Weekly review for 8 – 12. 11, 2010

During the whole previous week the greenback showed considerable consolidation against the background of the weakening euro. For example, on Monday concerns over the budget deficit of Ireland pressured the euro. During the whole previous week the greenback showed considerable consolidation against the background of the weakening euro. For example, on Monday concerns over the budget deficit of Ireland pressured the euro. The additional negative influence came from the political instability in Greece. The published on Monday Euro-zone fundamentals could not support the euro either, since the German monthly and yearly industrial production indicators dropped. As a result, the EUR/USD pair dropped to the level of $1,3930. During the European session the euro dropped to the $1.3890 minimums. The sterling also decreased and the GBP/USD pair showed the $1,6100 minimums.

In the beginning of the week the released information regarding the possible infection in kiwifruit orchards in New-Zealand pressured the New-Zealand dollar rate, which dropped against the greenback. At the same time the Swiss frank reached its maximums against the euro due to the released statistics. The unemployment rate in Switzerland dropped to 3.6% in October.

On Tuesday growing concerns over the European budget problems continued to pressure the euro. The EUR/USD pair decreased to $1,3850 mark.

The sterling was under pressure on Tuesday as well, due to the released RICS House price balance for October, which demonstrated an unexpected drop to -49% against the forecasted -39%. Previous month was at the -36% mark. The GBP/USD rate dropped to $1,6080. Nevertheless, by the end of the European session, the sterling managed to rehabilitate to the $1.6170 mark.

The Japanese yen demonstrated stabilization, and the USD/JPY pair dropped to the level of Y80,50. The yen grew against its major competitors as China announced of its decision to tighten the monetary control measures.

Meanwhile the “yellow metal” has reached its new historical maximum at the level of $1422.00 per ounce.

On Wednesday the speculations regarding the possibility that the ECB would seize the stimulating measures too early, pressured the euro. The rates of return of the state bonds of Ireland, Portugal and Greece decreased, which rendered additional pressure on the euro. At the same time the sterling showed considerable growth after the publication of the Bank of England’s quarterly inflation report. The GBP/USD pair reached the level of $1.6095. The report specified the projected inflation above 2%.

On the same day the Central bank of China increased the reserve requirements for the national commercial banks, and the USD/JPY pair crossed the Y82.00 mark and moved upwards.

The Canadian dollar demonstrated some rally against its competitors on Wednesday, in spite of the fact that the released Canadian merchandise Trade showed deficit in September, which turned out to be much below the forecasts. And the New-Zealand dollar weakened, since the REINZ house sales decreased for 35.9%, which turned out to be the biggest drop in two years.

On Thursday the European budget problems were in the spotlight again. According to the released information, the European countries were considering the possibility to render additional financial support to Ireland. The released weak Spanish GDP data pressured the euro as well. The EUR/USD pair was falling below the $1.3750 level.

The released on Thursday positive fundamentals from China supported the rally of the Yuan, and pressured the greenback. The Chinese consumer price index increased for 4.4%, the Producer price index grew for 5.0%, the purchasing price index and the industrial production data increased above expectations.

On Thursday the Australian employment change increased in October for 29.7K, but at the same time the unemployment rate for October grew to 5.4%, which was above the forecasted level of 5.0% and the previous month’s rate of 5.1%.

We should mention, that at the end of the week the oil rate grew and reached the level of $88.80 per barrel.

The sterling reached its 6-week maximums against the euro on Thursday. According to the published information, the Bank of England confirmed, that their bonds’ buy-out program would not be extended. As a result, the GBP/USD pair reached maximums at the level of $1,6180.

By the end of the week, the USD/JPY traded below the Y82,40 level. The general tendency of the market participants were to wait for the results of the G-20 meeting and not to invest in the risky assets.