Last week session’s setup deigned the American currency. The threatens of the rating agencies to decrease the crediting ratings almost for everyone due to great budgeting deficits and the apprehensions in concerns of the Dubai foundation still being actual have never favored the saving of the willing to risk among the investors at the high enough level. The situation was exacerbated with the decision to shave the rating of Greece. Moreover, both Portugal and Spain were noticed as potential for the rating cut down, and to make matters worse the Baltic countries as well – Latvia, Lithuania, and Estonia. The macro statistics from the USA stayed in its usual sense of multi direction – the trading balance deficit suddenly lowered down in October for 7.6 per cent till 32.9 Billion of dollar; the consumer crediting stayed in minus though less significant than before and expected by forecasts; the wholesales stocks raised in October as well for 0.3 per cent, and the sales grew up for 1.2 per cent. The retailing of November appeared much well than the forecasts – rose for 1.3 per cent while expected +0.7 per cent. The number of the preliminary redundant payment appeals grew up the previous week and the capacity of the secondary ones curtailed; though as known this very statistics suffers from misstatements from the side of the accounting methods and raises doubts. The consumer tunes from the “Michigan” have fixed the value f the advancing index at 73.4 against 67.4 in November by forecasted 68.8. The Federal Budgeting Deficit amounted 120.3 Billion of dollar in November, and 296.7 Billion for 2 first months of the new fiscal year (which started on October, 1 in the USA). Incidentally, the agencies threatened with the rating decrease for the USA as well; though most likely it didn’t impress the market, and reflected upon the “bugs” in no way. At the already started week the economic news set from the USA is quite substantial and interesting – first of all the following will be in the focus of attention: the data of both manufacturing and consumer inflation, as the analysts’ forecasts presume the indexes growth so for a month as for a year; at that almost till the FRS target levels (up to 2 per cent) – the producers’ prices index (PPI) 0.8 per cent m/m, 1.7 per cent y/y; the consumer prices index (CPI) 0.4 per cent m/m, 1.8 per cent y/y. The information of such kind, if being confirmed, will give sound arguments for the market to expect for the FRS “rough” rhetoric, all the more another FOMC meeting concerning the rates will take its place next Wednesday and it’ll certainly arise the special interest despite all announcements of the American regulator concerning the long enough rates preservation at the low levels and velvet monetary-crediting policy in general. Besides, the development affairs, redundant payment appeals, and the business activity indexes in the regions from the FRB departments won’t certainly suffer from the lack of attention.
EUR
The common European currency was decreasing the major part of the last week session. The lost of rating by Greece and threaten of the same kind from the side of the agencies concerning Spain, Portugal and Italy have pressed upon the euro and that resulted with the lowering down against the shelter-currencies – the dollar and yen. The macro statistics as for the Euro zone was represented with the data from Germany to greater degree. The trading balance surplus in the largest European economy grew up in October thanks to the domestic demand raise; though the manufacturing brought no joy – the production in Germany decrease for 1.8 per cent m/m and for 12.4 per cent y/y, the manufacturing orders fell down in October for 2.1 per cent m/m and for 8.5 per cent y/y. The consumer prices lowered down in October monthly though rose annually, meanwhile, the wholesales prices of November exhilarated as it was the growth for 0.7 per cent per month and the significant decrease per annum, -3.2 per cent, after -7.0 per cent in October. Amidst the deflation threatens hanging over the Europe this very dynamics looked encouraging enough for the perspectives. The news “climate” of the current week for EU is controversial and in general isn’t intended to support the euro; the business circles’ tunes indexes of Germany according to the Ifo version will grow up a bit in December though much less active than it had been before; meanwhile, the “sentiment” indexes form ZEW will by forecasted fall down a little on the contrary. The advancing provision managers’ indexes (PMI) for both the manufacturing and services of Germany and the Euro zone in general are expected with a little raise confirming the improvement tempos’ retardation and denoting a very sluggish economic recovery. To say it English the euro has more reasons for the decrease lasting rather than for comeback to the growth.
GBP
Great Britain hasn’t made an exception within of the rating agencies’ eyeshot and was also recalled in the lists of objects risking facing the rating decrease. It can obviously be considered as the main cause for the GB pound downfall against all majors except for the euro last week actually. The Pre-Budgeting Report of the Exchequer of Great Britain represented by A. Darling hasn’t given any reasons for the optimism raise as for the budget of the “Isles” despite the VAT benefits’ decline and Bankers’ Dividends Tax implementation. The Moody’s Agency hasn’t impressed with this program and the question concerning the British rating looks like to be still open. Moreover, the situation concerning the Emirates’ foundation not having been clarified completely yet didn’t also provide the confidence growth to the sterling. In accordance with the represented data the British manufacturing stayed in October at the September level and curtailed for 8.4 per cent per annum that became worse than forecasted. The October trading balance was remarked with the like result where the deficit altered to the side worse than forecasted having demonstrated the annual minimum. The Confederation of the British Industries (CBI) offered to attention some improvement of the orders in December; though the dynamics is still negative. The British Retailing Consortium (BRC) represented the overview saying the improvement of the retailing in November. The data of manufacturing inflation appeared to be essential; the annual prices hopped up especially procurement ones. From one side it gives a reason for the apprehensions in concerns of the rates increase; from the other side taking into account the weakness of the economy and respectively the BoE greater inclination to further softening of its policy it depicts the ambiguity and complication of the situation possible to be faced by the Bank of England concerning the monetary-crediting policy regulation. However, the announcements of the CB representatives prove there are still no anxieties as for this reason yet. Meanwhile, the news of the current week can sign the reason for the apprehensions can be – the data of the consumer inflation in Great Britain for November, the retailing prices index (RPI) and the consumer prices index (CPI) are predicted with growth at that significant one annually. The unemployment data with the possible retard of the growth of the appeals’ capacity but with the level increase lasting according to MOT method will be also represented. A good dynamics is expected as for the retailing for November, 0.5 per cent m/m, and 3.7 per cent y/y; quite not bad data as for retailing for December can come from the Confederation of British Industries (CBI) as the balance can raise here to 16 from 13 in a month before. In the great scheme of things the macro economic component is quite able to support the GB pound in the week already started; even more the data about the prices growth a the housing market are also expected. The only trouble moment can be the data as for the sate finances as the budgeting deficit problems are commonly known.
JPY
The significant decrease of the risks inclination amidst the anxieties concerning the debts of the states of European block increased the interest to the yen as a shelter-currency. The Japanese yen enforced itself the major part of the previous week session, but in the end lost earlier got positions a bit. Obviously the new stimuli’s set for more than 7.0 Trillion of yen accepted by the Cabinet of Ministers targeting the economic assistance to the state has given the reason for the growth at the fond market and made the pressure upon the yen thereby. The assumption of these measures was dictated pursuant to the statistics still continuing to worsen and denoting the dynamics of economic processes. GDP adjusted for the 3rd quarter became much worse than earlier represented data, +0.3 per cent q/q, after +1.2 per cent q/q earlier, the manufacturing orders in October fell down for 4.5 per cent m/m, and for 21.0 per cent y/y. The prices for the corporative products fell down in November for 4.9 per cent in annual comparison; though it is might be denoted as a retardation as in October it was -6.8 per cent y/y. The trading balance was better in October than in September thanks to the Chinese demand having increased the export from Japan; however, the payment balance has fixed the downfall of the surplus. The consumer tunes fell down to 39.5 in November from 40.8 in October, besides, the economic observers’ index accounting the presuppositions of the economic perspectives crashed down to minimums in November. As for the news this week will be tint and the main event will take its place in the first day of the week, when the report of the Bank of Japan “Tankan” for the 4th quarter will be published. The forecast expects the growth of the indicator to -23, after -33 in the 3rd quarter. Besides, this week further the October business activity index in the services will be represented, possibly with the growth to 0.5 per cent and later at the end of the session the decision of the Bank of Japan concerning the rates most likely declaring nothing especial.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
