Market review for 7 – 11. 06, 2010

The speculations regarding the possibility that Hungary might not avoid the budget crises, continued to pressure the euro during the first day of the previous trading week.  The speculations regarding the possibility that Hungary might not avoid the budget crises, continued to pressure the euro during the first day of the previous trading week. Nevertheless, the released strong fundamentals from Germany changed the euro dynamics. The factory orders volume for April grew sharply and happened to be significantly above the forecast: its factual growth for 2.8% against the predicted decrease for 0.4% pushed the euro upwards immediately. And the EUR/USD pair increased to $1,1990, but by the end of the day the rate dropped to the $1,1920 mark. At the same time the negative US labor market data, which turned out to be below the forecasts during the previous week, continued to influence the market participants’ concerns. The announcement of the British Prime Minister, David Cameron, regarding his intentions to fulfill serious reduction of the government expenses, resulted in a sterling growth against the euro and the US dollar. And the GBP/USD rate strengthened to the level of $1,4561, and then the rate dropped.

On Monday the oil rate demonstrated its increase to $72.04 per barrel after the statement, that on the June 5-th the 10,500 barrels of oil were recollected, while quantities of much more oil was out flowing from the wells into the Gulf after the accident.

On Tuesday the euro demonstrated a diverse dynamics. The temporary euro increase was a result of the statement of the European countries’ leaders regarding their intentions to undertake everything possible in order to avoid the default. At the same time the FRS President, Ben Bernanke, showed in his statement his confidence in the moderate rehabilitation of the US economy, which increased the investors’ optimism and supported the temporary growth of the demand for the high-risk currencies.

The announcement of Fitch Ratings regarding the necessity of an urgent reduction of the UK budget deficit lead to the significant sterling rate drop against its competitors on Tuesday. And the GBP/USD pair collapsed to the level of $1,4344.

It should be mentioned, that against the background of the speculations regarding the possible increase of the principal rate by the Reserve Bank of New Zealand, the high-risk currencies demonstrated their growth.

On Wednesday the Australian Westpac consumer confidence index decrease resulted in the Australian dollar rate drop. And according to the expectations, the principal rate of New Zealand was increased by the Central bank to the level of 2.75%, which influenced the growth of the national currency rate.

At the same time the oil rate demonstrated its growth to the $74.39 mark per barrel, due to the released US oil inventories decrease.

On Thursday the increased market participants’ optimism resulted in the demand growth for high-risk currencies. The signs of the world economy rehabilitation as well as the positive fundamentals, which were released on Thursday, resulted in the growth of the euro rate. According to the expectations, the Euro-zone principle rate was left by the ECB unchanged at the previous level of 1.00%. The EUR/USD pair demonstrated its maximums above the $1,2140 mark.

The Bank of England also decided to leave the principal rate at the previous level of 0.50%. The sterling reacted with an increase. Following the euro growth, the GBP/USD pair demonstrated its growth almost to $1,4716.

On the same day the unexpected decrease of the Australian unemployment rate below the forecasted level supported the demand growth for the high-risk currencies and the national currency rate increase. And the released data of the export growth in China and the positive unemployment rate data in Australia resulted in the oil rate increase. The oil price increased to the level of $74.96 per barrel.

On Friday the euro rate growth continued, and the EUR/USD pair reached its weekly maximum above the level of $1,2150. Following the euro, the sterling rate increased to the $1,4757 mark.