Weekly review for 16 – 20. 08, 2010

The first trading day of the previous week saw Japanese yen growth against the major currencies. Japanese Gross Domestic Product indicators, released on Sunday, turned out to be below expectations. The first trading day of the previous week saw Japanese yen growth against the major currencies. Japanese Gross Domestic Product indicators, released on Sunday, turned out to be below expectations. The GDP annualized for the second quarter decreased to 0.4% against the forecasted 2.3%. Therefore, the outlook for the world rehabilitation rate dropped. Consequently the demand for the save-haven currencies increased. The speculations regarding the slow-down of the world rehabilitation rate pressured the New Zealand dollar rate. And the dropped expectations for the possible increase of the principal rate of Australia pressured the national currency rate.

The greenback decreased on Monday against the euro due to the released negative US fundamentals. The Empire Manufacturing index for August turned out to be the level of 7.10 against the forecasts of 8.0. The Net Long-term TIC flows for June was at the level of $44.4 Billion when the predicted level was $45.7 Billion. And, finally, the NAHB housing market index for August dropped to the level of 13 against the expectations of 15 and previous level of 14.

Risk appetite has moved higher on Tuesday, and the save haven currencies were under pressure. The EUR/USD pair showed maximums at the level of $1,2915. But the release of the German ZEW Survey (Economic Sentiment) for August rendered negative influence on the euro. The indicator showed unexpected reduction to 14 against its forecast of 20. And the EUR/USD rate dropped to $1.2860.

The sterling traded in the range of $1,5630-$1,5700 against the American dollar on the same day. Following the release of the annualized Retail Price index for July, which happened to drop to 4.8% against the forecast of 4.9%, the sterling rate decreased. The increased interest this week was placed on the Bank of England Minutes, which was planned to be released on Wednesday.

The Japanese yen continued to trade at the level of its maximums, nevertheless, the rate was under pressure for the following reasons: the head of the Bank of Japan and the Prime minister of Japan could probably discuss the recent rally of the national currency at their upcoming meeting. According to the growing speculations, the possible Bank of Japan intervention could be arranged in the nearest future, aimed to limit the further rate growth.

The British Pound managed to reach maximums at the level of $1.5669 during the European session on Wednesday as the released Bank of England minutes showed that one of the members suggested to raise the principal rate to 0.75%. The board member Andrew Sentence expressed his confidence that “economic conditions had improved over the past 12 months”. The EUR/USD pair showed maximums at $1.2908. Among the released fundamentals, we should mention the Euro-zone construction output for June, which demonstrated growth to 2.7%.

Concerns over the Euro-zone rehabilitation rate slow-down pressured the euro on Thursday. In particular, the social tensions in Greece, as an outcome of the rigid economy measures, created additional negative influence over the Euro-zone outlook. According to the experts’ forecasts, the unemployment rate in Greece would show growth. The EUR/USD rate decreased to the $1.2800 level. The gold metal dropped to $1229.28 after the reached maximums. The gold price was also pressured by the growing concerns over the social tension in Greece.

The greenback managed to rehabilitate as the demand for the risky assets dropped on Thursday. This was a result of the US negative fundamentals release. The initial jobless claims grew and reached 500K against the forecasted 478K. The Philadelphia Federal index for August decreased to -7.7 against the expected 7.0 and previous level of 5.1.

Friday saw the EUR/USD minimums at the level of $1.2661, as the announcement of Aleks Weber was released, regarding the possibility that the Euro-zone economy would need additional support from the ECB up to the end of the year. Therefore the demand for the risky assets decreased drastically. The GBP/USD pair dropped to $1.5462.