Forex

Currency market weekly review (January 21 - January 25, 2013)

Euro: The data published on Monday showed that the producer price inflation in Germany rose in December with slower pace than expected did not influence much the euro dynamics against the dollar. The EUR / USD pair just slightly grew to range of $ 1.3300 -$ 1.3332 during the sessions. The currency on Tuesday when the released data showed that the level of confidence among German investors rose in January to its highest level for the last 2.5 years, adding a sign that Europe's largest economy is gaining momentum. The single currency was also supported by the published information that the Bundesbank’s representative has denied rumors that Mr.Weidmann was planning to step down as president of the Central bank of Germany. The EUR / USD couple showed vigorous trading dynamics while publication of the above mentioned news; the pair rose to $ 1.3371 then fell sharply to $ 1.3266 where it rebounded back to the level of $ 1.3360. The EUR / USD pair started one more attempt to overcome the $1.34 level On Thursday sessions. The euro currency strengthened against the dollar on results of the Euro-Zone Purchasing Manager Index Composite report , which showed that activity in the private sector continued to grow in January, rising this month to 48.2, compared to 47.2 in December, where the expectations of experts were at around 47.5. Meanwhile, the Euro-Zone Purchasing Manager Index Services report which measures the index of business activity in the services sector rose to a level of 48.3 up from 47.8 in December. Another data confirmed that the index of business activity in the manufacturing sector rose to the level of 47.5 from 46.1.The EUR / USD pair succeed finally moving to the level of $1.3480 on this positive news.

US Dollar: The dynamics of the U.S. dollar against major currencies in the period from January 20 to 25 was quite noisy and volatile, as background of published news was rich and controversial. The dollar tried against weak statistics from the U.S. country. The volume of Existing Home Sales unexpectedly fell by 1% in monthly term to 4.94 million. One more negative brought the report Chicago Fed Nat Activity Index the performance of which showed decrease to 0.02 points thus revealing slowed activity in December. It also grew after the International Monetary Fund downgraded forecasts for the World’s GDP for the current year. It was expected that the growth of world GDP in 2013 will be at 3.5%,however, compare with the October’s forecast it was expected increase by 3.6%.The IMF expects Eurozone’s GDP contraction by 0.2 % this year, rather than growth. However, the U.S. dollar was not able to change its position significantly this week. The Dollar index recorded small loss of 0.25% on Friday’s sessions.

British Pound: This entire positive on Monday was associated with the publication of the data, which showed that house prices in the UK rose in January, along with the number of new sellers. Also, the improved mood among market participants supported the currency today. According to the report, the Rightmove House Prices in the first week of January rose 0.2 %, compared with December’s fall of 3.3%. The result also confirmed that the annualized prices were 2.4% higher than during the same month last year. The GBP / USD pair rose to $ 1.5880 on Tuesday even despite the fact that the published data showed a sharp drop in the balance of industrial orders. As it was revealed, the CBI Trends Total Orders fell in January to the level of -20 compared to -12 in December and expectations of the -11. In addition, the CBI Trends Selling price grew to 21 values where the forecasts were at the level of 16. The GBP / USD pair fell to the lows of $1.5800 on Wednesday. Then the pound currency rose on released today data which showed that the number of applications for unemployment benefits fell last month to 12,1K. The news was a big surprise to many economists, who projected that the value will increase to 0.5K. The Claimant Count Rate for December remained unchanged and amounted to 4.8% which was in line with estimates. At the same time, the unemployment rate, which is calculated according to ILO and called ILO Unemployment Rate, fell during September and November to 7.7%, compared to 7.8 % forecasted. The quite negative data published on Thursday dropped pound to $ 1.5758 area. The number of approved applications for mortgage loans remained almost unchanged in December, reaching with 33.6K units, while analysts had expected growth to 34.1. The published today retail sales data the growth of which slowed slightly in January, but was still higher than expected could not help the currency to rebound from deep lows. The Reported Sales of retailers reported an increase in sales compared to last year resulting increase to 17 marks which beat the average of predictions of drop to 10 and compared to 19 in December. Moreover, the GDP data for the fourth quarter were worse than expected and increased pressure on the sterling.

Japanese Yen: The yen rose on Tuesday against the dollar, significantly rebounding from the 3-years low level after the Bank of Japan said that it will start buying assets worth about 13 trillion yen per month from January to January 2014. The fact immediately disappointed many investors who expected the more decisive actions. The USD / JPY pair during the European session fell to the Y88.35 area. In overall, the Japan's currency has increased by at least 0.25% against all 16 major counterparts. In addition, the Board of the Bank approved by seven-to- two the decision on introduction of the inflation target of 2% instead of the current benchmark of 1% and for this reason to ease even more its monetary policy. Mr. Abe, however, criticized this decision calling it as too weak commitment. The currency continued its two-day growth on Wednesday due to the forecast that deflation in Japan was observed in December. The decline in consumer prices in Japan, accordingly the consensus of forecasts, would accelerate to the most significant level since August in December to 0.2 % yearly from 0.1% in November (excluding fresh food). The USD / JPY pair fell by updating week low during the Asian session. Also, the yen grew up against almost all its rivals on speculations that the measures that will be announced by the Bank of Japan would not be enough to stimulate economic growth and weaken National currency. Against the published on Thursday data which reported the growth of the performance of China’s economy where the manufacturing PMI rose in January achieving the highest value in the last two years, the yen immediately weakened against most of its rivals. Also, this day in Japan was published statistics on the trade deficit of the country. Accordingly report of the Ministry of Finance, the index recorded 6.9 trillion yen (78.5 billion dollars).This figure was the worst for the state in the history of Japan. The trade deficit in 2011was much lower - $ 54 billion over the past 12 months, the volume of Japanese exports fell by 2.7% to 63.7 trillion yen (722.6 billion dollars), imports increased by 3.8% - up to 70.7 trillion yen (801.01 billion dollars). The USD / JPY pair rose to Y89.72 area during the European session. The currency continued to weak against the dollar after the Deputy Minister of Economy of Japan Mr. Nishimura said that level of 100 yen for the U.S. dollar will not be a problem for the currency and its collapse is not over yet. The yen fell by at least 1% against all 16 major currencies, and the USD / JPY pair rose to Y90.72 during the session.

Swiss Franc: The currency continued to strengthen against the euro. The uptrend was resumed after hitting on Friday the lowest level since the Swiss National Bank imposed restrictions on the currency in 2011. Swiss franc: The currency rose against the dollar after the report showed that the confidence among Swiss investors rose in January, showing the fourth monthly increase, and reached its highest level since May 2012, which added signs of the economy’s stabilization. The index of investors’ expectations, which is used to assess the potential economic development for six consecutive months, rose in January to a level of -6.9, compared with -15.5. At the same time, the index, which measures current economic conditions rose to the level 16 vs. 6.6 before.

Australian dollar: The Australian dollar fell after the publication of data on inflation in the country. The data showed that the consumer price index in Australia increased by 0.2% compared with the previous three months versus the expectation of the analysts of growth by 0.4%.