Market review for 02 – 06. 02, 2009.

The beginning of the week saw a sharp drop of the British pound, which decreased on Monday from $1.4440 to around $1,4050. The sterling was pressured by the Moody’s Investors Service rating agency, which reduced the long-term rating for Barclays Bank Plc., and the expectations of the principal rate reduction by the Bank of England to 1%. According to the analysts’ forecasts, the ECB would reduce the principal rate from 2% level for 25 points or more during its meeting on February 5-th, which influenced the downfall of the euro’s rate. The euro stayed under pressure on Tuesday as well, since the released information showed a manufacturing price index reduction for 1.3% in December.

The decision of the Bank of Australia regarding the principal rate was published on Tuesday. According to the expectations, the rate was reduced for 100 basic points to the 3,25% level. In addition, the Australian government announced that the stimulating measures package was already being implemented, which would result in economical growth during the current year already. Therefore the Australian dollar strengthened against the US dollar and the Japanese yen.

On Wednesday the US dollar received some support due to the publication of the ISM index, which grew in January till 42.9 against the forecasts at the level of 39.0. And the euro incurred losses against the yen and the dollar. Analysts pointed out a few reasons for this drop. The Euro-zone retail sales results were released on Wednesday, which showed a lower volume than forecasted. In addition to that, the expectations of the further principal rate reduction during the ECB meeting this week strengthened. Also the Fitch credit agency decreased the long-term credit rating for Russia. This information increased the speculations, that the Western European problems would lead to deepening of the recession in the region. Therefore the EUR/USD pair dropped to the 1.2800 level.

In the middle of the week the British pound happened to be under pressure against the US dollar. According to the National Institute of the economical and social research data, the economical growth rate in Great Britain would continue to be negative until the forth quarter this current year. And the GBP/USD pair decreased till $1.4320.

The ECB decided to keep the principal rate unchanged at the level of 2.00%, which was published on Thursday. The factory orders volume in Germany showed a sharp decrease for December: -6.90% against the forecasted level of -2.50%, which resulted in the drop of the euro’s rate. In addition the expectations were met by the Bank of England, which reduced the principal rate for 50 basic points to 1.00%. Right after this announcement, the sterling grew against the US dollar and reached maximums at the level of $1.4660.

At the same time on Thursday due to the stock markets growth, the Japanese yen rate dropped against the major currencies. And the USD/JPY pair reached its maximums at the 92.24 mark.

A very weak US news were released on Friday. The change in US nonfarm payrolls showed a sharper drop, than expected. The unemployment rate grew until 7.6% against the forecasted 7.5%. And the EUR/USD pair managed to close the week at the maximal levels of 1.2900.