CURRENCY REPORT

Currency Report

Currency Report

WEEK 1

Part I

Week 1

?/$

Change

$/?

Change

$/ €

Change

6-Jul

95.03099

-2.38%

1.622781

-0.31%

1.393662

4.52%

7-Jul

95.10641

0.08%

1.615532

-0.45%

1.396361

0.19%

8-Jul

92.94724

-2.32%

1.602472

-0.81%

1.385155

-0.81%

9-Jul

92.83275

-0.12%

1.629827

1.68%

1.40254

1.24%

10-Jul

92.31969

-0.56%

1.618178

-0.72%

1.392461

-0.72%

Part II

Japanese yen dropped sharply across the board in week 1, undercut by expectations of investment trust flows out of Japan this week and as gains in the euro set off automatic sell orders in other yen pairs. The euro found its footing against its lower-yielding currencies during this week in New York as global stocks improved, adding to risk appetite. Meanwhile, the common currency fell against the pound.

On the economic front, German unemployment unexpectedly fell in July, the first decline since October, thanks to government measures.

On an upbeat note, Eurozone economic sentiment improved for the fourth consecutive month in July pointing towards a possibility of positive growth in the economy during the second half of 2009.

The euro stabilized against the dollar after reaching a 2 1/2-week low this week. The pair moved at 1.4070 in early afternoon trading, compared to previous low crossing of 1.4006. In the U.S., initial jobless claims saw a increase in the week ended July 18th, with the increase coming roughly in line with economist estimates. The report showed that jobless claims rose to 554,000 from the previous week's revised figure of 524,000.

The euro touched a two-month low of 0.8502 against the British pound, extending a downward move that began yesterday morning. The pair had been range-bound for about a week before the slide. House prices in the UK rose 1.3% month-on-month in week 1 after climbing a revised 1% in June, data released by the Nationwide building society showed Thursday.

The euro climbed to a 3 1/2-week high against the Japanese yen, reaching 95.875. The rise took the European currency above a near-term resistance level.

In economic news, the seasonally adjusted number of unemployed Germans dropped 6,000 in July, data released by the Federal Labor Agency showed Thursday. Economists had forecast the number to rise 43,000. The jobless rate stood at 8.3%, unchanged from June, while it was expected to rise to 8.4%.

The consumer sentiment index stood at 76 in July, up from a revised reading of 73.2 logged in the prior month, a monthly survey published by the European Commission showed. Economists expected the indicator to climb to 75. However, the level is still far below the long-term average.

WEEK II

Part I

Week 2

?/$

Change

$/?

Change

$/ €

Change

13-Jul

92.76246

-0.48%

1.61766

0.00%

1.397029

-0.33%

14-Jul

93.18444

142.20%

1.631332

0.84%

1.397001

0.00%

15-Jul

94.07321

188.88%

1.643634

0.75%

1.411397

1.02%

16-Jul

93.56397

49.08%

1.6414

-0.14%

1.411351

0.00%

17-Jul

94.09065

152.67%

1.63268

-0.53%

1.411801

0.03%

Part II

The EUR/USD recovered from early selling pressure but still closed lower for the session. Traders were selling the Euro overnight and seeking the safety of the U.S. Dollar after it was reported that North Korea tested an underground nuclear bomb and launched two missiles.

Early trading was down as investors waited to see if these events would turn into something prolonged. The uncertainty lasted until the U.S. released its Consumer Confidence report which showed a rise to its highest level in eight months. Investor appetite for risk grew after the release of this bullish number but failed to attract enough buying power to drive it through last week's highs.

Some traders cite the strong rally last week as a reason why the market ...