Forex

Currency market weekly review (September 24 - September 28, 2012)

Euro: The euro fell on Monday after published statistics revealed that the IFO German business climate unexpectedly fell in September to the level of 101.4 value versus 102.5 predicted. Also, the German Expectations index fell to 93.2 versus 95.0 forecasted. The results provided pressure on the single currency and the EUR / USD pair dropped to the level of $ 1.2890. The Germany’s GfK Consumer Confidence Survey showed that in October the consumer confidence index remained the same at 5.9 levels. The Euro tried to use this positive news and grow against its rivals. However, the report of S&P rating agency on lowering the forecast for euro area GDP growth for 2012 – 2013 and statement that the Eurozone is entering to a new period of recession put pressure on Euro. Moreover, there were more sellers on market due to recent disagreements between European leaders on starting activation process of the single regulator for the banking sector in the Eurozone and results of Spanish auction, where the yield of three-month bonds rose to the level of 1.203 % and the yield on 10 -year government bonds of Spain exceeded 6 % mark.  The EUR / USD pair decreased to the $1.2855 level on Wednesday along with published economic statistics from Italy and France, the results of which were below forecasts. Also, the currency market participants were afraid of unstable political situation in Greece and Spain and growing tension there confirmed by strikes against austerity measures. On Thursday, the results of reports recorded decline in all sentiment indicators in the Eurozone in September, however, the Italian Business confidence as well as German reports on import prices and unemployment were better than expected. The EUR / USD pair snapped back and covered some losses ending up at the level of $ 1.2878. The big news of the week which was a driver for early Friday’s euro rally was the release of the information made by the European Commissioner for Economic and Monetary Affairs Mr. Olli Rehn who said that the budget plan of Spain "meets country-specific recommendations and even goes beyond them in some areas ". The EUR / USD pair strengthened to $1.2930 area in three hours move. However, the pair could not able to hold these achieved levels and dropped to the lows of $1.2840 on Friday’s close.

US Dollar: The dollar rose on Tuesday’s publications of the September Consumer confidence index which recorded 70.3 compared August one of 61.3 and predicted of 63.1 and S&P Case-Shiller Home Price Index which strengthened up by 2.3 points to 144.6 versus forecasted 143.7. The dollar continued moving up as it was supported by demand for safe assets which increased due to unstable political situation in Greece and Spain and growing tension there confirmed by strikes against austerity measures. The dollar index touched the important area of 80.04.The most pressure on currency on Thursday occurred when the message of the People's Bank of China on introducing a record amount of liquidity this week for supporting of economy growth, has been published. The Friday’s session showed the strength of the currency and the dollar by the end of the day returned all lost position against its competitors.

British Pound: The British pound fell more confident than other currencies and tried to fight against the dollar. The GBP / USD pair showed an increase against the U.S. dollar after the report on Confederation of British Industry (CBI) Reported Sales in Britain showed a positive result. Thus, the balance amounted to 6, which was better compare with analysts' forecasts of 5 and previous of 3. The published on Thursday reports on performances of the British economy supported the National currency. The British pound showed an increase and the GBP / USD pair rose above $ 1.6200 level on reports for GDP and the index of business investment for the same 2nd quarter which exceeded analysts’ expectations. The UK’s gross domestic product fell by -0.4% instead of predicted -0.5% and the business investment strengthened to +0.9% compare with the previous period of fall to -1.5%. The only balance of the current account deficit demonstrated contrary to the expectations and expanded to 20.8 Billion of pound instead of contraction to forecasted 12.2 Billion.

Japanese Yen: The situation associated with odds of European leaders on solutions for resolving the debt crisis in the EU had a negative impact on the trading dynamics of the currency. In addition, the Yen grew against all major currencies along with increase demand for safe haven assets on the background of the weakness of world’s stock markets. The pair USD / JPY dropped to the level of Y77.71 levels. The currency grew against its competitors this week and the USD / JPY pair gradually strengthened its position and approached closely to the technically important support level of Y77.60.

The Canadian, Australian and New Zealand dollars: These assets declined this week on concerns that political conflicts in Spain and strikes in Greece would obstruct attempts to resolve the debt crisis in Europe. Moreover, the drop of prices of commodities and undermined demand for risky assets put pressure on trading dynamics of these currencies.