Straight from the beginning of the trading week the American dollar received a negative influence, which remained for almost the whole week and was supported by rather weak fundamental news from the US. According to the information released on Monday, the American government could allocate less funds to the US auto industry for confronting the financial crisis, then the major auto companies requested. And the President Bush stated that he still was not ready to announce the final decision in that matter. As the result the dollar fell against the sterling, dropped against the euro and reached its 8-week minimum and approached its 13-year minimum against the yen.
The decision of the FOMC to reduce the principal interest rate for 75 points until the 0.25% level, which was published in Tuesday, irrevocably influenced the investors’ unwillingness to hold their assets in the US dollars. Oil price growth continued to pressure the US dollar. As well as the number of negative news could not support the dollar. The consumer prices decreased for 1.7% for November compared to the previous month (analysts expected this indicator to drop only for 1.3%). The number of new houses in the US dropped until 625 thousand units for November (experts forecasted this indicator to amount to 990 thousand units). Therefore on Tuesday the EUR/USD pair grew for more than 500 points and reached 1.4147 level.
At the same time, the pound was supported by the published inflation report in Britain for November, which happened to be better than expected and resulted in a manufacturers’ price decrease for 0,1% m/m and 4,1% y/y. And the GBP/USD rate grew and reached 1.5647 level. Then on Wednesday the pound was under a strong pressure due to the negative news from Great Britain. The number of unemployed for November increased for 75 700 against the forecasted growth for only 45 000. And the unemployment rate grew until 3.3% against the expected growth for 3.1%.
On Thursday the situation changed drastically, since rather encouraging American news were published, which provided a sufficient support for the dollar. The initial jobless claims amounted to 554 thousand, which was less then 573 thousand for the previous period. The Philadelphia Fed index for December turned to be -32.9 against the forecasted level of -40.5 and the last month’s -39.3. And the Leading indicators index for November was -0.40% against -0.80% for the previous month. Besides, the oil price dropped and settled at $38,19 for barrel. As a result the EUR/USD rate decreased for more than 500 points and reached its session minimum at the level of 1.4181.
The expectations regarding the principal rate reduction by the Bank of England, influenced the pound negatively. As a result the pound followed the euro and decreased until the level of 1.4882.
On Friday the Bank of Japan reduced its principal rate from 0.3% to 0.1% in order to resist the strengthening of the national currency.
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