Weekly market review for 30.08 – 03.09,2010

The beginning of the previous week saw the sharp of the Japanese yen against its major competitors. At the extraordinary meeting on Monday, the Bank of Japan left the principal rate unchanged at the level of 0,1% and increased credit facilities to 30 trillion yen. But the speculations pointed out that those measures were not enough to weaken the national currency. The beginning of the previous week saw the sharp of the Japanese yen against its major competitors. At the extraordinary meeting on Monday, the Bank of Japan left the principal rate unchanged at the level of 0,1% and increased credit facilities to 30 trillion yen. But the speculations pointed out that those measures were not enough to weaken the national currency.

On the same day the Euro-zone fundamentals showed unexpected encouraging results. The Euro-zone consumer confidence turned out to be -11, while the forecast was -12. The Euro-zone economic confidence resulted at the level of 101.8 against the predicted 101.6. But the speculations regarding the possibility that ECB would decide to continue its economy stimulating program into the next year pressured the euro. The EUR/USD pair traded in the range of $1,2710-$1,2770.

The UK financial markets were closed for the holiday on Monday, but the sterling demonstrated increase due to the released fundamentals. The Gfk Consumer confidence survey for August turned out to be above expectations: -18 against the forecasted -24 and the previous level of -22. As a result, the GBP/USD rate strengthened at the level of $1,5560.

Opposing its decline during the three previous days, the greenback showed a steady growth on Monday. Personal spending for July increased to 0.4% against expected 0.3%, at the same time Personal income for the same month turned out to be 0.2% against expected 0.3%. At the same time following the release of the negative fundamentals in Canada, the speculations regarding the slow-down of the Canadian economy rehabilitation rate increased. The industrial product price turned out to be 0.1%, which was below the expectations of 0.4%. The Current Account (BoP) dropped to -$11.0B. As a result the Canadian dollar dropped against the greenback.

On Tuesday the EUR/USD pair showed minimums in the range of $1,2640. The released Euro-zone unemployment rate for July turned out to be at its high level of 10%, just as expected. According to the experts’ opinion, the ECB will leave the principal rate unchanged during their meeting on Thursday. At the same time the Japanese yen continued its rally against its competitors against the background of the negative expectations for the US employment statistics.

The US Consumer confidence indictor for August was published on Tuesday, which showed an unexpected growth to 53.5 level against the forecast of 50.7 and previous month’s level of 51.0. As a result, the stock market was supported and the greenback dropped against the euro. Risk appetites increased. According to the released FOMC minutes, the economic activity in the second half was predicted to be weaker, than initially expected and that the recovery may weaken further.

High-risk assets were supported on Wednesday by the released positive fundamentals from Australia and China. The EUR/USD pair grew above the level of $1,2700. The European trading session set maximums at the $1.2800 mark. The Australian Gross Domestic product for the second quarter showed unexpected growth for 1.2% against the forecast of 0.9%. This factor boosted the risk sentiment of Wednesday. And the released Chinese business activity manufacturing index showed growth and turned out to be above its forecast.

The yen demonstrated decrease against the greenback and the euro during the morning trading as the demand for the save-haven currencies dropped, as optimistic fundamentals were published in Australia and China.

The sterling also showed consolidation and the GBP/USD pair reached $1,5400. But the Manufacturing Purchasing manager index for August dropped to 54.3 against its forecast of 57.0, and the pound reacted with a decrease.

The advance of the euro fully depended on the risk sentiment on Wednesday, but market participants were looking towards the ECB decision planned for the next day publication.

The released US fundamentals rendered additional support to the high-yielding assets. The ISM manufacturing for August turned out to be 56.3, above its forecast of 52.8 and previous level of 55.5. As a result, the greenback strengthened against the yen. In addition, the US stock markets closed the trading day on Wednesday with a considerable growth, and the concerns over the double-dip recession weakened.

Morning trading on Thursday was effected by the released Australian trade balance, which showed surplus reduction to 1888 billion Australian dollars against the forecast of 3100 billion Australian dollars. As a result, the investors’ willingness to take risks dropped and the Australian dollar reacted with a decrease as well.

Market participants were under pressure of expectations for the ECB decision. The EUR/USD pair traded in the range of $1,2770-$1,2820. The released Euro-zone data was positive and supported the euro: in particular, the Euro-zone Gross domestic product increased for 1.9% and the Euro-zone household consumption grew for 0.5%.

The ECB left the interest rate unchanged at the previous level of 1.00%. The program of the immediate banks’ crediting was continued for 2011 as well. The head of the ECB, Jean-Claude Trichet, mentioned at his statement, that the double—dip recession was not actual at the moment.

On Thursday investors were under pressure of expectations for the negative US fundamentals. The US change in non-farm payrolls in August, which was planned to be released on Friday, was expected to drop for 105K after the drop for 131K in July. The US pending home sales demonstrated an unexpected increase for 5.2% against the forecasted drop for 1.0%. This data supported traders’ risk sentiment. Being supported by the positive US fundamentals and Mr.Trichet statement, the euro grew against the greenback and showed confident stabilization.

The sterling decreased to the range of $1,5360. The negative Great Britain fundamentals pressured the pound. The Nationwide house prices decreased below expectations and the Purchasing manager index construction turned out to be below its forecasts.

We should mention, that the released on Thursday annualized Swiss Gross domestic product showed unexpected increase for 3.4% against the forecasted increase only for 2.6%. As a result, the Swiss frank demonstrated considerable growth against the greenback.

New incident at the Gulf of Mexico, which reported of oil leakage, pushed the oil rate higher. As a result, the oil price reached $74.26 mark per barrel.

Friday’s release of fundamentals surprised investors. The US change in non-farm payrolls resulted in a decrease of only 54K instead of expected drop of 103K. Therefore, the EUR/USD pair managed to show maximums at the level of $1,28

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