Currency market weekly review (September 09 - September 13, 2013)
Euro: In the absence of important events and reports the single European currency formed an upward trend fully taking an advantage of the weakness of the U.S. Dollar. The euro did not even consider the discussion of the possibility of additional reducing the key interest rate announced in speech of Mario Draghi last week.
Monday: The euro strengthened after strong data on investor confidence. The EUR / USD rose to $ 1.3262 during the European session. The index of confidence of European investors Sentix jumped in August to around 6.5 - against the July results of 4.9 strengthening for the first time after 26 months of negative performance. The economic analysts had expected it growth to only -4.0.
Tuesday: The euro fell against the dollar after the data on industrial production in France came out weaker than expected. The information presented by the statistical office Insee, showed that the volume of French industrial production fell unexpectedly by 0.6% in July compared with the previous month June where the rate was at 1.4% decline. The production, according to expectations, would have to be higher by 0.5%. The EUR / USD pair fell to $ 1.3225 level during the European session.
Wednesday: The euro rose sharply against the U.S. dollar reaching $ 1.3300 areas. The euro has grown substantially since the deposition of the vote on approval of military intervention in Syria has reduced demand for refuge assets.
Thursday: The euro was lower at the earlier trading session on weak data on industrial production in the euro area. According to Eurostat, the industrial production fell by 1.5% in July compared with the previous month rise by 0.6% in June and forecasts of reduction by 0.1%. The intermediate goods fell by 0.7%, while the production of energy fell by 1.6%. The production of capital goods and durable consumer goods fell by 2.6% and 2.2%, respectively. The consumer non-durable goods fell by 0.9%. On an annual basis, the industrial production decline deepened to 2.1% from 0.4% in June exceeding the consensus forecast of a 0.1% drop. The EUR/USD pair fell to $ 1.3285 during the European session.
US Dollar: During the period from 9 to 13 September, the US dollar came under pressure, as the latest labour market data from the United States were worse than expected. The dollar index lost about 1% by the end of the Friday’s sessions as the was no any support optimism about the main reserve currency of the world due to lack of important positive macroeconomic statistics related to U.S. Dollar.
Monday: The U.S. dollar tried to grow on earlier sessions still on the background of last week expectations that the Fed will shut down the incentive programs in September. The dollar declined significantly against its major counterparts on the uncertainty around the reduction of quantitative easing programs in the U.S. The markets were still analyzing the data on non-farm payrolls, which were released on Friday. The investors expect that the Fed will begin reducing incentives in September, despite the negative statistics.
Tuesday: The dollar fell against the euro losing the all previously earned a position on the background of the fact that the information that has been published in Washington by the Labor Department of U.S. The report resulted that the number of vacancies in the private sector in the U.S. decreased in July by 180K to 3.69 million compared with the revised 3.87 million the previous month. The pace of hiring also increased. The other main news that put pressure on the dollar was the information that the U.S. secretary of state John Kerry said the United States will study the offer from Russia to Syria. Note that Russian diplomats over the past day could seriously change the approach to the Syrian issue.
Thursday: The dollar fell sharply against most of its counterparts, losing the all previously earned positions as too optimistic data on treatment for unemployment benefits had been distorted because of the invalid parameters submitted by the different states. As it was learned, the primary applications for unemployment benefits in the U.S. unexpectedly fell in the week ended Sept. 7 to the lowest level in more than seven years. The Labor Department said that initial applications for unemployment benefits fell to 292K, which was by 31K less than the previous week's 323K which has not been revised. The decrease came as a surprise to economists, who had expected that the primary applications will grow to 332K.
British Pound: The British pound continued to feel confidently as the speech of the Governor of Bank of England Mark Carney before Treasury committee did not bring any new information for participants for the currency markets. Mr. Carney stated a positive estimation based on last macroeconomic statistics and again noted acceleration of rates of restoration of economy which now does not require economic stimulus. On this positive the pound continued to move upwards and finished week on maxima in area $1, 5870.
Monday: The pound was strong as the British currency is still prevalent among traders. The GBP / USD pair rose sharply to $ 1.5685 during the European session, leaving behind a mark of $ 1.5700 and tested the multi-week peak around $ 1.5732. The experts pointed out that there is still the balance of risks indicates a weakening of the pound by the end of the year, as there is no confidence in the stability of the British economy recovery.
Wednesday: The GBP / USD pair during the European session crossed the mark of $ 1.5800 and continued to rising to $ 1.5840 after the release of the report on employment in the UK. According to the Office for National Statistics, the number of people who claimed unemployment benefits fell by 32,600 people to 1.40 million, to its lowest level since February 2009. The economists had expected a fall of 21,200. As a result, the unemployment rate in August fell to 4.2% from 4.3% in July; while the experts forecasted this value remain unchanged at 4.3%. The unemployment rate in the three months to July was 7.7%, which is lower by 0.1 percentage points lower than in the period from the last period of February to April. Unemployment rates were slightly lower than expected 7.8%.
Thursday: The pound rose to the comments of the head of the Bank of England and crossed the mark of $ 1.5800, but later backed down and continued to decline. Mr. Carney statements were more aggressive than usual. The head of the Bank of England said that "the monetary authorities set the medium-term inflation target of 2.5 % instead of 2% due to the fact that 35 % of the unemployed are still long-term unemployed." Mr. Fisher and Mr. Miles also noted that "the achievement of 2.5 % level of inflation will force the Bank to reconsider the policy," and "the positive reaction of markets on improvement the GDP may be temporary." The GBP / USD pair dropped to $ 1.5785 on these statements during the European session.
Japanese Yen: The USD/JPY pair made an attempt to overcome the technically and psychologically important resistance level of Y100.00, however retreated back to the area of and Y99.30 closer to closing the week.
Monday: The yen fell against other major currencies at the beginning of 's session. The currency became cheaper after the International Olympic Committee decided in a vote that the 2020 Summer Games will be held in Tokyo, the capital city of Japan. Later, however, the pressure on the Japanese currency had a published report on Japan's GDP for the second quarter of 2013. The result of it increased by 3.8 % compared to the second quarter of 2012 and previously reported increase 2.6 % in the April-June. The analysts had expected a more significant revision - to 3.9 %. The Cabinet of ministers expects economic growth of 2.8% in the current financial year ending 31 March 2014. The USD / JPY pair rose to Y100.07 level and than fell to Y99.25 during the European session.
Tuesday: The yen fell against its competitors as the Bank of Japan announced its firm intention to continue easing the monetary policy. This was stated in the minutes of the last meeting of the Central Bank, which was held last week. The USD / JPY pair rose to Y100.40 area during the European session.
Wednesday: The yen fell to a seven-week low against the dollar after U.S. President Barack Obama at a closed meeting with senators urged the Senate to delay the vote on approval of military intervention in Syria before considering possible solutions for the conflict. The additional pressure on the Japanese currency had a growth of stock indices on all Asia Pacific financial markets. Later, the USD / JPY pair fell to Y100.10 on correction
Thursday: The yen rose after Tokyo published the data on the volume of new orders for machinery and equipment in Japan. In July, this figure did not change and was at June’s data at -2.7 %, while analysts had expected growth of new orders for 2,4% .The USD / JPY pair fell to Y99.20 during the European session.
Australian Dollar: The Australian dollar continued to strengthen on positive statistics from China and touched the mark of AUD0.9330, then fell in correction. The AUD / USD pair added about 1% by the end of the week.
New Zealand Dollar: The New Zealand dollar strengthened against all of its major counterparts after the Reserve Bank of New Zealand hinted about a possible rise in interest rates in the first half of 2014.
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