Market review for 5 - 9.03, 2012 (11/2012)
Euro: During the Monday’s the Euro currency continued it’s started at the previous week downtrend and the EUR/USD couple declined to its daily low of $1.3159. The report on Retail Sales in the European Union, which came out better than expected (in January (+0.3% (MoM) and 0.0% (YoY)) did not influence much the trading dynamics of the European currency. Later this day, the Euro received support which came from the statements of the Minister of Finance of Greece, Mr. Venizelos who said that Greece would not need third rescue package after conducting a bond swap. The EUR / USD pair fell down to the lows of $ 1.3112 by the end of the Tuesday European trading session. The publishing a report on GDP of the Euro Zone in the fourth quarter recorded the expected value of -0.3% (YoY). The reason to that result was the debt crisis in the region, which delays the growth of economy. An additional pressure on the Euro currency was also provided by the message of the Institute of International Finance (IIF) which stated that the spontaneous, uncontrolled Greece default will cost around 1 trillion euro to Euro Zone and will possibly force Italy and Spain ask for financial help from international lenders. The Euro grew up Wednesday and Thursday sessions on speculations that the PSI program would be completed tomorrow thereby will allow Greece to receive the next tranche of financial assistance. The anticipations that Greece will be able to attract enough investors for completing the PSI program was supporting the Euro’s positive trading dynamics against almost all its competitors and adding optimism among investors.
US Dollar:The pullback of the European stock markets from their session lows put pressure on the U.S dollar at the end of the European trading session on Monday and the greenback retreated from highs against major currencies. On Tuesday, after the last president of the Federal Reserve Bank of Dallas, Mr. Richard Fisher informed the markets that he opposes additional bonds’ purchases; the U.S. dollar got another push for strengthening against most major currencies. Mr. Richard Fisher said that additional bonds’ purchases may reduce the status of the U.S. Dollar as the reserve currency in the world. On Thursday, on the backdrop of publication of Fed report, the U.S. dollar fell against major traded currencies. The Fed stated that it is preparing to provide additional stimulus to the economy.
British Pound: On Monday, the report on the Purchasing Manager Index of the UK service sector put some pressure on British Pound. The February’s value PMI was below forecasts. On Thursday, the Bank of England decided to leave interest rates unchanged at 0.5% in line with expectations. The GBP / USD pair reached the highs of $1.5828 during the European trading session.
Japanese Yen: The yen continued to rise against all 16 major currencies. The main reason for this trend continuation was a publication of outlook for China's GDP, which confirmed China’s GDP contraction for the 2012. In details, the Prime Minister of China, Mr. Wen Jiabao stated that it would be a decrease to 7.5 % from targeted 8% for the growth of national economy in 2012. This news triggered tendency of market participants do not to take risks on Monday, therefore the demand for the currencies with the safe haven status had increased. Also, the technical factor of recent deep oversold of Japan currency provided support for that kind of trading dynamics. Concerns about possible problems regarding exchange of Greece bonds and the situation in the Euro Zone put pressure on the stock markets on Tuesday, which triggered the demand for the Japanese yen, as traditionally safe asset. On Wednesday, the Yen fell against the dollar after the publication of the information that the Fed is developing a new model for buying bonds. According to the Wall Street Journal, the Fed in regard of easing concerns about inflation, if the authorities will decide to take further steps to stimulate economic, was considering the possibility of “sterilized " purchases of bonds in the future. The yen fell against all major currencies after the publication of a report on Japan's Current Account Balance, on Thursday. The Current Account Balance confirmed Japan economy biggest deficit since 1985 in January totaled 437.3 billion yen, which meant that the Japanese yen is losing its status of a safe haven currency. The result was much worse than analysts had expected to see, the amount of 320 billion yen.
Australian Dollar: On the background of negative news regarding the slowdown of the growth of Chinese economy, the Australian dollar weakened against most major currencies on Monday. This situation also contributed for lowering demand for commodities for Australia. The Reserve Bank of Australia decided to leave the interest rate unchanged at 4.25%. The Australian dollar weakened against 15 of the 16 major currencies after the publication of this news on Tuesday. The publication of macroeconomic data showed a significant slowdown in the Australian economy. The GDP of Australia contracted in the fourth quarter of 2011 by 0.4% and by 2.3 % over the same period a year earlier, which is much less than economists had forecasted. In reaction on this news the Australian dollar fell to a six-week minimum on Wednesday sessions.
New Zealand: On Thursday sessions, the New Zealand dollar rose against all major currencies along with rising Asian stock markets and increased demand for high-risk assets. The support for positive trading dynamics of the currency was also provided by the New Zealand's Reserve Bank which left the interest rate unchanged at 2.5 %.Back