The session of Tuesday was noted with the warming up of the interest to the US dollar. The American currency has enforced itself against the Europeans, though decreased as for the yen, reasoning the classical situation of the investors’ lost of interest to the market. The “attack” of the rating agencies having made a precaution of Great Britain and the USA as for the possible decrease of the crediting rating together with the actual lowering of this very rating of Greece has obviously given the reason to the investors for the escape into the shelter-currencies which are the dollar and yen at the moment. Moreover, the situation was “chilled off” with the again enforced anxieties concerning the loaning problems of the Emirates’ companies (The Dubai World) together with the weak economic indicators of the Europe. It should be noted the caution from the side of Moody’s to the USA was accepted by the market as the declarative action and has made no pressure upon the dollar as the market players suppose the decrease of the USA crediting rating to be less a probable variant. No significant news as for the economy of the USA was published; those represented for the market haven’t encouraged for the optimism – the economic optimism index – IBD/TIPP for the previous week decreased till 46.8 from 47.9 while the growth was expected till 49.0. Besides, the US Department of Labor Report demonstrated the redundant tempos overlaps the recruitment tempos; and the job vacancies capacity curtailed in October for 50 per cent almost compared to the maximum having been observed in the summer 2007. To say it English this information was quite able to call up pessimism concerning the labor market perspectives. The news planned to appear today aren’t also notable for the significant content; the attention will be attracted to the gross supplies decreasing further: according to the forecasts for 0.5 per cent in October after -0.9 per cent before and the last data as for the petrol and its products supplies. Concerning the rest the investors will be guided with the data from the Continent and Great Britain where the regional foreign economic activities’ reports are being prepared for the publication. If taking into account the nature of the news of the current day they don’t seem to change the tunes of the market, and the dollar has quite not bad chances to last its raise.
EUR
The common European currency fell down against the dollar and the yen on Tuesday trading session. The disappointing economic data from the Euro zone and falling of sovereign Greece crediting rating tuned the investors against the high-profitable euro having given the serious reason to escape of the risks. The Fitch Agency warned Greece about the possible review of the rating on Monday, and on Tuesday lowered the level to BBB+ with the negative forecast. The information from Germany worsened the situation – as for the data published the manufacturing of the EU biggest economic in October shortened for 1.8 per cent m/m, and for 12.4 per cent y/y. That’s become a sudden surprise as the forecast expected the growth for 1.0 per cent m/m, and downfall retardation annually till -10.2 per cent y/y, from-12.9 y/y. That dynamic became a sharp contrast to having been observed in September +3.1 per cent m/m, and if remembering the data of Monday as for the shortening of manufacturing orders in Germany, the perspectives of this field are seen as less encouraging. The addition to the negative of the indicators for the manufacturing became the data of the capacity of bankruptcies in Germany. The amount of companies bankrupted in September continued the growth and increased for 17.4 per cent y/y, after the +12.3 per cent in August; the expectations for 2009 resolve themselves to the number will increase to 16.0 per cent in comparison with the previous year. The economic statistics for today demonstrates the data for German foreign economic activity both in October and November and also the consumer inflation of these months. The surplus of October payment balance of the States and also the positive trading totals of November are expected with the growth and the consumer prices are supposed to be seen with decrease, the October index of the consumer prices fell down for 0.2 per cent monthly, but stilled stayed at the level of 0.3 per cent annually. The news background will unlikely support the euro –the pressure upon the European currency will most likely be saved, though the technical factors namely strong supports, may become the reason for stopping of the decrease and starting consolidation movement of the pair EUR/USD.
GBP
The Tuesday’s trading session was found to be unfavorable for the GB pound. The Moody’s’ Agency’s precaution as for the possible rating decrease of Great Britain; the anxieties’ reverse connected to the Dubai foundations; the troubles’ escalation against this very background for the British banking sector; and also the disappointing news as for the economy of the “Isles” published on Tuesday have together made a serious pressure upon the “cable”. The GB pound has decreased till its minimums of the October’s last decade. As it has already been mentioned the results of the economic indicators haven’t given any hard point for the British currency – the manufacturing data together with the data of the processing sector in Great Britain for October didn’t justified the expectances and appeared to be weaker than the forecasts. The manufacturing still stayed in October at the September’s levels +0.0 per cent m/m and decreased for 8.4 per cent y/y; the September’s growth amounted for +1.3 per cent m/m and lowering for 10.8 per cent annually; by forecasted more positive totals, +0.4 per cent m/m an -7.7 per cent y/y. In the processing sector of Great Britain for October the result was analogous – the absence of the alternations in comparison with September and downfall as for a year; the decreased in the annual comparison was for 7.8 per cent y/y. The forecasts expected in their turn the growth per month for 0.4 per cent m/m and the decrease per annum for 7.2 per cent y/y only, at that the September data were revised to the side of decrease. The weak Tuesday macro statistics was quite possibly to become the supplement to the economic indicators having been published in the nearest past and also demonstrated the significant default; the activity both in the manufacturing and in the services retarded the growing tempos in November. This negative news set appeared just before the Bank of England meeting going to explore the monetary-crediting policy’s perspectives could set the market’s minds either on expectances or presuppositions of additional stimulus assignment from the part of the British regulator; and it certainly decreases the interest to the sterling. The news of this day as for the “Isles” will be represented with the October trading balance’s data. The last months’ tendency concerning this indicator is sustained positive, and this time the deficit shortage is expected, to -6 850 Million of pound from -7 194 Million of pound. Meanwhile, the focus of the attention will be at the publication of the Pre-Budgeting Report going to be represented by the Ministry of Finances, and the weak credibility of this very paper as for the deficit troubles decision will add the pressure upon the GB pound. Moreover, the causes having been mentioned before are connected to the coming of the BoE meeting and won’t provide the tunes’ alternation as for the sterling; and it will save the probability of the pressure upon the “cable”. The only thing being able to help the GB pound is the technical factors – the strong supports in its counterpart to the dollar.
JPY
All the factors having made any influence upon the market as for the escape of risks became the reason for the natural increase of the interest to the yen as a shelter-currency. The Japanese yen enforced itself against all the majors on Tuesday session; at that the enforcement was quite self-confident and encouraging to the expectances of its continuation. The extra argument for the yen purchases can be the exporters’ interests having selling the currency income for the yen at the attractive rates having been gained in their turn as a result of the lately decrease of the currency of Japan for the whole “front”. The economic news having already been published today has noted the revision with the decrease as for the GDP data for the 3rd quarter. The final evaluation has fixed +0.3 per cent q/q from 1.2 per cent q/q. Nevertheless, the yen is further enforcing itself at the current session as well. The main driver for this very asset is obviously further staying the political component dictating the anxieties’ escalation and escape of risks within the current situation; and it means the high probability of the further growth of the Japanese currency.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
