Market review for 27.09.12: The positive came back on markets. The budget plan of Spain met country-specific recommendations.
Asian and European trading sessions:
Euro: Yesterday, the yield on 10 -year government bonds of Spain exceeded 6 % mark. It was the reason why the demand for the euro was limited on today’s Asian session. Indeed, the continuation of uncertainty regarding the financial situation in Spain, where the need for financial aid has been substantially increased, put some negative on euro currency trading dynamics also today .The EUR / USD pair came under pressure on the European session and fell to the lows of $ 1.2844 after the regional statistics had been published. The results recorded decline in all sentiment indicators in the Eurozone in September, however, the Italian Business confidence as well as German reports on import prices and unemployment were better than expected. The EUR / USD pair snapped back and cover some losses ending up the European session at the level of $ 1.2878.
U.S. Dollar: Against the background of rising of the Asian stock markets as well as increasing demand for risky assets after almost four days of decline, the dollar fell against most major currencies. The most pressure on currency occurred when the message of the People’s Bank of China on introducing a record amount of liquidity this week for supporting of economy growth, has been published.
British Pound: The published today reports on performances of British economy supported the National currency. The British pound showed an increase and the GBP / USD pair rose above $ 1.6200 level on reports for GDP and the index of business investment for the same 2nd quarter which exceeded analysts’ expectations. The UK ‘s gross domestic product fell by -0.4% instead of predicted -0.5% and the business investment strengthened to +0.9% compare with the previous period of fall to -1.5%. The only balance of the current account deficit demonstrated contrary to the expectations and expanded to 20.8 Billion of pound instead of contraction to forecasted 12.2 Billion.
American trading session:
Euro: The big news of the session which was a driver for today’s euro rally was the release of information by the European Commissioner for Economic and Monetary Affairs Mr. Olli Rehn who said that the budget plan of Spain “meets country-specific recommendations and even goes beyond them in some areas “. The EUR / USD pair strengthened to $1.2930 area in three hours move.
U.S Dollar: The dollar weakened against most currencies on rising of the stock market due to the published report on Initial Jobless Claims, which showed that the number of applications for unemployment benefits in the U.S. fell more than expected.
Canadian dollar: Canadian dollar ended up adding points against U.S dollar after three-day losing streak against it. The appetite for risky assets has grown among investors after the Chinese government supported markets implementing stimulus measures to Chinese economy growth.
Gold: The Gold prices jumped up recovering from the previous day’s two-week low against the dollar on good news from Spain. The cost of October gold futures recorded 1778.40 on the COMEX at the end of the session.
Oil: The concerns that the stopping of oil platforms in the Atlantic area will further reduce amount of oil in inventories on the East Coast of the U.S. moved the November futures price of U.S. light crude oil WTI up to the level $ 92.28 per barrel on NYMEX.