In the beginning of the trading week against the background of the negative Euro zone news, and as a shelter-currency, the American dollar continued to stabilize. And the controversy, which has been expressed by the ECB representatives regarding the crises management plan, supported the investors’ discredit towards the euro and reinforced its pressure. Consequently, the EUR/USD pair dropped to its minimum at the level of $1.2887. At the same time the British pound continued to stabilize against its competitors. In addition to that, due to the growing investors’ confidence in the precious metals, the gold and silver rates increased as well.
On Tuesday the dynamics of the major currencies changed. The German ZEW Survey of economic sentiments was published, which demonstrated a significant increase. Experts forecasted this index to grow only to the 1.5 level, but it jumped to 13 in April. This factor influenced the strengthening of the euro and weakening of the dollar.
It should be as well mentioned, that the Central Bank of Canada unexpectedly decided to reduce the principal rate to the 0.25% level, which pressured the Canadian dollar against the US dollar.
On Wednesday the market participants reacted to the announcements that the US regulating administration was going to execute an examination in the 19 largest national banks. A particular attention would be devoted to the quality of the consumer crediting. According to the expectations the following examination could reveal considerable banks’ losses. Nevertheless, the US Secretary to the Treasury, Timothy Geithner, stated that American banks had more capital, than necessary for the reimbursement of the possible losses. According to the experts’ opinion, this fact could reduce the banks’ demand for the US dollar.
At the same time the dynamics of the sterling changed. The sterling was pressured before the release of the UK state budget report and after the publication of the unemployment level growth and the drop of the average level of the wages with consideration of the bonuses. Therefore the GBP/USD pair dropped to its 3-week minimum at the level of 1.4395.
In the middle of the week the oil prices were under pressure after the release of the DOE U.S. Crude Oil Inventories, which showed an increase, compared to the forecast. But the weakened dollar offered some support to the oil rate.
Weak fundamentals were published in the US on Thursday. The American dollar was pressured by the increased number of the initial jobless claims and the reported drop of the existing home sales in the US. And the euro continued to strengthen. A number of news’ releases rendered support for the euro and reinforced the demand for the high-risk currencies. Credit Suisse Group AG announced of its quarterly profit in the 1-st quarter report. The PMI manufacturing index in Germany and the Euro zone demonstrated better results, than forecasted. The industrial orders report in Euro zone turned out to be higher than expected as well. Consequently, the EUR/USD pair established a maximum at the level of 1.3160.
The gold rate continued to strengthen, as a more low-risk investment instrument in the conditions of the economic uncertainty. The gold consolidated due to the weakened dollar as well and thanks to the demand growth for the “yellow metal” in India. The silver dynamics correlated to the increased gold rate.
On Friday the British pound decreased after the release of the shortened volume of the British GDP for the first quarter, but then compensated its losses.
Happy trading!
