Pending Home Sales Spur USD Rise

Yesterday the US currency continued its bullish trend as optimistic U.S manufacturing data and Pending Home Sales figures were released. The U.S. manufacturers expanded in August for the first time in one year and a half, while home sales contract hit a two-year maximum in July, helping helped the economy to recover and thus spurred the demand for the USD. Factories and constructors, which have accounted for half of all the jobs lost since the recession started, may be rising in coming months as home sales are. The U.S dollar jumped against most of its major currency pairs yesterday as sharp losses in global stock markets offset lower than expected U.S. manufacturing data and boosted the greenback's demand. As a result, the USD finished yesterday trading session 150 pips higher against the EUR at the1.4216 level. As market analysis shows the US currency also saw bullishness against the GBP and closed at 1.6155.

The American Petroleum Institute informed yesterday that crude supplies declined 3.19 million barrels last week. A U.S. government report may also show stockpiles reduced. Oil’s gains were supported as Australia said economic growth unexpectedly accelerated in Q2, adding to expansion in Europe`s leading economies such as France and Germany.

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.

US GDP Data Brind Dollar Fall

The period of steady appreciation for the USD has ended. The greenback experienced the essential drop the end of European trading hours. The trades closed at the level of 1.4364 against the EUR and 1.6284 against the GBP. The fall was reasoned by the following reasons: crude oil appreciation as a result of the global economy growth. The Gross Domestic Product (GDP) of the United States contracted 1.0 percent, better than 1.5 percent expected by the analysts. And it looks like the USD index will continue falling next few days.

The drop in GDP was the fourth straight one, the longest recession since quarterly records started in 1947. The world’s number one economy has shrunk 3.9 percent since last year’s second quarter. Yesterday`s report is the second of three estimates on Q2 growth. As more information becomes available the data will be revised again in September.

Euro M3 Money Supply Grew at a Slower Pace

The ECB stated on Thursday that M3 money supply in Euro-Zone rose at a slower pace of 3% in July compared to June's 3.6%. As market experts tend to think the annual growth rate will ease to 3.2%. Among the main components of M3, M1 increased 12.2% in July, up from 9.4% in June. Meanwhile, the annual rate of change of short-term deposits depreciated to minus 2.6% from 0.4% in June. Furthermore, the annual rate of change of marketable instruments dropped to minus 7% from minus 4% in the previous month. The euro-region economy barely contracted in the Q2 as Germany and France unexpectedly emerged from the decline.

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Strengthening of USD Positions

On Monday the greenback gained its positions versus major currencies traded in Forex market, from a string of recent declines after signals at the end of the week that CBs of different countries continued to carry out a policy of keeping their Interest Rates low for the near future. Technical analysis experts continue to expect that at some point signs of strength in the U.S. economy will be treated as positive for the nation's currency, ending an inverse relationship since the period of financial recession, where negative news performed a negative influence on purchasing the U.S Dollar.

The US currency also appreciated yesterday versus the EUR and Japanese Yen as Wall Street halted earlier gains and traders shifted their trading positions ahead of U.S. consumer and Housing data to be released this week. Solid U.S. data and probable reappointment of Federal Reserve Chairman Ben Bernanke pushed investors to carry out riskier transactions at the expense of the JPY and USD.

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.