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Currency market weekly review (November 11 - November 15, 2013)

November 18, 2013, Monday, 17:10 GMT | 12:10 EST | 21:40 IST | 00:10 SGT
Contributed by Forex-Metal

Euro: After European Central Bank surprised many market participants lowering the discount rate last week thus throwing the single European currency to very deep lows the Euro restored some of its positions this week. Toward the end of the week the European single currency gained 1.0% against the dollar. There were not enough reasons for the further reduction of the EUR / USD pair.

In details:

Monday: Despite the lack of economic reports, the euro rose against the dollar. The EUR / USD pair started this trading week higher, recovering from a sharp fall last week at the ECB and the employment report for October on the weakening dollar. During the European session, the pair rose to $ 1.3408 area.

Tuesday: The euro rose against the dollar on the data on the index of economic activity from the Federal Reserve Bank of Chicago, which showed that the modest improvements in manufacturing have helped the index of economic activity to grow slightly in September , although less than predicted by experts . The EUR / USD pair rose to $ 1.3455 area.

Wednesday: The euro fell slightly, which was associated with the release of a weak report on the euro area. The data published by the Statistical Office Eurostat showed that the September industrial production in the euro zone fell more than expected, after recording moderate growth in the previous month. According to the report, the seasonally adjusted industrial production fell in September by 0.5% on a monthly basis, which followed a 1% increase in the previous month. The economists had forecasted decline in September by 0.2%. The EUR / USD pair fell to $ 1.3405 during the European session.

Thursday: The euro stopped a three-day growth after the ECB Governing Council member Peter Praet said in his today’s newspaper interview that the controller can begin to use negative interest rates and start buying assets. At the last week, the ECB cut rates and announced his readiness to decide on a further incentive to accelerate inflation. Afterwards, the euro fell against the dollar, which has been associated with the release of a weak report on the euro area from the European Union's statistics agency Eurostat. According to data, the euro area’s gross domestic product grew in the third quarter by just 0.1 % compared with the previous quarter. The EUR / USD pair fell to $ 1.3420 during the European session.

US Dollar: During the period from November 11 to 15the U.S. dollar weakened its positions in the global foreign exchange market. The dollar index has lost about 0.5%. In this period, there weren’t published the important macroeconomic statistics that could have had a significant impact on the prospects of the "Greenback”.

In details:

Monday: The Australian dollar fell against the U.S. dollar, in response, to data from China, which were published over the weekend. From the report it was reported that China's economic recovery is gathering pace, aided by a significant increase in industrial production and exports.

Tuesday: The dollar strengthened against its counterparts amid signs that the world's largest economy is gaining momentum. Note that many market participants are waiting for release of the report on the performance of the index of economic activity from the Federal Reserve Bank of Chicago, which is based on 85 economic indicators. After the report on the index of economic activity from the Federal Reserve Bank of Chicago, which showed that in September the value rose to the level of 0.14 points, compared with a revised downwards index for August at 0.13 points, the dollar started its correction. The economists estimated that the index would rise to the level of 0.15 points. In addition, it was reported that the average value of the index of economic activity for the last three months has improved to the level -0.03 -0.15. The index still remains below its historical rate of growth for seven consecutive months.

Wednesday: The dollar rose on Preta’s comments which put a sign that the European Central bank may take further action, despite the fact that the U.S. Federal Reserve is likely to curtail incentives in the coming months. Gold: The gold prices rose for the first time in five sessions, as many market participants took profits on short positions after the gold fell to one-month low. The cost of the December gold futures rose to $ 1280.80 per ounce on COMEX today.

Thursday: The U.S. dollar fell against major currencies after the deputy chairman of the U.S. Federal Reserve Ms. Janet Yellen signaled that no major changes in the central bank will be done during her being in a position of the head of FRS. Ms. Yellen pointed out that the Fed would consider folding its program of bond purchases by 85 billion dollars a month for the next meetings on monetary policy, although she did not say if it supports these early steps.

British Pound: The British pound came under heavy pressure after the Office for National Statistics recorded a growth of the Consumer Price Index in October at 2.2 % in annual terms. Accordingly to this news, sterling played back and almost lost ground. However, many economists agreed that the factors had a significant impact of the slowdown in price increases are transitory nature and have no significant threats to the economy; therefore by the end of the week the British currency even added 0.5%.

In details:

Monday: The GBP/USD pair tried to restore confidence after imposing losses suffered on Friday. From the opening level of 1.5997 prices have grown to a local maximum of 1.6020, but slipped to a minimum $1.5965 and closed trading near $1.5992. The Bank of England on Wednesday will publish a quarterly inflation report as well as the employment and retail sales results, each of the events could cause fluctuations in the British currency.

Tuesday: The pound fell markedly against the U.S. dollar, which was associated with the release of weak data on Britain. The Office for National Statistics said that the annual inflation rate in the UK in October fell to its lowest level in more than a year. The report showed that the results of last month’s annual inflation fell to 2.2 %, compared with 2.7 % in September and with the forecasts of the economists that the index will rise up by 2.5%. The annual growth rate was the lowest since September 2009. The GBP / USD pair fell to $ 1.5855 area.

Wednesday:  The pound rose sharply against its colleagues, which was helped by optimistic data on unemployment in Britain, and followed statements from the Committee on the monetary policy of the Bank of England. The Office for National Statistics reported that the unemployment rate fell in July -September to 7.6% level, compared with 7.7% in the three months to August. The GBP / USD pair set a high at $ 1.6010 during the European session.

Thursday: The pound rose against the dollar , recovering from early fall rate after retail sales report , which showed that by the end of last month in the UK retail sales unexpectedly fell, which was associated with a reduction in demand for electrical goods and clothing. The GBP / USD pair dropped to $ 1.5985 area , but then recovered to $ 1.6050 level.

Japanese Yen: The Japanese yen continued to lose the growth as the stock market and expectations of continued monetary stimulus from the Federal Reserve significantly reduced demand for defensive assets. The USD / JPY pair ended the week up by 1.2 % to 100.40.

In details:

Monday: The publication of GDP in Q3 could bring surprises projections indicate a slowdown in growth to 0.4 % from 0.9 %. The retail sales suggest that the figure could be much higher, which will trigger the growth of stock markets in Japan, and strengthening of USD / JPY.

Tuesday: The rate of yen fell after the spread between yields on Japanese and U.S. 30 - year yields widened to the highest level since 2011, which was due to the stabilization of the situation in the U.S. economy. Additional pressure on the Japanese currency had a two-day growth in Asian stock markets. This situation has led to a drop in demand for safe-haven assets.

Wednesday: The yen traded near a two-month low, after today speech of the Bank of Japan board member Ryuzo Miyao . The banker said that Japan is still far from achieving the inflation target of 2% and the Central Bank in the next year may expand incentive programs. Also today in Japan were published government data on orders for machinery and equipment, which showed a decline in September by 2.1 %. The USD / JPY pair fell to Y99.35 on the Asian session.

Thursday: The yen fell against all of its major counterparts amid rising stock markets in Asia. Also, the published negative data on the growth of the Japanese economy in the third quarter supported this trend. According to a government report, growth of Japan’s GDP slowed to 1.9 %, against 3.8% growth in the second quarter. Japan's economy shrinking second consecutive quarter, as weak consumer spending and a slowdown in export growth surpassed the strengthening of investment in real estate. The USD / JPY pair rose to Y99.75 area.

Australian dollar: The Australian dollar did not feel very confident against its counterparts after data on business confidence from the country's largest bank National Australia Bank Limited recorded a slight decline in business confidence in the economy and became an occasion for discussion on the prospects of the economy and the need for additional easing.