Market review for 23 – 27. 02, 2009

The beginning of the trading week was marked by continuing growth of the euro and the pound. The euro was supported by the expectations that the Euro zone officials would announce their intentions to provide back up for the crises management plan of the region. At the same time the US dollar continued to decrease against the euro due to the announcements of the American government’s intentions to increase its share in the national banks in order to support the country’s financial system. On Monday the EUR/USD pair established a daily maximum at the level of $1.2990. But on the same day the euro could not retain the achieved maximums against the US dollar after the statement of the European Central bank president. Jean-Claude Trichet announced that the region’s financial system “continues to be under serious pressure”.

The yen continued to drop due to the negative political and economical situation in Japan, and since the demand for the yen, as a shelter-currency, decreased as a result of the dollar strengthening. On Monday the USD/JPY rate managed to grow for more than 200 points during the day and reached Y94,80 mark.

On Tuesday the following negative fundamental news were released in America, which pressured the dollar dynamics. Particularly the consumer confidence indicator decreased for February till 25.7 against the forecasted 35 mark and previous month’s level of 37.7. The Richmond Federal manufacture index dropped to -51 against the expected -47. Only the statement of Ben Bernanke before the Congress temporary supported the American currency. The FRS president mentioned, that “the recession would terminate by the end of the current year, and next year there could be the economical growth”. On the same day the Ifo business climate indicator from the German institute was published. It’s value dropped in February to 82.6 against 83 mark in January. In spite of such a low level, the euro continued to strengthen.

Expectations regarding the unstable economic condition of the Western European countries continued to pressure the euro, which changed the dynamics of the European currency. In addition to that, the Moody’s agency reduced the rating of Greece. As a result on Wednesday the EUR/USD rate dropped to the $1.2770 level. On the same day the negative fundamental data was released in Great Britain. The UK quarterly and yearly GDP pressured the sterling, which resulted in a drop against the US dollar and the GBP/USD pair decreased till the daily minimum at 1.4172.

The negative fundamental American news, published on Thursday during the second part of the day, pressured temporarily the US dollar, which generally continued to consolidate. Particularly, the durable goods orders volume for January dropped to -5.20%, when the forecast was at the -2.50% level. The initial jobless claims grew till 667 thousand, and the new home sales volume dropped to 309 thousand. At the same time diverse fundamental news were released in Euro zone, which therefore did not have any impact on the euro dynamics. According to the published information, the business climate indicator dropped and the Euro zone consume confidence index decreased. And the German unemployment rate for February turned to be at the expected level, yet still higher than the previous month’s value.

According to the published data on Thursday, the reduction of the housing price index in Great Britain had a negative impact on the sterling. The Nat’wide house price index (MoM) for February dropped to -1.80% against the forecasted level of -1.30%. And the Royal Bank of Scotland reported a net yearly loss of 24 billion pounds. As a result the GBP/USD pair established a new minimum at the level of 1.4160. By the end of the week the dynamics of the major currencies continued to be the same. The EUR/USD rate renewed its minimum at the level of 1.2603, and the GBP/USD pair closed the week at the 1.4109 mark.