Currencies  |  December 10, 2012 08:57:34

Events that during the week waved price euro

One down and one up again. The ride on caterpillar track could be likened price trend of the currency pair EUR / USD during the past week. Why three days euro strengthened against the dollar and why then its price at the end of the week fell down again, tells you a weekly summary of economic events in Europe and the USA.


Euro began trading week against the U.S. dollar positively when climbed to the level of 1.3074, the highest value since 23 October. Against the Swiss franc on Monday also strengthened, by almost 0.4 percent. The reason for the positive mood in the financial markets were reports from Greece.It is on Monday kicked off the event, which should result in a partial write-down its debt. This means that lenders recognize some of their losses resulting from the purchase of Greek bonds. As a result, the total debt humiliate Athens. This new agreement, according to the so-called "troika" achieved in 2020 124 percent of GDP. For troubled southern European country, suggesting that these steps to debt reduction should help the local economy in a faster recovery.

The Greek government will spend up to 10 billion euros to buy back bonds, which should reduce the total debt of the country by about 20 to 30 billion euros. Lenders do not get the recognition of losses bond reimbursed in full.

Redemption of bonds could be involved in Greek banks, Cypriot banks and the banks of the European Union. Another potential player in the Greek pension and investment funds. Investors have until 7December notify whether the tender offer are interested. The transaction is expected on the 17th December.

Helped to improve sentiment and statements by German Chancellor Angela Merkel, which does not exclude the possibility of further write-down of Greek bonds and from Germany. It also reiterated that the performances of Greece from the eurozone would be much more expensive than staying in the euro area.

Positive news on Monday was the fact that Spain has formally requested the release of money to recapitalize their banks in the amount of € 39.5 billion.


Eurodollar currency pair continued growth on Tuesday and got to the level of 1.3125, ie for up to 7 weeks. While the U.S. dollar remained under pressure due to inconsistencies in the U.S. Congress on the steps leading to the solution of a fiscal cliff.January and the first is time, when it is possible to change the laws leading to the emergence of fiscal cliff inexorably approaching. When U.S. legislature with the end of the communication failed to address this issue, the U.S. economy may be on the side due to cuts in government spending and the impact of higher taxes on the inhabitants fall into recession.


On Wednesday continued the positive sentiment in Europe and the auction of Spanish bonds. Madrid sold bonds with maturities of three, seven and ten years. Overall, it was awarded € 4.3 billion, which was the upper limit of the range that you specified. Investors expressed on these high interest securities. This caused the price rose and yields fell. This means that the Spanish government is able to finance their needs less. Euro on Wednesday ended with its growth to levels 1, 3125 and began to gradually weaken.

On Wednesday, it was interesting to follow speech British finance minister George Osborne to England economic outlook.

The Minister of Finance has cut its estimate of GDP for next year, to a level of 1.2 percent instead of the previous 2 percent, the ministry predicted this year in March. Due to slower economic recovery in the islands (GDP) and public debt begins to decline later, up in the fiscal year 2016/17 instead of the originally planned 2015/16.

The government will be according to Osborne continue to reduce government spending. On the other hand, England as one of the few countries plan to cut taxes, for example from corporate profits. In 2014/15 the rate should drop from the current 22 to 21 percent. London also wants to start a fight against avoidance of corporate taxes. The first cases of this region come to the surface already.Recently, it appeared that world-famous companies such as Google, Starbucks or Amazon taxing their profits from the British Isles in other countries, most commonly in Ireland, the Netherlands, Bermuda or Luxembourg.

Britain is also planning to increase investment in infrastructure, exploration and mining of shale gas and tax favored firms using long-term (capital) investments.


On Thursday, the mood on the currency pair EUR / USD turned 180 degrees and headed down the euro. Just arrived in the morning to the financial market reports, the international rating agency Standard & Poor's placed Greece's credit rating to "selective insolvency" SD from the current speculative evaluation "CCC".

After two days of negotiations with nine Monetary Commission British central bank (BoE) decided to maintain interest rates at 0.5 percent and the absence of additional expenditure on the purchase of government bonds. The British central bank today did nothing to change its monetary policy. Passive attitude of the national bank is in conflict with the views of the British Finance Minister George Osborne, on Wednesday admitted that the growth of the British economy over the next three years will be slower than expected

On Thursday met the European Central Bank (ECB). Mario Draghi at a press conference announcing that the ECB retains the existing interest rate at a record low 0.75 percent.

But this time, investors focused their attention more on what the economic outlook of the common monetary union countries ECB predicts. The European Central Bank expects the economic slowdown by 0.5 percent this year, which is due to deterioration of the September forecast of up to 0.4 percent. The ECB has also changed its outlook for the year 2013, when the now-expected growth predicts development ranging from a decline of 0.9 percent after growth of a maximum of 0.3 percent. The Bank and its prediction follows the European Commission, which in November also humiliated the eurozone economic outlook for next year. The ECB has also changed the inflation forecast for next year, from the original 1.9 to 1.6 percent.

Draghi also admitted that the bank's management was the introduction of negative interest rates in an effort to force banks to accumulate money, but lent them to support the economy.

European Central Bank failed to convince investors about the progress in the fight against the debt crisis and steadily worsening predictions indicate that the ECB does not have the situation completely under control. Euro after the publication of negative economic growth outlook for next year has weakened. The common currency has responded sharp sell-off and fell against the dollar to 1.2950 month low.


The U.S. economy hit by storms last month, Sandy has created 146,000 new jobs outside the agricultural sector. The unemployment rate so exceeded all expectations and achieved the best result in the last four years, and 7.7 percent.
Average hourly earnings in the U.S. increased from 23.59 dollars to 23.63 dollars and the average number of hours worked per week remained at 34.4 hours.
It is remarkable how the United States deal with the aftermath of storms Sandy for such a short time. In terms of fundamental analysis is a signal to strengthen the dollar.

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