Weekly market review for 5 – 9. 07, 2010

At the beginning of the previous trading week the trading activity was low and the US financial markets were closed due to the celebration of the American Independence Day. Monday did not bring any success to the euro. At the beginning of the previous trading week the trading activity was low and the US financial markets were closed due to the celebration of the American Independence Day. Monday did not bring any success to the euro. The speculations regarding the ECB decision regarding the interest rates influences the investor’s willingness to take risks. As a result, the euro rate dropped against all major currencies. The released Euro-zone PMI services index turned out to be a bit above the forecast, but did not have any impact on the trading dynamics. The EUR/USD traded in the range of $1,2520-$1,2560. The British pound was not supported by the published UK fundamentals either. The UK PMI services index showed a lower result for June: dropped from 55.4 to 54.4 (which was the lowest result in 10 months) against the forecasted 55.0. The GBP/USD pair was decreasing from the reached levels of $1,5200 to the support $1,5100 level.

Stock markets growth on Tuesday resulted in a decreased demand for the shelter-currencies and the euro rate consolidated. The EUR/USD grew to the level of $1,2600. The drop of the US dollar rate showed its 6-weeks low against the euro. The released US ISM non-manufacturing composite index for June showed an unexpected drop to the level of 53.8 against the previous month’s 55.4 mark and the forecast of 55.0.

According to the expectations the Reserve Bank of Australia left the principal rate unchanged at the previous level of 4,50% on Tuesday. At the same time, the RBA statement included the growth of the investments rate, moderate growth rate of the consumption expenditure and high prices’ levels of raw materials. As a result the Australian dollar rate grew and strengthened against the major competitor currencies.

Due to the growing concerns over the slow down of the world economy rehabilitation rate, the oil prices decreased and traded around the range of $71.85 per barrel. But driven by strong stock markets, the oil rate increased and reached the $73.65 mark per barrel during the trading day.

At the same time the gold rate dropped to $1191 for troy ounce. And the silver price decreased as well to $17.65 per ounce.

On Wednesday the demand for the high-risk currencies reduced. According to the released fundamentals, the factory orders in Germany for May dropped for 0.5% unexpectedly when the forecast showed growth for 0.3%. The EUR/USD rate dropped below the $1,2600 mark. The concerns over the slow-down of the global economy rehabilitation rate supported the Japanese yen as a safe haven currency on Wednesday morning. The yen strengthened against its major competitors. The USD/JPY pair decreased to the Y87,20 range.

The published data in Australia on Tuesday also supported the negative sentiments attitudes in the market. The AiG Perf of Construction index for June showed a considerable decrease. As a result the market participants’ uncertainty grew.

The gold rate dropped at Wednesday European session to the 6-week low level at $1186 per ounce due to profit taking.

The Wednesday American session showed some change as the risk appetites shifted. The signs of the US economy rehabilitation supported the growth rate of such currencies as Australian, Canadian and New-Zealand dollars. The stock markets growth influenced the drop of the US dollar rate as well. The oil prices showed growth to the level of $73.75 per barrel.

As the safe haven currencies started to loose their ground, the sterling strengthened. The pound was also supported since the announcement of the British government released its emergency budget aimed to reduce the budget deficit.

Thursday saw continued growth of the euro, supported by the speculations regarding the possibility that stress test results might turn out better than expected. Therefore, the market participants’ willingness to take risks grew. The IMF forecast of the increased global economy growth rate to 4,6% against the previous level of 4,2% supported the high-risk currencies as well. The EUR/USD rate increased to $1.2684 mark. According to the expectations, the ECB left the interest rate at the previous level of 1.00%.

The released on the same day employment change in Australia for June increased for 45.9 thousand against the growth for only 15 thousand. The unemployment rate dropped to 5.1%. These fundamentals boosted the investors’ willingness to take risks. Today the Australian dollar was the best performing major currency against the greenback.

Following the euro, the sterling rate increased as well. The GBP/USD reached the $1.5240 mark. According to the expectations the Bank of England announced the principal rate unchanged at the level of 0.50%. The oil rate also showed its maximums and almost reached the $75.00 per barrel level. The gold prices also increased to $1,199.60 per ounce.

The yen rate decreased as safe haven currencies dropped against the background of the Asian stock markets growth.

Some positive US fundamentals supported the risk appetites of the market participants as well. The released initial jobless claims dropped to 454 thousand against the forecasted level of 460 thousand. The US stock markets showed growth as well.

At the press-conference on Thursday, the ECB President, Jean-Claude Trichet, stated that the Euro-zone economy was strong enough regardless of some investors’ concerns. According to the experts’ opinion, the ECB President tried to introduce some confidence and to support the market participants’ optimism.

Friday saw the oil rate maximum reaching the level of $75.76 after the released drop of the US oil inventories.

The EUR/USD pair managed to reach its maximums above the $1,2700 mark, and the trading week was closed above the $1,2600 level. The GBP/USD pair grew to $1,5180 mark. The gold rate increased to $1,198.50 for troy ounce level.