Euro Drops ahead of German Key Figures. Latest Currency Market Update

Yesterday the EUR closed trades at 1.4769 versus the USD, the weakest level for the last two weeks. On Tuesday the European currency was at 1.4802, a little bit lower from Monday 14-month high of 1.5064 per Dollar on Monday morning. The EUR/JPY was 135.88, lower from 137.08 on the currency market.

The European currency drop is described by concern on negative German unemployment data due to be released tomorrow. The reading is expected to be 8.3 percent in the month of October, a 0.1 percent drop from September figures. Also the separate researches show that commodity and stock market is likely to peak as recovery in the USA seems to be fragile.

Among today`s important events in economic calendar the major one is the German CPI figures likely to deliver worsening of consumer prices. The Euro will probably lower a little bit moving away from 1.500 level versus the USD.

American Unemployment Rises

American job market remains now the worst problem zone in the US economy. 263,000 Americans lost their jobs in September much worse than expected by the market analysts. The major losses are seen now in services and construction industry. Thus, the unemployment rate in September is 9.8 percent from the active part of the population. Last month the jobless rate was 9.7 percent. Current result has been considered as the lowest one for last 26 years. 10 percent mark will probably be attained by the end of the year.

Worse than expected employment data have stopped and reversed the USD upside trend. This had traders questioning the US economy recovery and pushed them away from trades with dollar in the list of their financial operations.

Bearishness as Future for Dollar

The advance of the USD continues. The EUR/USD pair is now traded 1.4620. And the GBP/USD is close to 1.5900 level durinf European forex trading hours. The JPY is the only currency to gain versus the greenback after reaching its 8-month low of 88.22. The pair is now traded near 90.00 mark as the latest Forex quotes show. Announcements made by Minister Fujii have producedinfluence on many traders wondering if Japan will not intervene in its currency's recent rise. If it chooses not to do that, the target for the USD/JPY may be close to 82.00 very soon.

Looking ahead to today`s events, however, the most important one will be the Conference Board's release of their Consumer Confidence announcement at 14:00 GMT. As the trend is currently pointing towards rising optimism in the US, bearishness for the USD may still be seen today.

Federal Reserve May Announce Exit of Stimulus Measures

Concern that FOMC may remove stimulus measures encouraged appeal for the US Dollars. As a result the Dollar reached its week high versus the Yen and the Euro, according to Bloomberg.

Many economists tend to suppose that FOMC is likely to become a catalyst of USD rising as FED will probably announce the withdrawal of its economy stimulus measures. The USD rose to 92.17 yen as of 7:45 a.m. in London from 91.29 yen in New York Sept. 18. It jumped to $1.4645 per euro from $1.4712. The U.S. currency advanced to $1.6143 per pound from $1.6271, after earlier touching $1.6135, the highest level for the last three weeks. The USD index climbed 0.6 percent to 76.878.

The JPY fell to its three-week bottom versus the Euro after Hirohisa Fujii new Finance Minister refused to make comments meaning he would let the Japanese currency rise.

It is expected that Japan will remain the only country among big economies that will keep its benchmark interest rate at a record low. Japan`s Overnight call rate is now at the lowest level worldwide . The economy is likely to expand 0.8 percent next year after declining 6 percent in 2009 putting assets in the world’s second-largest economy not in favor comparing to those in countries with higher borrowing rates.

Financial Market Update

The previous week appeared to be very volatile for the US currency during Forex trading hours. The USD remained in a tight range 1.4200 and 1.4400 with no clear direction. The greenback performed a bearish activity yesterday as a result of yesterday`s parliament elections. The election outcome also pushed the Japanese yen sharply higher. The USD volatility was reasoned by mixed results from the US economy. The major data release that impacted USD behavior appeared to be the Preliminary Gross Domestic Product (GDP) report. It dropped by 1.0% in Q2 of the year, showing that the American economy continues its recession, despite some optimistic releases.

According to the Wall Street Journal, the DJIA dropped 0.4% on Friday also damped regional sentiment. DJIA futures were recently 50 points lower in screen trade.

First CFD Transaction in Romania

An important event in the history of Romanian stock market. On Monday the Sibiu Stock Exchange carried out the first CFD transaction with SIF Banat-Crişana (SIF1) shares, in an overall value of 4.950 lei for the first time in the history of the home capital market. The SIF Banat-Crişana equities quoted at 0.99 lei / title, 2.94% below Friday's Forex quotes on the Bucharest Stock Exchange. Every contract for difference includes 1,000 shares, and for the transaction conducted Monday the buyer submitted a margin of 990 lei, 20% of the total value of the securities traded there.

Thecontracts for difference help the traders to take advantage of the indices in the price of shares, without effectively buy or sell the respective securities, i.e. if an investor bought a contract for difference for a single share, he did not buy the respective number of equities on the spot market, but has the possibility to gain from the difference between the bid and ask price. CFD's are similar to the futures contracts, with the difference that they have no due-date.

Positive US Indexes Data Brings Gains for USD

The last week ended with significant gains versus other major currencies. But at the same time it ended with decline against the Yen boosted up by optimistic economic figures from Japan. USD/JPY is currently traded 94.50.

The previous week started for the US index with a significant drop caused by pessimistic U.S economic figures. The Federal Budget Balance delivered a negative result, revealing a strong deficit for the federal budget. This fact accompanied by the FOCM decision to leave the interest rates at a record low level added to the USD bearishness. But however, the second half of the week brought much better results and positive releases. The CPI report managed to provide a reversal sign for USD in all Forex crosses showing signs of further recovery of USD.

This week will bring the release of Building Permits and the Producer Price Index (PPI) this Tuesday capable to influence mobile trade. The Building Permits is anticipated to perform the best figures in 8 months.

EUR Goes on Falling against the Yen

Yesterday the EUR performed a record 1.9% loss against the Japanese Yen. The reason of such a decline appeared to be negative data from German consumer prices in July raising opinions that the ECB will maintain interest rates at a record low till the end of the year. The EUR traded $1.4154 from $1.4142 late Monday and was at 135.74 yen, down from 137.32.

The British equity market movements tend to have major affects on the Pound`s value. Even more, Forex traders are staying cautious ahead of today's BOE inflation announcement. Looking ahead to today`s events from the U.K which will likely impact the Pound for the rest of the week with the Claimant Count Change to be released at 8:30 GMT. The Euro-Zone Industrial Production report is also set to be announced at 9:00 GMT, negative results will likely put further downside pressure on the EUR.

Dollar Tumbles on Optimistic Manufacturing Data

The release of better than expected figures of ISM Manufacturing PMI brought the Dollar tumbling. The indicator reached its 11 month high of 48.9. It appears to be much higher than forecasted 46.4. The improvement in U.S. construction also added to optimism. Risk appetite grew on Monday bringing decline in demand for the greenback. The U.S. currency tumbled against all major Forex currencies as traders believe that the worst of recession is over expecting sooner growth. Therefore, the Dollar declined to its 7 month bottom.

The EUR/USD pair jumped to as high as 1.4444, before ending the trades at 1.4421 level the lowest rate for 7 months. The USD fell by about 250 pips vs. the British Pound to 1.6980. One of the only currencies that the Dollar appreciated against yesterday was the Yen. Among today`s economic events, forex traders can assume volatile market. The Dollar is expected to rise against its major currency counterparts. The traders are expecting for the release of Personal Spending and Personal Income data at 12:30 GMT, and the release of U.S. Pending Home Sales at 14:00 GMT.

Expectations from FOMC

The dollar and euro gained slightly against the yen in Tokyo on Wednesday as trust funds of Japan purchased those units to buy overseas assets. As dealers state, anticipation of such investments, which the trust funds regularly make at month's finish, prompted some short-term foreign exchange traders to buy the dollar and euro earlier the morning. Many players were reluctant to make big bets, particularly on the dollar, ahead of a U.S. Federal Open Market Committee meeting scheduled for later in the global day.

That happens because the FOMC statement is forecasted to contain few dollar-positive cues, as it seems to be much more cautious about the outlook of an economic rise than market players, dealers said. That would also confirm the opinion that the Federal Reserve will take more time before deciding to end its ultra-low 0-0.25% policy Federal Funds Rate. Currency market players said, after the meeting of FOMC the dollar may also further decline against the yen as Japanese firms repatriate overseas earnings ahead of six months at the end of June.