The result of Thursday trading was on the dollar, though the beginning of the day was remarkable with the further decrease of the “bugs” against the euro and the GB pound. As for the yen the growth of "greenback" was denoted for all last week. The support to the optimism and relatively the enforcement of the pressure upon the American currency was observed amidst the news from the Bank of America about the intention to pay 45 Billion of dollar received within the Government assistance during the crisis. Besides, the reason for the sales of the dollar may be supposed the market expectances connected the ECB signaling about the beginning of the large capacity liquidities expropriation, in a way of beginning the processes of the European economic recovery after the financial crisis. Though as the event development demonstrated the CB of the Euro zone didn’t equal the investors’ expectances. After the announcement of the decision concerning the rates and the press-conference of J.-C. Triche the US dollar began to enforce itself – it got back the part of the before lost positions against the euro and neglected completely the losses against the GB pound fixing the plus as a result of the day concerning the "Brit". Some support to the dollar was provided by the economic news having demonstrated the decrease of the activity in the services in November. Shifted into the negative territory after the growth during two months running the provision managers’ index for the non-manufacturing of the USA became just a sudden surprise for the market. The statistics denoted 48.7 against 50.6 at the expectances due to the forecast for the growth to 51.5. At that the sub indexes haven’t stimulated the hopes for positive perspectives as the new orders fell down in November amounting 55.1 against 55.6 a month earlier. Though, better than expected became the data for the preliminary redundant payment appeals’ capacity of the previous week; the quantity of the appeals shortened for 5 thousand till 457 thousand while the growth for 19 thousand forecasted. It’s become just a surprise, but the positive was diluted with the secondary appeals increased for 28 thousand after a few weeks of falling down and the general capacity consisted 5 465 thousand against 5 437 thousand a week before. Today the employment report from the USA for November will be represented to the market attention, it’s presumed the job places shortage lowered significantly and equaled -120/-130 thousand after -190 in October; and the unemployment level stayed at 10.2 per cent. Any surprises as for this information may call drastic volatility at the market.
EUR
The European currency’s growth amidst the conversations about the possible start of the great capacity of liquidities’ expropriations from the part of ECB and optimistic perspectives from the Bank of America was interrupted after the announcements of J.-C. Triche hadn’t obviously equaled the expectations of the market. The European Central Bank has left the key rates at the level of 1.0 per cent as expected; and the ECB President has made a hint upon the European regulator would moved to the liquidity expropriation sluggishly and complete fulfillment of the refinancing operations with the 12 months’ expiry in March. However, it has been noticed together with it ECB would continue the fiscal supplies’ pursuance to the banks of the Euro zone within the merges of more short-termed refinancing operations in any necessary possible capacities at the fixed interest rate. So as it becomes clear from these announcements the liquidity expropriation in fact can fail. The perspective of this kind has possibly become the reason for the market’s disappointment and the sales-outs of the euro in the second half of Thursday session. Moreover, the new ECB forecast was presented – more optimistic than one had been published in September, in accordance to it the economic activity growth is presumed for 0.2mper cent in the Euro zone in the following year. The economic data from the Euro zone published yesterday brought no sudden surprises an appeared to be within the forecasts. The secondary evaluation of GDP for the 3rd quarter proved the results having been published after the preliminary evaluation – the growth for 0.4 per cent q/q and the decrease for 4.1 per cent y/y. The retailing in the Euro zone in October have also stayed without changes in a monthly comparison – 0.0 per cent m/m, though lowered down per annum for 1.9 per cent y/y. The factual values appeared to be worse than the monthly forecast expecting the sales raise for 0.2 per cent and better than the expectancies as for the annual dynamics where it had been supposed to watch -2.7 per cent y/y. Although the reason for the pessimism has still been given by the macro statistics – the specified business activity indexes for November in the services both of Germany and the Euro zone appeared to be lower than the advanced values, for Germany 51.4 from 51.5, for the Euro zone 53.0 from 53.2. No news concerning the EU economy is planned for today; the euro will be traded at the expectances and results of the employment data of the USA.
GBP
The British currency appeared among the “losers” of Thursday session. The GB pound enforcement amidst the optimism splash in the beginning of the trades altered with the weakening and the result of the previous trading day fixed the “cable” decrease against both the dollar and euro. The falling down of the interest to the GB pound was possibly provided with the message from the Bank of England about the intent to enlarge the liquidities at the corporative bonds markets. As it was noticed in BoE the conditions of the preliminary corporative bonds market were improved, though ones concerning the secondary markets still stay restricted; an the alternations being planned for the fulfillment are dedicated to the liquidity affairs improvement at the secondary market exactly. The reason for the discourage could also become the data of the economy of the “Isles” represented on Thursday; the provision managers’ index (PMI) for the services in Great Britain fell down to 56.6 in November against 56.9 in October; this very falling down was just a sudden surprise as the forecasts were looking forward for the growth to 57.0. Together with the already published at this week provision managers’ index (PMI) for the manufacturing which had also demonstrated the decrease this news could be a serious reason for the apprehensions enforcement concerning the economic recovery processes’ stability in Great Britain. Moreover, as like as not the state of affairs of the Dubai World’s debts which hasn’t still been clarified up to its end yet adds some disturbances to the investors further and enforces the pressure upon the GB pound during the period of its sales-outs. At the current day session no economic news of the British economy are going to be published; the GB pound will be under the influence of outer factors and first of all the results of the employment reporting the USA going to be published in the beginning of the American session.
JPY
The Japanese yen appeared to be under even more powerful decreasing pressure on Thursday trading having become the leader of the trades. The chattering activating about the possible “intrusion” of the Government of Japan into the currency market targeting to cease the growth of their own national currency makes the investors to escape out of this very asset having been purchased as a shelter-currency no long before causing the massive sales of the yen against all majors. Besides, the BoJ decision concerning the new financing program creating adopted in the beginning for the current session continues to make a pressure upon the Japanese currency. To say it in English the tunes as for the yen are far from being pinky and it can define the perspectives of the Japanese currency for the nearest time as negative ones. However, the yen possesses a factor being able enough to support it – it’s the curtailing of the delta between the LIBOR rates both for the dollar and yen; against this background the “greenback” can become more attractive asset for the carry-trade foundering again. Nevertheless, the yen’s positions will find themselves under the absolute influence of the information from the USA today; the positive as for the employment in the American economy will give the investors extra confidence in the sales of the currency of Japan, at the same time the opposite result will provoke the purchases of it i.e., provoke the comeback into the shelter-asset.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
