FX.co ★ Fundamental Analysis, February 23, 2011

In the global macroeconomic arena, the Case-Shiller index for home prices in the 20 largest cities in the United States fell yesterday by 2.4% for December – the sharpest decline in the previous year. For comparison, in November home prices fell by 0.4%. Furthermore, in the fourth quarter of 2010 home prices in the United States fell by 4.1% - the sharpest quarterly decline in over two years. For comparison, in the parallel quarter of 2009 a 3.9% decline has been recorded.

Furthermore in the macroeconomic sphere, the U.S. Consumer Confidence Index reached a 3-year high February, crossing the 70-point bar as compared to 67 points in January. This goes against analysts' predictions that the index would only reach the 65.6-point level.

The S&P credit ratings agency reduced Libya's credit rating by one level to the level of BBB+. The agency warned also that further downgradings are possible in the near future, and that the step was taken due to the political risks inherent in Libya's situation and the expectations that it would continue to escalate. S&P joins the Fitch ratings agency, which has taken this step two days ago, in downgrading Libya's credit rating.

Index declines have been recorded in Europe yesterday based on the political tensions in the Middle East. By the end of the trading day, the London Stock Exchange declined by 0.3%, the Frankfurt stock exchange declined by 0.1%, while the Paris stock exchange dropped by 1.2%.

In the commodities market, crude oil traded yesterday at a 6.6% climb to a level of 91.85 United States dollars for one barrel of oil due to concerns of a long-term damage to Libyan oil production. Gold futures locked yesterday at a climb of 1.1% to a level of 1,404 United States dollars for one ounce of gold.