Weekly review for 27.09 – 01.10, 2010

The beginning of the previous trading week saw the euro still holding its maximum levels against the greenback, but the released data could not allow the euro grow higher. In particular, the rating agency Moody’s reduced the credit rating of the Anglo Irish Bank Corporation Limited with the negative forecast The beginning of the previous trading week saw the euro still holding its maximum levels against the greenback, but the released data could not allow the euro grow higher. In particular, the rating agency Moody’s reduced the credit rating of the Anglo Irish Bank Corporation Limited with the negative forecast, and the final decision regarding the necessary support for the bank would be disclosed by the Irish Government before October 1-st. As a result, concerns regarding the condition of the European banks reinforced, which rendered additional pressure on the euro. According to the speculations, some banks would require additional capital for their stabilization and restructuring. According to the published information, the European Committee was not sure about the stability of the German banks either.

Concerns over the European banks stability could pressure the oil rate as well. The prices were set around the $76.60 level per barrel. The rate showed decrease to $75.80 per barrel.

According to the released information on Monday, the probability that the Reserve Bank of Australia would increase the principal rate next week, rendered support to the Australian dollar, which reached its 2-year maximums against the greenback.

During the morning trading on Tuesday the euro continued to be around its 5-months maximum against the greenback. But concerns over the European banking sector continued to pressure the euro as well. The EUR/USD rate dropped to $1,3400. The decrease of the stock market also pressured the euro. In addition, the rating agency Standard & Poor mentioned that the further reduction of the European countries’ ratings would probably continue.

The GBP/USD maximum was set at the $1.5892 level after the release of the strong fundamentals. In particular, the CBI Reported sales for September increased unexpectedly to 49 from the 35 last month and compared to the forecasted level of 25.

The oil prices grew to the $75.95 mark per barrel on the same day, due to the US dollar weakening and concerns over the next storm forecasts, which was approaching the Gulf of Mexico.

The yellow metal rate strengthened against the background of the general US dollar weakening. The new historical gold maximum was established at the $1307 mark per ounce.

Negative US fundamentals were released on Tuesday, and the outlook for the world largest economy remained unclear. The US consumer confidence for September dropped to 48.5 against the previous month’s level of 53.2 and its forecast of 52.1. In addition, the Richmond Fed manufacturing index demonstrated decrease against the forecasted growth. As a result, the greenback dropped against the euro, the sterling and the yen. Concerns over the possibility of the double-dip recession reinforced.

It should be mentioned, that the released Tankan survey for the third quarter was mixed. According to the published data, the Japanese manufacturers were concerned about the strength of the national currency. At the same time the current business conditions demonstrated improved results.

On Wednesday the American dollar was still under pressure, as a result of the previously released negative US fundamentals. The substantial decrease of the US consumer confidence index had a strong influence on the greenback. Speculations regarding the further FRS quantitative weakening policies, aimed to support the American economy, continued to pressure the US dollar rate as well.

Japanese Tankan indices, which were published yesterday, continued to render support to the yen on Wednesday as well. The yen strengthened, and the USD/JPY reached minimums at the Y83,50 level.

On the same day the oil rate showed some growth over the released industrial business activity index from China, which demonstrated increase. The rate grew to the $76.56 mark per barrel.

Experts’ expectations for the weak US statistical data and the concerns over the slow-down of the US economy rehabilitation rate continued to pressure the greenback. The Chicago purchasing manager for September, which was planned to be published on Thursday, was expected to drop to 55.9 from the previous month’s level of 56.7. According to the current situation, the greenback decreased and reached 8-months minimums against the major currencies. At the same time, the oil rate continued to increase and reached the $78 mark per barrel.

The following unexpected negative data was released in Euro-zone on Thursday, which changed the trading dynamics of the euro during the morning trading. The rating agency Moody’s cut the credit rating of Ireland, due to the weak economic outlook and fiscal problems. In addition, the Central bank of Ireland stated that Anglo Irish Bank Corp and Allied Irish Banks Plc might need additional capital of up to 14.4 billion euro’s. As a result, the euro decreased 0.3% against the US dollar. The greenback managed to rehabilitate and strengthen over the euro temporarily, as the negative European news were released.

Against the background of the European problems, the sterling managed to gain strength. As a result, the pound grew for 0.3% against the US dollar and strengthened against all major currencies. In addition, the Nationwide house prices grew in September, while their forecast was negative.

At the same time the released Australian fundamentals dragged the Australian dollar rate lower against most of its competitors. The building approvals in Australia for August demonstrated an unexpected drop, the private sector credit turned out to be below the forecast, which decreased the expectations for the principal rate increase by the National Bank of Australia. The negative released New-Zealand statistics also resulted in the drop of the national currency against its major competitors. The possibility of the interest rate increase is very low.

The American news, which were published during the same day, pressured the greenback again, and the previous tendency returned. The American dollar started decreasing against the euro. The Annualized Gross Domestic Product for the second quarter showed growth for 1.7% against the predicted increase for 1.6%. The initial jobless claims turned out to be 453 thousand against 460 thousand (which was a decrease from the previous level of 469 thousand). Personal consumption grew above the forecast as well.

Friday showed a continuing weakness of the greenback, and the EUR/USD pair reached maximums at $1,3770. The GBP/USD pair grew also and set maximums at the $1,5800 mark. The gold established new historical maximums at the $1317.32 rate per ounce.