Forex online trading markets saw the Euro fall to a surprising two-year low against the US dollar on Friday, loosing almost 400 pips and erasing any optimism created by the EU summit held in Brussels last week.
After a disappointing US employment figure resulted in investors shifting their funds to safer territories on Friday, the US dollar endured a significant jump against its more significant currency rivals.
In this sense, the EUR/USD forex online trading pair dropped over 120 pips after the news was released, eventually hitting the 1.2258 mark before experiencing a slight upward improvement to close out the week at 1.2288. Against the Japanese Yen, the Euro fell 130 pips to trade at the 97.61 level. The pair finished the week at 97.91.
The US dollar has kept its rising tendency against the Swiss Franc, oscillating between a narrow 0.9751 and 0.9801 range. According to Bijoy Kar, a financial analyst from MIG Bank, “of all the US dollar pairs, the USD/CHF presents the biggest rising trend”.
Commodities and precious metals also saw abrupt movement on Friday. The crude oil price fell by close to $3 a barrel, while gold tumbled over $20 an ounce. This week, the abrupt movement may persist, especially if the Euro continues to fall against the dollar.
Also this week, forex online trading brokers will have their attention pointed at several significant political and economic events, especially U.S trade balance figures on Wednesday, the U.S PPI on Friday and today’s ECB president Mario Draghi’s speech, in which he is expected to address some new developments in the Euro Zone that will certainly create some volatility in the market.
In effect, the Greek economy will continue on the recession path for the fifth year in a row with a 6.9 percent contraction from the prior year, according to reports from the Foundation for Economic and Industrial Research (IOBE).
Cuts in salaries and public spending are the main reason appointed by the IOBE to explain the sharp fall in economic statistics, the same measures that were implemented by European financial institutions last February as a condition to bail Greece out of its debt crisis. A record 23.6 percent unemployment rate is also expected.
Also, borrowing costs for Spain and Italy are again climbing to critical levels with yields for 10-year government rising to unsustainable levels above 7 percent.
The renewed uncertainty prompted the European commission on Monday to “assure” that “there will be no need for a sovereign guarantee for banks being directly recapitalized by the soon to be established permanent bailout fund”, the European Stability Mechanism.
Forex online trading experts are also aware of news coming from the East, as prices are tumbling across the Chinese economy, according to data released by the Chinese government. Consumer prices dropped 0.6 in June, compared with May, in a clear sign that produced goods are exceeding demand from the Chinese people.