Market review for 22 – 26. 12, 2008

This holiday week did not see any significant currency movements nor did it show any fundamental news, that would have any major influence on the forex market.

In the beginning of the week, the dollar received some support due to the weakened American stock markets. And the euro turned out to be under pressure after the published information on the industrial orders in the EC, which dropped by 15,1% for October (annualized) against the -1,1% for September. Market participants were fully concentrated on the ECB decision regarding the principal rate. The ECB refinancing rate now amounts to 2.5%, which is the highest level among the G7.

On Monday the GBP/USD pair dropped and showed a minimal session level in the range of 1.4686. This decrease was a result of the statement, announced by the Committee members of the Bank of England monetary-credit politics, which mentioned that a single monetary politics would not be enough to prevent the British economy from the negative influence of the credit crisis.

In the beginning of the week the Financial Ministry of Japan published a trade balance report, which showed a deficit in the amount of 223.4 billion for November against the trade balance surplus for 784.4 billion for the previous year. The yen happened to be under pressure and dropped against the US dollar.

Fundamental news, which were published in the US on Tuesday, were rather diversified. The new homes sales for November turned to be 407 thousand against the expected 418 thousand and the October volume amounted to 433 thousand. The existing home sales for November were 4.49 mln against the expected 4.93 mln. These publications could not support the dollar. At the same time the investors were pleased to see the unexpected growth of the Michigan index. The University of Michigan confidence indicator increased in December and reached 60,1 points against the forecasted amount of 58,8.

The slow-down of the British economy in the current year third quarter turned to be more significant, than expected before. The GDP change for the third quarter happened to be worse than forecasted: -0.60% against the expected -0.50%. As a result the GBP/USD pair reacted with a minor decrease. The British currency traded in the range of 1,4650-1,4900 during the week.

On Wednesday the following US releases were published. The durable goods orders for November turned to be a bit better than forecasted: -1.00% against the expected drop for -3.00%. But the initial jobless claims for December 20-th turned to be much worse than forecasted: 586 thousand against the 558 thousand expected. At the end of the week the EUR/USD pair closed at the level of 1,4059.