Market review for the week of 25.02.2013 – 1.03.2013

The US Dollar continued strengthening its positions for the period of February 25 – March 1. The outcome of the Italian parliamentary election weakened the Euro’s positions, the specific weight of which in the Dollar index is 45%. In the week’s aftermath, it lost 0.4%. Besides that, the connection between the stock indices and the main global reserve currency, when the shares growth was accompanied by the Dollar’s weakening, begins to burst. The reverse correlation coefficient between the USDX index and the stock index S&P 500 is now at one of the lowest levels over the past years. The main reason of such a gap is a lot more favorable economic situation in the US, where the world’s largest economy’s recovery is flowing a lot more confidently than in Japan and the Eurozone. Therefore, when the positive macroeconomic data from the US moved the shares upwards in the middle of the week, the Dollar also strengthened its pressure on the competitors.

The European currency continues feeling rather unconfident in relation to the Dollar. The traders are digesting the Italian parliamentary election’s outcome, which has put into question the ability of this country to adhere to the budgetary savings regime. The political will in the country turned out blocked after the representatives of populist parties received a large number of votes in the parliament’s lower chamber. With this background, and also due to the Dollar’s strengthening across all markets, the EURUSD pair has lost 1.2% and attempted to overcome the psychologically important support level at 1.30.

The Canadian Dollar was not an exception from the rules. For all the past week, the US Dollar kept strengthening against the Canadian currency, having only confirmed the long-term upward trend.

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