Market review for 15 – 19. 02, 2010

In the beginning of the trading week due to the continued decrease of the investors’ willingness to risk, the euro stayed under pressure.

In the beginning of the trading week due to the continued decrease of the investors’ willingness to risk, the euro stayed under pressure. As a result of the EC financial ministers meeting, it was decided to call the Greece government to take the necessary measures aimed to reduce the budget deficit. The uncertainty with the Dubai World financial crises also rendered support to the US dollar, as a shelter-currency. On Monday the US financial markets were closed due to the celebration of the national holiday The President’s Day. And the Asian stock markets were also closed on Monday due to the celebration of the Chinese New Year.

The euro dynamics switched in the opposite direction on Tuesday. The prime Minister of Greece confirmed his counties’ readiness to undertake the necessary reforms aimed to solve the budget deficit problems. The market participants drew their interests to high-risk assets again. The positive Euro-zone fundamentals supported the euro growth as well. In particular, the German ZEW Survey (Economic Sentiment index) for February turned out to be at the level of 45.1 against the expected level of 41. Therefore, the EUR/USD pair showed its maximums in the range of $1,3778. At the same time, the positive US data, which was released on Tuesday, rendered a minor support to the dollar. The Empire Manufacturing index for February demonstrated its growth: the factual level of 24.91 against the forecasted level of 18 and the previous mark of 15.92. The Net Long-term TIC Flows also happened to be above expectations.
The Great Britain statistics, which was published on Tuesday, could not render support to the sterling. The consumer price index for January dropped and turned out to be below the forecasts, and the retail price index for January happened to be at the predicted level, but below the previous mark. In spite of the above, the GBP/USD pair managed to grow and almost reached the $1,58 level, though the rate decreased after that.

We should mention, that against the background of the possible increase of the principal rate in Australia in the nearest future, the Australian dollar grew against the American dollar.

The investors’ burst of uncertainty and the positive fundamentals, which were published on Wednesday, rendered support to the American dollar. The industrial production volume for January grew to the level of 0.90% against the forecast of 0.70%. The housing starts also increased and amounted at the level of 591 thousand opposing to the expected level of 580 thousand. The EUR/USD pair dropped to its minimums at the level of $1,3587. The sterling received strong negative influence from the released on Wednesday unemployment data in Great Britain. In particular, the jobless claims volume for January grew. And the GBP/USD pair decreased to the level of $1.5680.

On Thursday the euro currencies continued to stay under pressure due to the various factors. Though, the rate managed to rehabilitate a little thanks to the stock indices growth. The Euro-zone consumer confidence indicator dropped, which could not support the euro. And the EUR/USD pair managed to grow to the level of $1,3650, but then the rate reduced.

According to the FOMC minutes of the meeting release, the exit strategies from the economic stimulation programs were discussed. This factor supported the US dollar. The diverse fundamentals were published in the US, which could not render any support to the American dollar. The Philadelphia federal index for February turned out to be above the forecast: its factual level of 17.6 against the expected level of 17. And the initial jobless claims, on the other side, happened to be above the predictions: 473 thousand against the forecasted 438 thousand. The producer price index for January demonstrated its growth: 1.40% against the expected level of 0.8%.
The Bank of Japan left the principal rate unchanged at the previous level of 0,10%, which was published on Thursday.

The oil rate continued to grow and established its maximums at the level of $79.10 per barrel. And the gold prices increased as well and set its maximums above the $1125 mark per ounce.

By the end of the trading week the EUR/USD pair strengthened around the level of $1,3600. And the GBP/USD pair showed some rehabilitation at the $1,5450 mark.