Forex

Currency market weekly review (October 01 - October 05, 2012)

Euro: The EUR / USD pair rose to $ 1.2910 on Monday. The pair resumed its uptrend as the fact that the results of stress tests of the banking system in Spain provided the confidence for market participants that the debt crisis in the Eurozone is about to come close to resolution. In addition to it, the ratings agency Moody informed that the recapitalization of banks in Spain is positive for the country's credit rating. The published this day reports showed that the business activity in the manufacturing sector continued to decline in September and the unemployment rate reached its highest level in history. In details, the Euro-Zone Purchasing Manager Index Manufacturing recorded 46.1value and was higher than the initial estimates of 46. The Unemployment rate was 11.4 % in August which was in line with forecasts and unchanged compared with June and July. During the Wednesday’s European session, the euro rose against its competitors, as the reports for business activity showed that the index in the services sector and retail sales unexpectedly rose and exceeded analysts' expectations. The result of the report of Eurozone retail sales also came out positive and recorded lower than it was forecasted decrease of 1.3% instead of 1.9%. The EUR / USD pair rose to $ 1.2935, but was unable to hold this level and it fell to $ 1.2905area.The currency grew against the U.S. dollar and other its competitors on Thursday on the publication of the ECB decision about the interest rate of the Euro zone. The key interest rate remained at a record low of 0.75 % per annum. In addition, growth of asset was sustained by the results of auctions for debt securities of Spain. Spain was able to sell its bonds worth 3.992 billion euros with planned 3 - 4 billion. As a prime candidate for international help, Spain, as of now, is trying to delay asking about it (financial aid). The EUR / USD pair set the high at $ 1.2957.

US Dollar: The dollar index fell on Monday by 0.28% to 79,64 during the speech of the head of the U.S. Federal Reserve Chairman Ben Bernanke, who said the central bank's strategy will be remained the same and the Fed will continue purchasing assets for as long as the situation on the labor market begins to stabilize. The dollar index was able to regain previously won positions and almost recovered, after falling by 0.2 % over the past two days. The index strengthened almost to its recent high of 80.22 touching meanwhile the 80.06 area.

British Pound: The pound weakened on Monday as a report showed that UK PMI index for manufacturing sector fell in September more than economists forecast. On Tuesday, after the report showed that the UK PMI of construction declined at a slower, than it was forecasted, pace in September, the pound rose against its rivals. Indeed, the index rose to 49.5 in September by 0.5 from 49 the previous month. Moreover, the Nationwide House Prices report showed that house prices in the UK fell in September by 0.4 % in monthly term and by 1.4 % in yearly thus supported the British currency. The GBP / USD pair set the daily high at $ 1.6185 level. During of Thursday the sessions the GBP / USD pair grew to $ 1.6131. The pound got support by released information says that the Bank of England decided to keep the size of the program of asset purchases at 375 billion pounds and leave the key interest rate at the same 0.5% level. The research from Halifax showed that house prices in the UK fell in September, noting also that the prices are expected to remain generally stable during the rest of the year and in 2013. These news provided support for the currency this day.

Japanese Yen: The yen rose against the dollar on fact that the consumer sentiment index fell in July and September to -43.1 versus -39.5 in April -June, indicating that the recovery and growth of the Japanese economy stacked amid the slowdown in overseas economies. On Tuesday, against the background of rising of the Asian stock markets on positive from previously released data of the ISM for the manufacturing sector, which increased investors’ sentiment towards risky assets the yen fell against most major currencies. The USD / JPY pair set the high of Y78.21during the European session. The expectations that the Bank of Japan would take appropriate action to weaken its currency put pressure on yen and it fell against most major currencies on Wednesday.

Australian dollar: The currency weakened against the U.S. dollar and other traded currencies. The main news this week was the decision of Reserve Bank of Australia to cut its benchmark interest rate by 25 basis points for the first time since June. The Australian dollar fell to its lowest level in more than three weeks after the release of the decision. The RBA has finally joined to the other central banks, which already lowered their interest rates as a measure for stimulating economic growth and fighting with slowing of global economy. On the background of released statistics that recorded that Australia's trade deficit in August was more than expected and reached 2.027 billion of Australian dollars the Australian dollar fell against its counterparts. The expectations of the results were 685 million and the previous July’s report showed 1.530 billion of Australian dollars.

New Zealand dollar: The kiwi rose against most major currencies after the publication of the report of the performance of the index of commodity prices from ANZ Commodity Prices came out positive, showing that the change in the level of prices for raw materials, valued at world prices, increased by 3.5%. However, after the release of the report the trading dynamics of the currency had changed and it fell against of all its competitors.