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Both dollar and euro rose versus the yen on Friday morning in Asia, as the fear of spreading of swine flu started to vanish. But events, that are about to happen in both Europe and the States will hit the Forex market with declining rates for both currencies.

American currency was pressured in early European trades due to end of month dynamics for fixing. Euro was rising in the first half of the day, reaching the level of 1.3385 against the dollar, and then decreasing back to the level of 1.3200.

Euro rose in the foreign exchange session in London, as the results of German Ifo survey were released. At the beginning of Friday (European time), the euro was traded at 1.3190, and even temporarily reached 1.3260, and then got settled at the level of 1.3240, when the survey data was released.

As a result of the survey, traders could observe, that the index of expectations has been rising for three months in a row. And although these are not results of growth or any positive incline, these results of the survey indicate that the real economy is starting to be less pessimistic.

Although Wednesday was a very calm trading day on the foreign exchange market for many major currencies, the pound of sterling fell significantly, as a result of reveling of the annual budget statement by the government of the United Kingdom of Great Britain.

On Friday the Dollar hits its lowest level in the past three weeks, decreasing below Y97, as a result of multiple negative news reports from the American automakers, which made players instantly sell a lot of US dollar.

As the Wall Street Journal reported on Friday morning, that American auto company Chrysler LLC may file for bankruptcy as soon as next week, which will lead to a much deeper recession in the American economy, the dollar started losing its positions.

According to the latest economic data the United States dollar increased in relation to other major currencies but still it was quite affected by the fact of the decline of consumer spending and sales of property. The level of the consumer confidence is likely to fall to the 60.0 in the current month. According to Sal Guatieri at BMO Capital Markets the US consumers experience hard times due to decreasing house prices, growing energy and food prices and increasing rate of unemployment. The present fall of the consumer confidence level is one of the largest the US economy experienced.

The IFO survey issued recently caused the sharp growth of the Euro in relation to the USD. The business climate index provided in the IFO survey experienced a growth reaching 103.5 point instead of 101.9 predicted by the experts. Such trend reflects the situation at the German Business market that seems to be quite stable at the moment. According to the Capital Economics official Jennifer McKeown the growth of the IFO did not compensated the previous month decrease in full but it improved anyway.

According to the latest news from the Forex markets the United States dollar continues to grow in relation caused by the opinion that there will be no more declines of the interest rates. The Federal Reserve considers the inflation as the one of the main problems and still is trying to pursue the policy in the proper direction.

The CMC Markets official James Hughes said that many forex traders heartened by the yesterday’s speech of the Federal Reserve Chairman despite the fact that this speech hardly resembled the monetary police roadmap.

The British pound decreased rapidly especially in relation to the United States dollar throughout morning Forex trading session after the necessity of another interest rates cut by the Bank of England became quite obvious. The negative information that caused such fall is the reports concerning the fall of the house prices and decline of the retail sales level. So the British currency reached the 1.95 point in relation to the USD.

The latest Forex trades showed the Euro increased again after the short period of decline however this instability shows nothing but the problems of the European economy. The purchasing manager’s index for the previous month increased up to 51.8 point but the growth trend was reported only by Germany; as for the Spain, France and Italy they have reported the slowdown.
As for the whole market opinion there are talks about further decreasing of the Euro.

The main point to be singled out is that the Japanese Yen declines for the second consecutive day on Forex. The sole reason is the current situation occurred at the markets. The United States dollar became more attractive for the traders and that is why the Japanese currency is being sold off.
We should also mention that despite the fact that the greenback increased for the second time this week in relation to Japanese Yen, the Yen itself has also decreased in relation to such currencies as British pound and South African rand by 5% and 11.5% interest rate correspondingly.

The United States currency experiences growth caused by high numbers of employment index and possibility of the Federal Reserve to increase the liquidity at the financial markets with the help of the Term Auction Facility auctions extension and Fed’s agreements with Central banks of other countries.
The Fed’s intention is to increase TAF auctions from $50 billion to $75 billion and extend its swap agreements wit central banks of Eurozone and Switzerland.

The main point we should consider is that the Japanese yen turned to be quite strange throughout the trading session this day and has come to the end of trades at low positions in relation to the United States dollar and British pound but strong enough against the Euro, Australian and New-Zealand dollars. As for the inflation level in Japan we have to mention that it increased to 1.2 percent throughout the previous month.