Daily Market Review 29 of May
OVERVIEW

The analysts who were skeptical about the Euro monetary union were once rejected like ancient prophets predicting the end of the world. Today when Euro is struggling to survive the claims of those who have been criticizing the policy of the EU become more and more credible. We are able to see now many of their forecasts come true. Though none of those analysts seems to be happy because of predicting correctly the development of some events in the Euro zone. The analysts admit that with regret as they realize that the exit of Greece from the monetary union as a result of new elections next month will trigger chaos in Europe. Following Greece Spain experiences serious financial difficulties. The fourth biggest bank has requested an unprecedented sum for local financial markets: 19.5 billion Euros.  If the funds are insufficient Spain will have to appeal to the EU for the aid. In addition to that on Friday Moody’s downgraded the credit ratings of five local banks at once. Analysts are afraid that allocation of such enormous sum to one bank will devastate the whole Spanish fund for restructuring of the bank system. In case Spain addresses the EU for help it perhaps won’t be able to manage another urgent credit.

CURRENCIES

EUR/USD

The Euro depreciated against the US Dollar from 1.2623 to 1.2509 yesterday. The general trend in the market is bearish due to continuing problems in the EU economy.  Approaching macroeconomic statistics is anticipated to confirm the sentiments on the market. The goals are 1.2470 and probably even 1.2000 quite soon.



GBP/USD

Yesterday the Pound depreciated against the US Dollar from 1.5716 toо 1.5655. The easing of the Pound did little to increase the competitiveness of the British companies but had an impact on the inflation growth. According to statistics the indexes of Britain are lower than ones of the EU and the USA. That’s why analysts expect that the Pound rate will continue to descend.