15 January 2010
The session on Thursday distinguished with the maintenance of the US dollar purchases against the GB pound and yen...
The session on Thursday distinguished with the maintenance of the US dollar purchases against the GB pound and yen, though with the endurance of the “buck” as for the euro respecting the troubles with the state finances of the European countries at the same time. The pressure upon the “greenback” was provided by the decrease of the US T-Bonds’ profitability together with the publication of the economic data weaker than expected. The totals of the US Treasury Bonds stock promotion have determined the profitability’s decrease and that afforded the ground for the investors to purchase other majors for the dollar. The economic data distinguished themselves with the lame situation as for the consumer demand though. The December results of the retailing in the USA demonstrated a sudden worsening as the statistics appointed to the falling down, -0.3 per cent while the growth for 0.5 per cent had been predicted. The negative trend of December reflected the volatility of the recovery processes in the USA and compelled to even more confidence that the Federal Reserve System wouldn’t increase the rates for a long time. The news of today may correct the situation a bit and support the American currency, the data of the manufacturing production in the USA together with the Michigan consumer confidence index will be in the center of attention. The forecast presumes the statistics will demonstrate the growth in the manufacturing for 0.8 per cent in December and the improvement of the consumer sentiment till 74.0 after 72.5 before. However, the most important support may come from the publication of the consumer inflation data, the consumer price index (CPI) is expected with the increase to 2.8 per cent y/y from 1.8 per cent y/y, and the core one – till 1.8 per cent y/y i.e., to the level next to the target one that serves as a control of FRS. Besides, the market will monitor the financial statements of the American corporations, and the good profits’ results may get back the confidence to the dollar and enforce its positions at the last session of the week.
EUR
The common European currency fixed a minus to the dollar though a little one on Thursday session. The least favorable dynamics for the euro compared to with all other currencies was explained with the still relevant apprehensions concerning the state finances of the Euro zone’s countries where the probability for Portugal to join Greece as for the rating decrease enforces itself. Moreover, at the press-conference following the publication of the ECB decision as for the rates, which has been maintained at the level of 1.0 per cent by the way, J.-C. Triche has voiced the support to the powerful US dollar and noticed that the attitude of ECB to Greece that faced large taxing-budgeting troubles would never be special. The Head of the European CB has also cautioned that he also left open the possibility of the negative raise in the next quarters as the global economy’s recovery tempos didn’t encourage the special optimism. The news background as for the Euro zone will be represented with the consumer inflation data, the consumer price index (CPI) of December is presumed to be seen with growth, 0.3 per cent m/m and 0.9 per cent y/y, after 0.1 per cent m/m and 0.5 per cent y/y. The situation of the same kind will be observed for the core indicator as well, though the support for the euro from this very side mustn’t be expected as after the yesterday announcements of J.-C. Triche about the weakness of the recovering the expectations of the ECB policy stiffening won’t be grounded. Most probably, the common currency will further weaken against the US dollar during the session of today as well.
GBP
The GB pound was further going up against the US dollar at the session on Thursday. Probably, the extra support for the sterling was provided by the announcements of the National Institute of the Economic and Social Researches (NIESR) as of the economy of Great Britain had escaped in the fourth quarter of 2009 of its worth state during the whole history of the recession, GDP grew up for 0.3 per cent in the 4th quarter after the decrease for 0.2 per cent in the third one. Furthermore, just a favorable rhetoric from the side of the Moddy’s Rating Agency as the present schedule of the “Isles” state authorities’ steps causes the high probability of the maintenance of the AAA sovereign rating. As known, Great Britain has already got the warnings of the possible rating decrease amidst the sufficiently grown budgeting deficit. No economic statistics as for Great Britain was published on Thursday, nothing significant will appear today as well, the advancing indicators’ index for November being published today will make no influence upon the market. The British pound will further stay under the influence of the foreign information and the technical factors determined by the powerful resistances at the levels gained by the pair of GBP/USD.
JPY
The Japanese yen increased rapidly on Thursday trades. The interest to the yen as the sheltering asset has rapidly risen after the publication of the disappointing data about the US economy concerning the redundant payment appeals, the retailing for December, and the decrease of the T-Bonds’ profitability. The data of the Japanese economy have demonstrated the economic recovery in the country is still very weak, the Japanese machine-building orders indicator for November crushed down suddenly till its record minimum, -11.3 per cent m/m and -20.5 per cent y/y after -4.5 per cent / -21.0 per cent in October and the forecasts of +0.2 per cent m/m and -10.1 per cent y/y. The absence of threaten for the crediting rating of Japan announced by the Fitch Rating Agency has also provided some extra support for the yen. Meanwhile, the remark was also dropped about the necessity to deliver an “essential” tax reform for the improvement of the situation within the budgeting-taxation sphere. There will be no macro statistics from Japan today, the yen will further stay under the influence of the foreign information. At the same time, the technical aspect can make some corrections for the enforcement of the Japanese currency as the pair of USD/JPY has decreased tot the powerful supports’ levels.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
