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Market review for 2 – 6. 05, 2011 (19/2011)

Weekly review for 02 -06. 5, 2011

The beginning of the previous trading week saw the strengthening of the US dollar after the official announcement of the liquidation of the terrorist #1 Osama Ben Laden. Market participants were optimistic during the Asian and European trading sessions on Monday.   Strengthening of the US dollar lead to the decrease of the EUR/USD pair to the $1,4800 level, to the decrease of the GBP/USD to the $1,6800 mark to the increase of the USD/JPY pair to the Y81,50 level.

The Australian dollar rate dropped on Monday in anticipation of the Reserve Bank of Australia meeting, where the principal rate was supposed to be left unchanged.

The publication of the US ISM manufacturing index for April influenced the decrease of the American dollar during the American trading session. The index turned out to be at the level of 60.4 against the 61.2 level for the previous month. Forecasts and concerns over the possibility that the FRS would continue keeping the principal rates at the minimal positions reinforced. 

According to the expectations, the Reserve Bank of Australia left the principal rate unchanged at the level of 4.75%. Australian dollar dropped due to the decreased demand for the commodity currencies on Tuesday.  

After the liquidation of Osama Ben Laden, the possibility of the terrorist attacks grew, and the demand for the save-heaven assets increased on Tuesday. Stock markets dropped.

Negative UK fundamentals, released on the same day, pressured the pound. The manufacturing purchasing manager index for April dropped to the level of 54.6 against the expected 57.0. Minimums of the GBP/USD pair were set at the $1.6460 mark. Expectations for the increase of the principal rate by the Bank of England dropped.

Japanese financial markets were closed on Tuesday due to the celebration of the national holiday. The yen was supported as the demand for the save-heaven assets grew. The USD/JPY rate dropped to the Y80.80 minimums.

According to the results of the elections in the Canadian Parliament, the Conservative party and the Prime Minister Steven Harper won for the third year in a row.  As a result, Canadian dollar increased.

Investors avoided risks on Wednesday in anticipation of the ECB interest rate decision. Released Euro-zone fundamentals pressured the euro, since the data turned out to be negative. European PMI indices were below expectations. Euro-zone retail sales volume decreased below forecasts. 

Euro grew during the second part of the day on Wednesday. Euro reached its 17-months maximum against the US dollar.  The EUR/USD pair traded at the level of $1,4900. Sterling grew as well as a result of the speculations that the Bank of England would increase principal rates. Greenback dropped against the euro and the pound as a result of the released weak US statistics. In particular, the ADP employment dropped in April to 179K against the forecasted level of 195K. The ISM non-manufacturing composite index showed decrease to 52.8 against the expected 57.5.  Canadian dollar dropped against the greenback due to the decreased oil prices. 

Thursday saw a considerable decrease of the euro. Following the announcement, that the ECB left the principal rate unchanged at the previous level of 1.25%, the statement of the ECB head, Jean-Claude Trichet, read that the Euro-zone rates would not be increased for some time now. The released Euro-zone statistics pressured the euro as well. The German Factory orders for March resulted at the 9.7% level, much lower than the expected 15.4%. As a result, the EUR/USD pair dropped from the maximums of $1.4870 to the minimums of almost $1,45 level.

Sterling was also under pressure on that day. The released UK fundamentals could not support the national currency. The GBP PMI services turned out to be 54.3, which was lower than its forecast of 56.0. According to the expectations, the Bank of England left the principal rate unchanged at the record-breaking minimal level of 0.5%. The GBP/USD pair dropped from the maximums of $1.6530 to minimums of $1,6400. The USD/JPY pair showed minimums of Y79.55.

Oil continued to drop, and the price reached the minimum of $100 mark per barrel. Canadian dollar decreased as a result of the oil prices’ drop.

Greenback rehabilitated from its previous losses and strengthened during the American session on Thursday. Demand for the save-heaven assets grew and the commodity markets’ prices went down. Dollar strengthened in spite of the negative US fundamentals, released on that day. The US initial jobless claims grew to 474K against the expected drop to 410K.

On Friday the EUR/USD pair decreased to the $1,44 level after the announcement that Greece might withdraw from European community. The released change in US non-farm payrolls turned out to be above expectations, which supported the greenback. 

18:35 GMT   Bid Ask
GBPUSD 1.36564 1.36757
USDCHF 0.97184 0.97492
AUDUSD 0.74678 0.74823
NZDUSD 0.71085 0.71442
EURJPY 113.389 113.635
GBPJPY 139.45 140.238
XAUUSD 1318.33 1318.83
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