FOREX: Weekly's review
08.08.2011, 06:00

FOREX: Weekly's review

The US dollar has been plummeting down on concerns over slowdown in economic recovery of US and Europe for all last week.
The Senate and President Obama approved the legislation plan to hike the U.S. debt limit at the last minute. If the deal hadn’t been passed by Aug 2, the US might have been faced a technical default and lost its AAA debt rating immediately. However, the risk of downgrade remained real.
The approved legislation plan of cutting federal spending by $2.4 trillion triggered worries about prospects of the world's largest economy.
Market participants also concerned as reports on US macroeconomic statistics have showed the worst figures during a long time, including weak July data on manufacturing and non-manufacturing indices from ISM.
On Friday the dollar declined versus a majority of its most-traded counterparts as U.S. employers added more jobs than forecast in July and the unemployment rate fell, damping demand for refuge.
The European currency also suffered substantial losses amid worries about EU debt crisis. ECB President Jean-Claude Trichet acknowledged a “particularly high” level of uncertainty said inflation expectations “must remain firmly anchored.” He said the ECB will offer banks additional cash as the region’s debt crisis spreads increasing pressure on policy makers to resume bond purchases. Widened spread between Italian, Spain, French and Belgium bonds and German 10-year bonds fueled concerns about EU debt crisis.
On Friday the euro began to rebound after news that the ECB is willing to buy Italian and Portugal bonds if Italy advances reforms.
The Canadian dollar shed to the lowest level over 5 weeks amid declining crude oil prices, Canada’s biggest export.
Switzerland’s franc reached new life-time highs several times this week as “save haven” amid weakness of the dollar and the yen. The franc’ rise has been curbing as the Swiss National Bank said it won’t exclude any measures to curb the currency’s advance.
The Japan's yen strengthened against the US dollar, but its increase also was curbed by the nation’s central bank. The Bank of Japan expanded its asset-purchase fund to 15 trillion yen ($189 billion) from 10 trillion yen and left the benchmark interest rate unchanged at the level of 0-0.1%. However, the currency erased the effect of Japan's yen-selling intervention nearly by half at the turn of the week.
 

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