The dollar decreased all over the front on Wednesday trading having surrendered its positions to all majors including the yen. It’s quite possible that the starting impulse to the “bugs” decrease served the rumors about the RBA intents to raise the rates next week again for 0.25 per cent. But as it seems the main reason of weakness of the American currency concluded that after the FOMC agendas were published and analyzed attentively, the market has already ensured in lack of wish of the States regulator to shorten the measures of stimulation. Besides, it became quite clear that the falling down of the "greenback" was regulated and becomes a part of the monetary-crediting policy of the Federal Reserve. In other words, the opinions the stiffening policy in the USA will start later than it happens in other developed economies enforced much more. Furthermore, the data of the USA economy published on Wednesday disposed to greater degree to the optimism. The number of preliminary redundant payment appeals fell down to the lowest level from September 2008, and consisted 466 000, falling to 35 000; the forecast expected the shortening for 10 000. The capacity of the secondary appeals has also shortened quite confidently for 190 000, amounting the general quantity to 5 423 000 against 5 613 000 a week earlier. The personal expenses in October increased again as the profits of the American households. As for the represented data the personal expenses increased to 0.7 per cent after -0.6 per cent in September, the profits denoted +0.2 per cent. The expectancies were connected to the growth for 0.6 per cent and profits for 0.1 per cent. A sudden positive was demonstrated by the sales at the primary real estates market in October; the indicator fixed the growth for 6.2 per cent and consisted 430 000 per annum, the analysts expected the falling of sales for 1.0 per cent. The news from the regions were also nice an encouraging, the manufacturing activity in Kansas City increased in November. According to the Kansas City FRB Report the business activity index consisted 17 against 6 in October and the new orders index increased for 14 against 11 a month earlier giving the hopes for the good perspectives. Nevertheless, together with the positive tendencies in the economy of the USA the less encouraging changes are also observed; the durable products demand fell down in October suddenly; the orders fell down for 0.6 per cent while the forecasts expected to demonstrate the growth for 0.5 per cent, and the consumer moods index from the University of Michigan consisted 67.4 in November against 70.6 in October. Today there’s a day-off in the States as a rule such events denote weak trading in narrow ranges, but in the current situation and mainly in the investors’ opinion the low trading capacities may enforce the dollar falling down.
EUR
The common currency broke through the level at 1.5100 on Wednesday trading and went out of the edges of the trading range which it had been trading against the dollar for a long time before. The apprehensions concerning FRS would uplift the rates even later than all its colleagues – other CBs has enforced the pressure to the “bugs” and warmed up the interest to the high profitable euro which enforced itself for almost 2 cents during Wednesday trading. At that the market has paid no attention to a bit weaker than expected data from GfK published on Wednesday and according to which the consumer confidence index decreased till 3.7 from 4.0in the previous period when the growth was expected to 4.5. The economic news from the Euro zone going to appear today can put a wet blanket on the “bulls” intents of the investors as for the euro as the data about the money supply and consumer inflation are traditionally weak. According to the predictions the monetary aggregate strategy M3 should demonstrate much less widening in October than it had been in the previous period, exactly 0.8 per cent while earlier it had been 1.8 per cent; at that the same indicator for three months until October lowered the tempos to 1.7 per cent from 2.5 per cent. The like dynamics says for the fact of serious troubles in the crediting and in case ECB starts curtailing it financing programs through “cheap money” it will become even more. Furthermore, the investors’ tunes may be influenced with the data of the consumers’ prices index in Germany for November as the lowering per month is expected for 0.1 per cent and that exactly will provoke some distrust as fort he reasonability of the same measures concerning the stimulating programs cutting down. After all, the investors can come across the willing to fix the profit as for the long positions of the euro. To say it shortly, amidst the absence of the trading in the USA there’s a sound reason to beware of decrease of the European currency, anyway, for the short-termed period.
GBP
The hopes the GPD of Great Britain for the 3rd quarter appears much better than the preliminary evaluation haven’t justified; the economic activity decreased less significant but not to the level of expectancies. According to the revised data the main economic indicator curtailed for 0.3 per cent compared to the previous quarter and for 5.1 per cent in an annual comparison. The preliminary estimation had informed about the shortage for 0.4 per cent q/q and for 5.2 per cent y/y. The alternations found themselves within the edges of the forecasts and gave a reason for the negative as for the sterling in the initial reaction of the market as these data have already been taken into account in the ratings. However, the GB pound has recovered later and even continued its growth fixing the “profit” concerning the dollar summarizing the day. The new information abut the GDP of the “Isles” showed no significant rebalancing takes its place in the economy; and the hopes for the investments enlargement don’t justify themselves as the unengaged capacities size in the economy still stays at high enough level. Today the statistics will represent the data of the Confederation of British Industries (CBI) about the retailing in November: quite not bad raise of the indicator is supposed to be watched till 12.0 per cent compared to the previous period when it had been 8.0 per cent. It can support the GB pound a bit; though as it seems due to the holidays in the USA it isn’t worth expecting too much activity, moreover, the pair of GBP/USD showed the modest result in growing compared to other majors on Wednesday trading.
JPY
The predictions the apprehensions will appear at the market as for the levels gained by the yen being possible to become the cause for the interventions haven’t become true. The Japanese currency continued its enforcement in Wednesday trading as well; resulting this it marked itself next to the annual maximum at the level of 87.20. The investors have bought the yen as the dollar became even more interesting as the fund-currency for the carry-trade deals. Nevertheless, according to the reports from Japan today the Deputy Minister of Finances E. Noda has already claimed the absence of the intents from the part of the Government to examine the possibility of the intervention just at the moment. It will obviously give the reason for the further purchase for the yen; what is being observed within the current session already. However, this process can be interfered with the technical factors meaning the strong supports at the today already gained levels of 86.70/50. The Bank of Japan agendas has stated BoJ had taken a decision to complete the direct purchases of the commercial securities and corporative bonds in the end of December as it had been arranged before. Though alongside to it, the document mentioned the Japanese regulator was ready to continue the utilization of the special crediting instruments even if it is the recurring measure. If take into account the perspectives of this day so as it seems the yen enforcement at the Asian session won’t get its further prolongation for the rest of the day session as the apprehensions concerning any steps directed for the enforcement of the Japanese currency still stay. It’s enough to recall the massive purchases of the dollar against the yen at the moment of the last enforcement of the Japanese currency till the levels of 88.10 in the beginning of October.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
