Chinese stock indexes decrease, unfavourable economic news from the USA and wreck of the fifth largest American bank led to lowering of the investors\' risk inclination and allowed the U.S. currency and the Japanese yen to quote on the upside. Announcements about growth recovery of the Japanese economy were alloyed with the companies investments falling.
The world markets deals closed on the downside last week, after the preliminary consumer confidence index of Michigan University/Reuters for August came in lower than the forecasts. At the same time, consumer price index decline in the USA by 2,1% in July, compared to the same period of last year, ruined the hopes of that recovery will be rather strong to guarantee the early interest rates tick up.
Friday evening news about Colonial BancGroup Inc. closing by the American financial regulatory authorities increased the negative mood in the market. The assets of this bank are estimated with 25 bln.dollars and it is the fifth largest bank, which has bankrupted in the USA.
Some positive news were recieved from Japan on Monday, confirming the concerns the country\'s economy has strengthened enough to fix up the GDP growth of 0,9% in Q2. Nevertheless, this improvement was expected and the market participants prefered to focus on more negative data about that the capital investments fell in the country.
Also the market climate was not improved by the comments of Bundesbank Head Aksel Weber regarding that the financial crisis has ended.
JPY
The following pairs: AUD/JPY, NZD/JPY, GBP/JPY lowered, as the market participants were selling these pairs, reducing the assets positions, which are weak from the aspect of risk. It was due to that shares continued a decline, while the market participants were revising their too optimistic global economy forecasts . The Asian stock indexes ticked down shaply, but Nikkei index closed on the downside at 2,1%, Shanghai Composite index — at 5,8%, HIS index – at 3,3%, Kospi index– by 2,8%.
GBP
The week start up turned out to be unfavourable for the British pound. The investors\' inwillingness to risk and Rightmove house price index tick down by 2,2% resulted to a sharp currency fall. Presently, in the public eye will be the consumer price index inflation data for July, scheduled on Tuesday, and the minutes of Bank of England meeting and the August report from Confederation of British Industry (CBI) concerning the manufacturing trends, its release is expected on Friday.
EUR
Euro was trading on the downside with other risky currencies on Monday, as to the market was returned the investors\' inwillingness to risk, and the global economic recovery prospects are becoming doubtful. The uncertainty is caused by the last week release of some dissappointing data from the USA and one more American bank crush at the end of the week.
The EUR/USD currency pair rose after FRS New York producer price index for the month of August, which showed the conditions upturn for the first time this year. Though, due to the profit fixing by the market participants the pair continued moving downwards, compared to the Friday closing.
AUD
The Australian dollar was quoting on the downside on Monday, as risky currencies continued losing ganied positions. The low-key trading during the Asian session also worsened the movement in the currency market.
Nevertheless, the economists forecast regarding that the Australian dollar will stop slightly lower 0,8200 against the U.S.dollar was affirmed, as shutting up of long term positions has finished.
In a short term we will observe a natural growth correction, which has taken place in recent weeks. Nonetheless, the global figures improvement across the board must restrain any falling from this level.
After last week sessions full of the Australian currency events, during which it had strengthened amid severe sentiments of Reserve Bank of Ausrtalia Head Glenn Stivens, at present, there are less factors, determining the Australian dollar direction. National Australia Bank currency strategies consider that in the coming 2-3 months the Australian dollar is to rally to the postcycle maximum 0,8600 versus the American currency as far as the Chinese economic revival goes on and the price upturn for main raw materials.
NZD
The NZD/USA looked attackable after a sharp fall from 11-month high of 0,6886 on Friday amid a new wave of investors inwillingness to risk, that gladdened the New Zealand dollar. Surprising is that how sharp it increased during the weekend and dropped from the maximums. More surprising is that how the New Zealand currency stands against the Australian dollar taking onto account more severe position taken by the Reserve Bank of Australia on Friday. So, the Australian dollar must be more strong.
Kind regards,
Analyst: Vladimir Donin
