Forex Metal Weekly Newsletter

Forex-Metal

Master Trader
Jul 12, 2010
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52
IN THIS ISSUE:
1. Weekly market review from Forex-Metal.
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WEEKLY REVIEW FOR 18 - 22. 07, 2011


The beginning of the previous week saw strengthening of the greenback. The dollar rose on Monday as risk aversion grew following the increased Euro-zone debt fears. Uncertainty over the ongoing crisis of Greece, concerns about the banking system in the EU and fresh doubts about Italy's solvency resulted in increased safe-heaven buying. Market participants were also concerned over the discussions regarding the increase of the US National debt level. Technical default of the US economy became possible.
Euro started the week by showing losses against major currencies on concerns about the fact that European leaders were unable to agree on measures aimed at stopping the further spread of the debt crisis in the EU. Next summit of the European leaders was scheduled for July 21, which was the main reason of investors’ unconfident behaviour on Monday. The EUR /USD pair hit its minimums of $ 1.4010. During the European trading session the euro managed to rehabilitate to $1.4050.
The yen was stabilizing as a save-heaven as well. The USDF/JPY traded in the range of Y78.90-Y79.20. Swiss franc continued to strengthen against major currencies against the backdrop of increased demand for the currency with the status of save-heaven.
On the same day gold prices renewed its historical maximums of $1.603.80 per ounce.
On Tuesday the euro remained under pressure. The financial stability of the region was the main issue of the European leaders summit, planned for July 21meeting. But during the European session amid speculation that European officials were close to agreement, Euro strengthened against the dollar and Swiss Franc. The EUR /USD pair dropped to the area of $1.4091. During the early European session the pair began to recover, overcame $1.4200 and showed highs at $1.4220.
The Canadian dollar fell against the backdrop of weakening global stock markets as a result of the falling commodity prices, including oil. The Bank of Canada left the principal rate unchanged at the previous level of 1.00%.
The dollar strengthened during the Asian session on Wednesday against the euro and the pound after the announcement that U.S. President Barack Obama has reached an agreement with a group of six senators over the plan of substantial government spending reductions, primarily for social purposes, and raising of the tax bar. However, during the European session dollar reached a one week low against the euro in anticipation for the agreement between the European on solutions to the debt crisis.
During the European session Euro rose against the USD due to the increased investors’ optimism regarding achieving of the possible agreement over the Spanish and Italian debt. The EUR/USD pair showed its lows at $1.4130 and then began to recover and reached the $1.4200 mark.
Released Minutes of the Meeting of the Bank of England read that the majority of the members believed tightening of monetary policy in the short term was less likely. Before the publication the GBP fell to the lows of $1.6070. But as a result of the released meeting minutes, the GBP/USD pair rose sharply, reaching the $1.6150 highs.
The Canadian dollar rose on Wednesday to its highest level since May 2 against the U.S. dollar against the optimistic expectations on the eve of Thursday’s EU summit. This has led to increased demand for high-risk currencies. The Canadian dollar was also supporting by yesterday's comments of the Bank of Canada Governor, Mark Carney, who suggested a likely increase in interest rates in September.
The euro rose for a third day against the dollar after German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a solution for the debt problems in Greece. Details of arrangements would be announced on the same day at the summit of EU leaders with the main topic of the financial stability in the region. During the European session Euro fell against the dollar after European officials made ??it clear that Greece could face a default on government bonds. Euro retreated on concerns about the fact that the summit would not be able to control the spread of the debt crisis in Greece to other countries in the region. The EUR/USD pair grew and reached the $1.4271 mark, came close to $1.4298, but wasn’t able to overcome this level, which provoked a correction to the lows at $1.4139. Later, pair recovered to $1.4190.
Greenback decreased after the administration of U.S. President Obama has made it clear that to take short-term increase in U.S. debt limit was possible only if it would be combined with the agreement of reducing the deficit.
The Japanese yen rose after published news from the Ministry of Finance of Japan. The positive balance of trade at ¥70.737 billion ($897 million) in June, exceeded the average of analysts’ forecasts. The USD/JPY pair fell to the range of ??Y78.60, but later recovered. Tested and retreated to Y79.00-Y78.80.
Euro reached a 2-week peak against the dollar amid speculation that the European financial stability mechanism (EFSF) would finance the Greek bonds. The U.S. dollar fell against major currencies against the background of the negotiations regarding the increasing U.S. national debt. Moreover, on Thursday, the rating agency S & P affirms a 50% risk reduction of U.S. debt in three months. The Australian dollar recovered and showed strong growth. Canadian dollar continued to grow after the Bank of Canada statement on the possibility of raising interest rates.
As a result, the EUR/USD managed to grow to $1.4350 maximums by the end of the week. The GBP/USD pair reached the $1.6300 mark, and the USD/JPY pair decreased below the Y78.50 level.
Happy trading!
Technical analysis would not be available from today 25/07/11 and will resume on 08/08/11. We regret the inconvenience it may cause to any of our customers.
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