The first day of the started week was remarkable for the American currency decrease against all its main “opponents”. The information that the Emirate of Abu-Dhabi grants the assistance to the Emirate of Dubai on amount of 10 Billion of dollar for settlement of the debts of the of the Dubai World Company has released the anxieties concerning the crediting crisis and also provided the tunes raise and the “bugs” sales. Moreover, the support to the optimism came from the Citygroup Company declaring its readiness to pay the out the loan to the Government of the USA which was received for the crisis period. However, this splash of optimism was neglected quite rapidly; the demand for the risky assets was moderate in the view of still lasting apprehensions concerning the debts of the EU countries. As known the most important question at the agenda of the current day is if Greece will be able to represent the program conceiving the market the country will cope with its own debts, and the default on its side isn’t an urgent threaten. Nevertheless, the American dollar has found itself under the pressure again due to quite not bad climate of the stock ventures where the raise was observed at the opening. No news about the US economy was on Monday; though today the series of the important data is going to be published which can make an influence upon the “greenback”. The December manufacturing index form New York FRS is presumed with the growth to 25.0 from 23.1; the enlargement of the capacities of the US securities purchases by the foreigners in November is also presupposed to be watched (TIC), to 42.3 Billion of dollar at 40.7 in October. Close attention will be put on the inflation data, the producers’ prices index (PPI) for November which is expected with the sound growth amidst the prices run-up for the energy resources possibly at the level of 0.8 per cent m/m, 1.7 per cent y/y that can seriously support the dollar facing the FRS meeting, even more the consumer prices index (CPI) going to appear on Wednesday is also expected with a hop. The basic producers’ prices index excluding the prices for the food stuff and energy resources probably grew up in November for 0.2 per cent after the downfall for 0.6 per cent in October. The manufacturing of November is predicted with another raise, though for 0.5 per cent; the December real estates market index with the uplift to 18 from 17. As it’s seen the forecast variant suggests the durable positive to the US economy and if the positive macro statistics really favors the support of the American currency as it’s presupposed due to the example of the assured growth of the dollar after the publication of the positive data in the recent past – the dollar can continue its growth having begun last Friday even today if certainly the fact will confirm the forecasts’ expectances.
EUR
The common European currency grew up against the dollar on Monday trading. However, the uplift was quite restricted and didn’t encourage the mind the investors were set on the serious interest as for the euro. The market saves the apprehensions concerning Greece and waits for the resolution of this trouble which threatens with the official announcement of the default of the state debts in this country. Besides, the extra reason for the anxieties is Ireland, Spain, and Portugal where the situation concerning the budgeting deficit leaves much to be better. There was not much news about the EU economy; though even they didn’t give any reason for the investors’ tunes warming. The manufacturing in the Euro zone curtailed in October compared to the previous month, that proves the tenuity of the economic recovering processes; in accordance to the represented data the curtail was for 0.6 per cent m/m and for 11.1 per cent y/y; the forecasts expected for the shortage for 0.8 per cent m/m and for 11.0 per cent y/y. the manufacturing of September was revised to the worse side per month, to +0.2 per cent m/m and for better one per annum -12.8 per cent y/y, while before it had been informed about +0.3 per cent m/m and -12.9 per cent y/y. The employment data were found to be not the best one as well; according to the EU Statistics Agency’s information the employment in the Euro zone in the 3rd quarter decreased for 0.5 per cent in comparison with the previous quarter after the 2nd quarter when this indicator had stayed without changes. To say it English the retardations in EU still continue and against this background the Organization for Economic Cooperation and Development (OECD) has predicated the unemployment level would get 10.9 per cent till the end of the following year against 9.9 per cent this year. Certainly these perspectives mean the consumer expenses will further stay at low level and restrict the recovery. Today ZEW Institute will publish its report for the Euro zone and Germany for December: it’s expected the economic climate indexes will decrease; though the current economic situation’s evaluation index will mark its growth in Germany though stay in the negative sector, to -60.0 from -65.6. This news is unlikely to raise the active movements at the market; the euro will most likely stay in the before formed range till the publication of the news from the Government of Greece or even from the results of the FRS meeting going to be completed on Wednesday.
GBP
The beginning of Monday was on the "cable" decrease. Obviously the negative influence upon the GB pound appeared amidst the disappointing data from the housing market of Great Britain. The December real estates prices index from Rightmove demonstrated -2.2 per cent m/m, against -1.6 per cent m/m. Moreover, the influencing factors upon the British currency were the same as for the euro, but the result of the session shown by the sterling as for the dollar was much more impressive than the euro, the GB pound increased considerably more than the common currency. As like as not, for the rest the support for the sterling was reasoned also with the falling of anxieties as for the rating of the United Kingdom. The Moody's Agency announced the AAA ratings for Great Britain and the USA wouldn’t be revised yet. This news cancelled anxieties as for the perspectives of losses of the highest investment rating by the British state bonds for the nearest time, and for Great Britain itself – to loose the status of one of the most financially stable states of the world. The news background as for the economy of the "Isles" being observed today may give the support to the GB pound, the consumer prices index (CPI) is forecasted in November with impressive growth, 0.2 per cent m/m, 1.8 per cent y/y, the like picture as for the core CPI, +1.9 per cent after +1.8 per cent, and also foe the retailing prices index (RPI), 0.2 per cent m/m, 0.3 per cent y/y, after 0.3 per cent m/m, -0.8 per cent y/y, in October. The like inflation growth is able enough to push to the thought the British CB will have to think over the inflation risks, and that means the necessity of stiffening its policy. However, the housing market data from RICS having already been demonstrated today may spoil general positive picture a bit as the housing prices balance in December was forecasted with the convincing growth to 39.0 per cent, after 34.0 per cent in October, though appeared to be less impressive and increased only till 35.0 per cent i.e., became much worse than expected.
JPY
The Japanese currency enforced itself against the dollar a bit on Monday, the Bank of Japan Report “Tankan” appeared to be positive; the index in the 3rd quarter amounted -24 whereas the expectances were connected to the level of -27. In the previous quarter the index demonstrated -33. The market’s reaction in this respect was moderate as the plans of the Japanese business concerning the investments have shortened rapidly; and it respectively presumes negative perspectives. The pessimism occupying the greater part of the Japanese companies’ tunes is grounded upon the predictions about the heavy threaten of further inflation that in its turn doesn’t encourage the business to the massive investments. Concerning the yen’s perspectives the essential falling down of the interbank rates for the thee-months loans in the yen say for the currency of Japan is becoming more attractive than the dollar as the foundering asset in the carry-trade deals again; and this fact argues the presuppositions as for its weakness both in the nearest and in more distant future. The expectances of this kind already find their confirmation at the today session: the yen is under the pressure against the dollar again, and most likely this pressure will have its continuation.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
