The previous trading week resulted in positive achievements of the US dollar. The week already started with the decrease of the EUR/USD pair to $1.4109 minimums. The euro dropped to its 3-week minimums against the yen as well, since the German Chancellor Angela Merkel could not get maximum votes on Monday. At the same time the market instability supported the demand for the save-heaven assets, and the US dollar strengthened. Financial markets in the US were closed on Monday due to the celebration of the Labor Day.
Released UK statistics influenced the dynamics of the pound on the same day. The Purchasing Manager index (services) decreased in August to 51.1 against expected 54.0. Therefore, the GBP/USD reached minimums of $1,6100.
After the National Bank of Switzerland established minimum exchange rate of CHF at the 1.2000 level against the Euro on Tuesday, the EUR/USD pair rapidly grew to its session maximum at the $1.4280 area. However, during the European trading session the pair fell to the region of $1,4110 against the background of reduction in demand for high-risk assets in the region, when the party of German Chancellor Merkel was defeated in local elections.
Meanwhile, the main news of the morning session was the outcome of the meeting of the Reserve Bank of Australia. As expected, the central bank left the main interest rates unchanged at 4.75%.
On the same day a new record-breaking maximum was set at the $1,923.70 mark per ounce.
The yen incurred losses against the greenback after the statement of the Minister of Finance of Japan, who proposed to discuss the issue of the strong influence of the yen growth on the world economy during the upcoming G7 summit.
The Euro strengthened on Wednesday on the backdrop of the report, which showed a significant increase in industrial production in Germany from July. Indicator grew by 4.0% in July against the forecasted value of +0.5% and previous -1.0% in June. The EUR/USD pair rose from $1.4008 to its daily high at $1.4150, then rolled back to $1.4050.
After 6 days of growth, the US Dollar fell against the Euro and other major currencies. The greenback also decreased amid the growing stock markets around the world and reduced demand for currencies with the "safe haven" status. Another factor which pressured the US Dollar was speculations that Fed Chairman Ben Bernanke would express his willingness to continue stimulate the U.S. economy in his speech on Thursday.
According to statistics, the Australian GDP grew by 1.2% against analysts forecasts of 1%. As a result of this report, the Australian Dollar grew against all major currencies. The Canadian dollar held its positions against the greenback after the Bank of Canada has kept its interest rates unchanged on that day.
The pressure on the Euro currency continued on Thursday amid speculations of the fact that the ECB would lower forecasts of the inflation and the economy in Europe and also hint at a pause in raising interest rates. There was no doubt that the ECB would leave the interest rate unchanged at the 1.5% level. The EUR/USD pair traded in range of $1.4034 to $1.4107 during both sessions. The US Dollar strengthened its positions on Thursday in the threshold of the US President Barak Obama speech. In this speech the President was expected to lay out his program of creating new American jobs and initiating growth of the US economy by injecting more than $300 billion next year.
The British pound rose after the Bank of England left interest rate unchanged at 0.50% and kept the size of the program of purchasing the assets (QE) at 200 billion Sterling. The British pound tested its lows at $1.5915 then grew to the maximums of around the $1.6971 area.
As the result of the speech of ECB President Jean-Claude Trichet, who pointed out increasing risks of the region economy, the Euro fell against major currencies. These news were perceived by market participants as a signal to stop the process of raising interest rates by European Central Bank. The ECB President also noted the inflation reduction in EC.
As a result, by the end of the week the EUR/USD pair traded at the $1.3655 level, the GBP/USD pair closed the week at the $1.5880 range, and the USDJPY pair – at the Y77.60 mark.
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