Market review for 26 – 30. 01, 2009

From the beginning of the week the American dollar had a rather diversified dynamics. Thus, in the beginning of Monday, the US dollar demonstrated some active growth, but then happened to be under pressure due to the stabilization of the European stock exchanges. The EUR/USD pair was decreasing until the $1.2870, but then established a session maximum in the range of $1.3200.

At the same time the British pound temporary approximated to its 23-year minimum against the dollar after the sharp drop of the housing prices in England until the record-breaking level from 2001, which were published on Monday.

The fundamental news, published on Tuesday, supported the euro against the US dollar. The German IFO business climate index grew in January until 83 against the last month value of 82.7 and forecasted level of 81. As a result the EUR/USD pair demonstrated maximum levels at $1.3328. The sterling showed a parallel growth and maintained an increase against the major currencies. The GBP/USD pair grew for more than 150 points and established maximums at the level of $1.4180. Due to the strengthening of the main world stock indices, the yen continued to decrease as a result of the investors’ inclination to take risks.

The minutes of the FRS meeting were published in the middle of the week. As a result of the sitting, the dollar strengthened during the second part of Wednesday against its European competitors and recovered most of its previously lost positions against the euro and the pound.

The negative Euro zone fundamental news, which were released on Thursday, could not support the euro. The Business climate indicator dropped until -3.16 for January. And the German unemployment rate reached 7.8% for January against the forecasted 7.70%. The EUR/USD pair established a minimum at the level of $1.3025. The announcement of the ECB president Jean-Claude Trichet regarding the possible reduction of the principal rate in Euro zone below the 2.00% pressured the euro. Due to the negative Euro-zone news, published on Thursday, the US dollar continued to strengthen. But during the second part of the day, following the weak fundamental US data release, the dollar rate decreased temporary. Durable goods orders for December showed a sharp decrease until -2.6% against the expected -2.00%. The Initial jobless claims for January 24-th reached 588 thousand, when the analytics forecasted 575 thousand claims. And the New home sales for December dropped until 331 thousand against the expected 395 thousand.

The Central bank of New Zealand reduced the principal rate on Thursday for 150 basic points to the 3,50% level. Analysts have expected the reduction only for 100 basic points, and as a result, the New Zealand dollar dropped.

At the end of the week the negative European and American fundamental news continued to be published. The Euro zone unemployment rate for December grew and reached 8%, the Chicago PMI index dropped to 33,3%, and the consumer confidence indicator from the US University of Michigan dropped to 61,2.

Happy trading!