During the whole previous trading week the euro was demonstrating strength over the weakening US dollar. But on Monday the euro was under temporary pressure due to the negative influence from the European banking sector. During the whole previous trading week the euro was demonstrating strength over the weakening US dollar. But on Monday the euro was under temporary pressure due to the negative influence from the European banking sector. The released information, that the budget deficit of Ireland was expected to show a higher figure, rendered additional pressure to the euro. The EUR/USD pair decreased to the $1.3665 figure. The sterling showed negative dynamics as well and the GBP/USD rate dropped to the $1.5750 mark. At the same time, the released fundamentals were positive on Monday: the UK Purchasing manager index construction for September grew to 53.8.
Market participants were waiting for the results of the Bank of Japan meeting, which started on Monday as well. According to the expectations, the Bank of Japan would decide to take additional measures to support the Japanese banks and buy out the state bonds. The interest rate was expected to be left at the previous level of 0.1%. As a result, the yen stopped its growth against the greenback.
On Tuesday the EUR/USD rate managed to grow and reach its trading session maximums at the level of $1.3792. The release of the strong European statistics supported the euro growth, which also reinforced the speculations over the increased growth rate of the European economy rehabilitation. European PMI data showed better than expected results, which lifted the risk appetites. At the same time, the Euro-zone retail sales demonstrated weaker results, compared to the forecasts, but did not have an impact of the price movement. The greenback reached low levels against the euro and the yen due to the continuing speculations regarding the intentions of the FRS to weaken the national currency and increase the government debt. On the same day the UK PMI index showed an unexpected increase compared to the forecasted drop. Therefore, the GBP/USD rate also grew and set its trading session maximums at the $1.5913 level.
The Bank of Japan interest rate decision was very unexpected by the investors on Tuesday. The principal rate was actually decreased to the level of 0.0%. The Bank of Japan also surprised the markets by easing the monetary policy further. The Japanese yen reacted with a considerable drop against the major currencies. As a result, the USD/JPY pair grew to the Y83,98 mark.
Market participants were also surprised by the decision of the Reserve Bank of Australia to leave the principal rates unchanged at the level of 4.50%. Experts forecasted the interest rate increase for 25 basic points. But the Australian dollar was pressured even harder, when the accompanying statement read that “the financial markets were still uncertain”. The central bank also mentioned that the principal rate could be raised in the future at some point. As a result, the national currency weakened against all its competitors.
On Tuesday the gold rate reached its new historical maximums at $1328.25 per ounce against the weakening of the greenback and euro growth.
On Wednesday the US dollar was still trading at the 8-months minimums against the euro. The EUR/USD pair reached the $1,3880 mark. The pressure was also coming from the unemployment rate, which would be released on Friday, and was forecasted to advance to 9.7 % from 9.6 %. The initial jobless claims were expected to show growth as well on Thursday.
As the greenback showed a continuous weakening, the oil rate grew and reached the level of $82.86 per barrel.
Meanwhile the gold continued to grow and renewed its historical maximum at $1349.90 mark per ounce. The silver also showed growth to $23.07 per ounce, as investors expressed great interest in precious metals.
On Thursday the EUR/USD pair has breached the psychologically significant 1.40 mark. According to the expectations, the ECB left the principal rate unchanged at the 1.0% level. The ECB President Jean-Claude Trichet mentioned, that rates remained “appropriate”. On the same day the GBP/USD rate grew to the $1.5960 mark, due to the released positive UK statistics. In particular, the Industrial production increased for August for 0.3%, compared to the forecasted 0.2%, and the annualized indicator showed growth for 4.2% against the predicted 4.1%. The Bank of England left the principal rate unchanged at the level of 0.5% and the Bank of England asset purchase target was set at the previous level of 200B. As a result of the Bank of England decision, the sterling tested the $1.6000 maximum.
The Australian dollar rate also demonstrated a rally on Thursday, being supported by the increased prices for metals. The AUD/USD reached an all-times high. The released Australian fundamentals showed, that the national economy was on a correct rehabilitation path, which supports speculations that the principal rate would be increased. The employment change for September showed increase for 49.5K, compared to the forecasted growth for only 20.0K. At the same time the unemployment rate stayed at the previous level of 5.1%.
At the same time the oil rate grew and reached the $83.87 mark per barrel. And gold renewed its historical maximum again at the $1,366 level, and silver showed considerable growth as well.
On Friday the greenback dropped below the Y82 against the Japanese yen after the release of the American labor market statistics. Change in non-farm payrolls actually decreased for 95 thousand, but the unemployment rate stayed at the 9.6% level, when experts forecasted growth to 9.7%. As a result, the greenback did not manage to rehabilitate and regain any of the previously lost positions against the competitors.