Forex-Metal Daily Analysis -06/07/2012

The ECB reduced the interest rate of Euro zone to record low level of 0.75% per annum.

 

Asian and European trading sessions:

Euro: The EUR / USD pair retreated from yesterday’s lows. During the Asian session the couple traded in a flat range on the background of today’s publication of the report on German’s Factory orders, the result of which can once again confirm the worsening of the debt crisis in Europe. According to the analysts’ forecasts number of Factory orders in Germany would likely to decline in May by 6%.Also, the market participants were waiting for the announcement of the decision of ECB on lowering the interest rate on today’s meeting by 0.25 % points – to a record low of 0.75% per annum. The attention of the foreign exchange market this week was also directed to the auction of Spanish bonds. During the European session, after the publication the decision of the ECB and its comments on the current situation in Euro zone the currency sharply fell, despite the fact that this decision has matched the analysts’ predictions. The EUR / USD pair fell steeply to the 1.2360 area after the announcement.

U.S. Dollar: The demand for the dollar after announcement of the rate decision news has risen sharply. The reason for that action was the fact that the Mr. Mario Draghi who commented the ECB decision had not mentioned any possibilities of additional support for Euro zone economy, thus increased uncertainty which negatively impacted the confidence to the Euro zone’s economy. The volume of dollar purchases has increased dramatically today.

British Pound: The GBP / USD pair was trading between $ 1.5580 -$ 1.5605 during the Asian session. The Pound remained under pressure in anticipation of the completion of a two-day meeting of the Bank of England in which, as many analysts are predicting, the Bank will be forced to expand the current amount of the asset repurchase program, which currently stands at 325 billion pounds ($ 525 billion), up to 50 billion pounds. The Bank’s of England decision on interest rate which was announced today provided significant support for the currency and the GBP / USD pair rose sharply to $1.5625 area.

Japanese Yen: The USD / JPY pair renewed a maximum of one week during the Asian session, but later declined. There was a volatile European session for USD / JPY pair. The pair firstly dropped then abruptly increased to Y80.07 and than after once again fell to Y79.93 area where it traded till the end of the session..

Australian and New Zealand dollar: The statements of the representatives of the People’s Bank of China about lowering rates for loans and deposits provided a significant support for commodity currencies today. In the regard of this news, which caused a great interest in buying these currencies, the Australian and New Zealand dollars reached their daily highs

American trading session:

Euro: The pressure on the euro had also the results of Spain bonds placement. Spain was able to sell its bonds for 3 billion Euros today, while the cost of borrowing has risen to 6.43 % from 6.04% from the previous auction.

Gold: The August gold futures went up to 1623.7 dollars per ounce, then fell to $1597.3 after the announcement of the ECB’s decision on reducing the key interest rate by 25 basis points and Mr. Draghi’s pessimistic comments about the current and future situation in Euro zone’s economy.

Silver: The August Silver futures also had a quite volatile session rising up to 28.4 dollars per ounce yet then falling to $27.5 on the COMEX today.

Oil: The cost of the August futures of WTI rose to $ 88.96 per barrel on the NYMEX today, its highest level since May 30, and then dropped to $ 86.70 a barrel. As it was reported by the U.S. Energy Information Administration today the oil reserves of U.S. country recorded a decrease in stocks.