Weekly market review for 02 – 06. 08, 2010

The beginning of the previous trading week saw confident growth of the greenback competitors. And strong Euro-zone manufacturing fundamentals fueled the euro growth. Monday morning trading experienced the US dollar weakening as the expectations for the negative US data increased. The beginning of the previous trading week saw confident growth of the greenback competitors. And strong Euro-zone manufacturing fundamentals fueled the euro growth. Monday morning trading experienced the US dollar weakening as the expectations for the negative US data increased. The ISM Manufacturing for July was predicted to fall to 54.5 from its previous value of 56.2. At the same time the released report showed that Great Britain purchasing manufacturing index for July turned out to be higher than its expectations: 57.3 against the forecasted 57.0. According to the experts’ opinion, the British economy rehabilitation rate was higher, than its previous forecasts. And the GBP/USD pair set maximums at the $1,5800 mark.

We should mention that the released on Sunday AiG performance of manufacturing index for July showed growth to 54.4 mark, which supported the Australian dollar rate against the US dollar.

The speculations regarding the Chinese economic growth supported the oil prices. The rate was set above the level of $79 per barrel during the morning trading. Later on the oil rate continued its rally, and reached the $81.70 maximums per barrel. As a result the Canadian Dollar rate showed growth as the oil rate reached its maximums.

At the second part of the day on Monday the euro rallied to its 3-months maximum against the US dollar as the ISM manufacturing index was published. The indicator turned out to be at the level of 55.5, which was higher than its expectations of 54.5. The US construction spending showed growth as well. The European corporate reports showed very positive results, which increased investors’ risk appetites. The largest European bank HSBC announced of its profit growth for $6.76 billion in it’s semi-annual report. The French bank BNP Paribas stated that its net profits increased for 32% in the second quarter.

Tuesday was marked by the unexpectedly negative publication of the Australian statistics. Monthly Building approvals in June were expected to rise for 2.0%, but the indicator dropped for 3.3%. The retail sales were predicted to increase for 0.4%. but its volume grew only for 0.2%. The Australian dollar dropped against the US dollar after the released decision of the Reserve Bank of Australia to leave the principal rate unchanged at the level of 4.50%. The supporting statement of the RBA confirmed that the Australian labor market continued to stabilize and that the Australian monetary policy was considered to be correct.

The greenback weakened on Tuesday as a result of the slow-down of the US economy rehabilitation. The negative forecasts for the US fundamentals were expected to reinforce a weakened outlook for future growth. Speculations regarding the fact, that the FRS might introduce additional stimulating measures pressured the US dollar. The EUR/USD pair traded above the $1.3261 mark on the back of US dollar weakness. According to the expectations the released US statistics reinforced the negative investors’ outlook. The ABC Consumer confidence dropped for 50 against the expected decrease for 46. Monthly pending home sales dropped for 2.6% in June against the forecasted growth for 4.0%. Factory orders decreased below the expectations in June as well as the reduced personal consumption, personal income and personal spending indicators.

At the same time the GBP/USD pair continued its sharp rally and set 6-months maximums at the level of $1.5967 .

On Wednesday’s European trading session we saw the change in the sterling direction. The pound slipped to a low of $1.5891 mark. At the same time the monthly Halifax house price for July increased for 0.6%, while the forecast showed decline for 0.3%. On the other hand, the purchasing manager index dropped below the expectations (53.1 against the forecasted level of 54.5 and 54.4 for the previous month). The outlook for the future growth was considered to be “uncertain”.

The Japanese yen was supported as a safe haven currency on the back of the negative US data. The American dollar dropped to its yearly minimums of Y85.32 against the yen.

The release of the optimistic US fundamentals during the Wednesday’s American trading session rendered support to the greenback. In particular, the ADP employment for July grew for 42K, when the forecasted growth was at the level of 33K. The ISM non-manufacturing composite index also increased to 54.3 while the predictions were at the level of 53.0.

On Thursday the European Central Bank announced of its decision to leave the principal rate at the previous level of 1.00%. The market participants’ expectations of the reduction in the US Initial jobless claims publication on Thursday supported the American dollar, and the EUR/USD pair decreased to the $1,3120 range.

According to the expectations, the Bank of England left the principal rate unchanged at the level of 0.50%. The GBP/USD pair continued to trade a little below the maximums of $1.5924 level.

The released on Wednesday New-Zealand unemployment rate showed unexpected growth to 6.8%, while the forecasted increase was only to 6.2% from the previous volume of 6.0%. As a result, the national currency rate dropped considerably on Thursday, since the probability of the principal rate increase by the Reserve Bank reduced.

The negative publication of the Initial jobless claims reinforced concerns over the rehabilitation of the American economy. The published statistics showed unexpected jobless claims growth to 479K compared to forecasted 455K. European stock markets dropped as all financial markets were under pressure. And the released US fundamentals increased the demand for the Japanese yen, as a safe-haven currency.