Review for the week 30.04.2012 – 04.05.2012

In the period from April 30th to May 2nd, the U.S. currency resumed its pressure on its major competitors. The USDX Dollar Index at the moment added 0.520 basis points, or 0.7%, reaching the mark 79.400. The main reason for the growth became the positive data on the PMI by the Institute for Supply Management in the U.S. manufacturing sector. However, on Wednesday and Thursday, the trading activity significantly decreased due to the expectations of a traditional important report on the labor market, which once again disappointed investors and triggered sales in the stock markets and an escape to the defensive assets, followed by the Dollar strengthening. Towards the end of the week, the Dollar Index added 1.0%.

The dynamics of the European currency against the U.S. currency in the absence of significant news and while expecting the next meeting’s outcome of the Governing Council of the ECB was largely determined by the behavior of the Dollar. The EUR/USD pair broke the support of 1.32000, and approached the minimums of last week, where customers started returning to the market, having provided the support for it. By the end of the week, it continued fluctuations in the relatively narrow range of 1.31000-1.32000, waiting for the data on the U.S. labor market, which contributed to further strengthening of the Dollar. At the close of the week, the EUR/USD pair lost about 1.2%.

The British pound continues to feel rather confident. The data published in the first three days of May on the PMI in industry, construction and services from the Center of independent financial information Markit did not give substantial reasons for reconsidering the positions of the Bank of England. Let us recall, that the regulator intends to consider the possibility of an early collapse of the quantitative easing program, if inflationary pressure does not decrease. Therefore, the Pound was trying to ignore the weakening of the Euro, and its downward movement against the Dollar was of a very sluggish nature. The EUR/GBP pair reached the target level in the area 0.8120.

The Australian dollar again came under pressure after the Reserve Bank of Australia lowered interest rates more aggressively (than previously expected) to 0.5 basis points to the level of 3.75%. The AUD/USD pair decreased from the level of 1.0445 to 1.0245, and then broke it, and moved to the area of 1.0145. The New Zealand dollar broke the bottom limit of the corridor 0.8060-0.8280, where it had been resting for the past two months, and is moving to the mark 0.7845.

The falling risk appetite also contributed to the movement of the USD/JPY pair to the direction of 80.70.

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