rate grew against its competitors.

On Tuesday the condition of the Spanish economy extended a serious pressure on the euro dynamics. According to the released information, the IMF mentioned, that the government of Spain would need to undertake urgent reforms. And the concerns over the crises of the European banking system strengthened. At the same time the Euro-zone industrial new orders volume for March demonstrated its significant increase: the indicator grew for 5.2% against the forecast growth of 2.5%.

The drop of the iron ore prices influenced the decrease of the Australian dollar rate on Tuesday. The oil rate continued to be under pressure due to the negative situation in Europe. The oil price dropped to the level of $67.57 per barrel. The gold price could not manage to grow above the level of $1,191 per ounce.

According to the released information on Wednesday, the Italian government announced of the approved plan aimed to reduce budget expenses. In addition, the following negative Euro-zone fundamentals were released on Wednesday. The German Gfk consumer confidence survey for June dropped and turned out to be below the forecast: 3.5 against the expected level of 3.6. The consumer spending in France for April also decreased considerably. Therefore, the EUR/USD pair showed its trading day minimum in the range of $1,2166.

At the same time the expectations for the US positive fundamental releases rendered support to the American dollar. The durable goods orders for April grew for 2.9% against the forecasted increase of 1.3%. The new home sales for April increased as well for 14.8% against the expected growth of 3.4%. The results of these indicators definitely prove the rehabilitation of the American economy.

After the lengthy fall the dynamics of the euro on Thursday finally demonstrated its growth. The released announcements regarding the fact, that China was not going to reconsider its foreign exchange reserves on assets denominated in euro, rendered substantial support to the European stock markets and the euro rate. The intentions of China to continue investments into the European Union had a positive influence on the market sentiments. And the EUR/USD pair managed to reach its daily maximum at the level of $1.2390.

Against the background of the decreased demand for the shelter-currencies and the renewed interest for the risk assets, the rate of the yen dropped.

Due to the American dollar weakness against its competitors, the oil rate jumped to the level of $73.60 per barrel. The gold price also showed an increase to the $1,214 mark per ounce.

We should mention, that the initial jobless claims in the US, which was published on Thursday, turned out to be below the previous level: its factual value of 460 thousand against the previous level of 474 thousand, while the forecast was at the 455 thousand mark. As a result, the US dollar received some support.

At the end of the week the euro renewed its negative dynamics, and the EUR/USD pair dropped below the $1.23 level, and the British pound followed the euro and decreased to the $1.4450 mark.

Happy trading!

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