The trades beginning of the first day at the already started week was on the optimism comeback to the market. The European currencies enforced against the dollar on the Asian session after it had become well-known that United Arabian Emirates’ CB promised to involve into the situation and let the financial structures risking the debts problems of the Dubai World. Though the situation changed later the UAE Government announcement about the absence of guarantees as for the debts liabilities of the Dubai World company has returned the anxiety to the market and made the investors look for the shelter in the American currency. The dollar enforced itself against both the GB pound and the euro but decreased against the yen denoting the typical situation of the risks resignation. The statistics of the USA economy published on Monday may be called not bad as for the final results – the business activity index of NY increased in November the fourth month running, the indicator fixed to 62.9 against 60.9 in October; at that the expectancies index for six months advancing increased to 74.4 from 68.9 in October. The activity growth was fixed within the responsibility zone of Dallas FRS in November as well; the general activity index passed onto the positive area and ceased at +0.3 against -3.3 a month earlier; the sub index of the manufacturing increased in November till 5.9 from -8.0; and the new orders index giving the information about the perspectives increased to 10.5 from -2.8. The Chicago business barometer looked quite not bad being also presented on Monday. The Chicago Institute of Supply Management (ISM-Chicago) reported the Provision Managers’ Index (PMI) increased in November to 56.1 against 54.2 in October; while the forecasts expected the fall down to 53.5. Nevertheless, this positive information didn’t become a support for optimism as the main attention was focused at the market on the situation concerning the Emirates’ foundation. The macro data being represented today will demonstrate the situation with the business activity in the manufacturing for the USA in November in general. The Provision Managers’ Index (PMI) for the manufacturing as expected fell down to 55.0 against 55.7 in October; being quite able to be evaluated as retardation. Besides, the October development expenses will be published; being also presumed with decrease for 0.5 per cent, after the growth for 0.8 per cent in September. However, as it seems as far as the problems of the Emirates’ foundation are staying in focus the economic data of the will make no influence on the events’ development either it will have fleeting character.
EUR
The initial optimism of the investors concerning the euro having clarified itself through the commentaries of the UAE Central Bank about the possible participation in the solving of the situation of the Dubai World troubles has been neglected with the announcements of the state authorities about the absence of any warranties from their part as for the obligations’ accomplishment of this very foundation. Against this very background the common currency began its decrease and found itself within the descendant trend for the part of Monday trading. Nevertheless, to the end of the day when the stock market of the USA demonstrated a little uplift the euro could neutralize the major part of its minuses against the dollar and complete the day with relatively non-essential looses. There were not much data of the EU economy; the harmonized index of the consumer prices of the Euro zone grew up in November for the first time, +0.6 per cent, at that it had been -0.1 per cent before. It has appeared to be higher than the forecast as the economists expected the uplift for 0.4 per cent only. The data from the Conference Board expressed the growth of the combined index of the advanced indicators for the Euro zone in October, for 0.9 per cent; though this dynamics noticed retardation of the positive processes only as the indicator showed +1.2 per cent in September, against +1.8 per cent in August. Certainly the retardation being observed fostered the questions in concerns of the strength and durability of the economic recovery. The principal cause of the indicators’ retardation is supposed to be the EU labor market’s tenderness. The news background of this day is much more amazing than the previous one as the November indexes of the business activity in the manufacturing (PMI) of both Germany and the Euro zone in general will be represented; the indicators are foreseen to be with the raise but much less significant than it was before, to 52 and 51 accordingly. Besides, the information of the labor market will be represented; the unemployment level in Germany can still stay at the previous level, 8.1 per cent, and as for the whole Euro zone – increase for 0.1 per cent to 9.8 per cent from 9.7 per cent. Certainly, it won’t define the support for the euro; though the probability of good result in the retailing in Germany for October can be; the forecast is 0.5 per cent m/m, -1.9 per cent y/y and it can leave the investors’ tunes in the positive view and support the common currency.
GBP
The British pound was traded worse than other currencies on Monday amidst the apprehensions as for the vulnerability of the banks of Great Britain in the loan troubles of Dubai. As it’s known 45 per cent of all the British credits are in UAE, and it approximately amounts 123 Billion of dollar falls at the banks from Great Britain, and it causes the most possible serious apprehensions concerning the GB pound provoking the decrease of the British currency. Moreover, the economic information from the “Isles” served as a reason for the complicating the situation. The data from GfK concerning the consumer confidence appeared to be extremely tender; the consumer confidence index decreased to -17 against-13. Besides, as it has already become clear according to the data of the Bank of England, debts remissions within the banking sector in the 3rd quarter grew up to 4.3 Billion of pound against 3.6 Billion of pound in the 2nd one, an in the foreign currency increase till 1.0 Billion of pound against 249 Million of pound. These indicators were found to be the highest possible starting from the day of the statistics monitoring; and they certainly provoke the raise of the anxieties as for the state of affairs and perspectives in the banking system of Great Britain. There will be not much economic news today; the publication of the so-called “triptych” of the business activity in the “Foggy Albion” for November is originating: its first part – the business activity index in the manufacturing is forecasted with the raise though less rush than in October as it’s presupposed to see 54.0 after 53.7 in October. The data having already been published today concerning the housing prices from Nationwide has demonstrated the growth for 0.5 per cent m/m and for 2.7 per cent y/y; it can support the sterling though as it seems not for a long time. The increase of optimism in concerns of the “cable” shouldn’t obviously be expected until the final clarification of the troubles as for the Emirates’ foundation.
JPY
The pair of USD/JPY has got back some portion of before lost positions after the Minister of the National Strategies of Japan N. Kan had announced the government of the state agreed to take some measures to stop the national currency increase i.e., the intervention threaten started to get its realistic forms. Against this background the yen has ceased its enforcement against the dollar, though the result of the day was at the side of the Japanese currency by all means. Today the Bank of Japan is conducting the unscheduled meeting, which necessity was obviously dictated by the situation having formed at the market. Due to the unjustified information the Japanese regulator intends to enlarge the capacity of the state bonds’ purchases and broaden the Commercial Loans Securities Relief Programs. It can’t also be excluded the probability of the key rates decrease. Basing upon these hints the growth of the dollar against the yen is being observed at the trading within the session of today. If these expectances are confirmed the observed raise of the pair of USD/JPY will be lasted, the dollar purchases will be warmed up.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
