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Forex-Metal Market review for 26 – 30. 04, 2010
Written by article default Monday, 03 May 2010 13:36
The euro rate fluctuations on Monday and during the whole following week were totally a result of the Greek issue. After the announcement of the German Chancellor, Angela Merkel, that the funds would not be allocated unless Greece would not follow the strict plan aimed to reduce the country’s budget deficit, the euro rate dropped significantly. But then the euro received some support from the statement of the ECB member committee, Axel Weber, who mentioned the strength of the euro currency and no risk of its collapse.
At the beginning of the trading week the sterling received support from different sources. According to the published information, the Hometrack Housing Survey showed its growth for 0,2% in April. In addition, the positive political situation in Great Britain before the upcoming elections had a strong influence on the sterling dynamics. And the GBP/USD pair demonstrated its maximums at the level of $1,5495.
According to the released information on Tuesday, the Standard & Poor’s rating agency reduced the rating of Greece to the «BB+», which was for three steps downwards. Experts did not expect such a sharp decrease. In addition, the Portugal ratings were reduced as well to the «A-» and «A-2» levels. Consequently, the euro, which was already under pressure due the Greek budget deficit problem, showed a sharp fall-off. After that a new wave of concerns, regarding the possible reduction of the Spain rating, and fears over the critical situation in which can get the Euro-zone, started to grow. As a result, the EUR/USD pair dropped to the minimum of $1.3164. Following the sharp euro rate drop, the sterling also demonstrated its decrease. And the GBP/USD pair dropped to the level of $1,5240.
On Wednesday the speculations regarding the possible increase of the financial support package for Greece rendered temporary support to the euro. But later on according to the released information, the Standard & Poor's agency reduced the rating of Spain from the AA+ level to the AA level and indicated a negative forecast. As a result, the market participants’ concerns over the budget crises spreading on the whole Europe grew. Therefore, the euro set its new yearly minimums against the US dollar. And the EUR/USD pair dropped to the level of $1.3114.
According to the information, that was released on Wednesday, the FRS decided to leave the principal rates unchanged at the previous level of 0.25%. The FOMC stated, that the principal rate would be left unchanged at the same level during the continuous period of time.
It should be mentioned that the New Zealand principal rate was left at the previous level of 2.50%. And the increased inflation rate in Australia influenced the market participants’ expectations for increasing of the principal rate, and the Australian dollar grew against the US dollar.
On Thursday the positive information regarding the negotiations of the EC and the IMF and discussions regarding offering Greece additional financing supported the euro. The new help package for Greece might amount to 100 billion euros. Positive Euro-zone statistics was released on Thursday. The unemployment rate decrease in Germany and the business climate indicator growth rendered additional support to the euro. And the EUR/USD pair almost rehabilitated to $1.3300.
The political instability of Great Britain continued to influence the sterling dynamics. The preliminary surveys resulted again in the possibility that none of the political parties would manage to receive the necessary majority in the Parliament. After the set minimums at the level of $1,5150, the GBP/USD pair managed to reach the $1.5340 mark.
The budget problems of the other Euro-zone countries continued to increase the demand for the shelter-currencies. Which in turn strengthened the US dollar and the Japanese Yen. The USD/JPY pair grew to the level of Y94,50, and its minimum was set at the Y92,80 mark.
As a result of the general US dollar consolidation, the oil rate decreased and reached the level of $82.18 per barrel. But due to the time-out in the growing concerns over the Greek budget crises, the oil rate managed to reach the $85.28 price per barrel.