The US dollar continued its enforcement on Thursday session: more optimistic view on the economic affairs from the side of FRS, still non-slacken apprehensions concerning the debts of the European countries and going out of the carry-trade deals up to the end of the year where the dollar was a foundering-currency caused the enforcement of the “bugs” within the whole “front”. The economic news from the USA was of the controversial nature and made no influence upon the development of the market events. The capacity of the preliminary redundant payment appeals in the USA continued to grow last week likely to the secondary ones as well; the increase was for 7 thousand to 480 thousand, at that the lowering for 9 thousand was predicted. The secondary appeals grew up for 5 thousand till 5 186 thousand. Meanwhile, the Philadelphia FRB data gave some buzz with positive, the manufacturing activity of this region increased in December. Te business activity index in the manufacturing amounted to 20.4 after 16.7 in November and 11.5 in October. However, the long-run expectations are less encouraging as the new orders’ index summed 6.5 in December compared to 14.8 in November; the delivery index decreased to 15.3 from 15.7; though the employment improved as its index grew up to 6.3 from -0.5 in a month earlier. No significant news concerning the USA is planned for today; the market will look about the data both from Great Britain and the Continent. The profit fixation will quite probably become the cause for the break in the “greenback” enforcement, and just before the weekend the ranging trades will be observed within the lateral corridors.
EUR
The Greece crediting rating decrease, though from the Standard & Poor's Agency saved the pressure on the common currency having added "oil to the flame" to the anxieties concerning the affairs in the Austrian financial sector on Wednesday. Naturally the euro was sold not only against the dollar, but also against the GB pound and the yen. There was no significant news from the Europe and the common currency devoid of the support stayed under the influence of these political factors during the whole session. EU news for today will be represented with the data from Germany and the results of the foreign economic activity of the Euro zone in October. The Ifo Institute will publish its reports about the tunes in the business circles of the largest economy – the business circles tunes index is expected with growth to 94.6 from 93.9, the current situation assessment index – with uplift to 90.0 from 89.1, and the economic expectancies index – till 99.0 after 98.9. Besides, the producers’ prices index (PPI) of Germany will be published for November: here the growth is also expected, 0.2 per cent m/m, -5.9 per cent y/y, after 0.0 per cent m/m,-7.6 per cent y/y. The Euro zone trading balance in October will obviously be denote with the surplus decrease, but the payment one – with the deficit curtail on the contrary. It seems the data of the foreign economic activity won’t make any influence upon the investors’ opinion; however, the Ifo indexes and the commentaries of the representatives of this institute may support the euro, if only demonstrate positive.
GBP
The British pound decreased on Thursday trading, at that the sterling’s sag against the dollar was quite impressive, almost for 200 points. The disappointment of the economic data from the “Isles” added to the dollar favors promoting it at the Asian session. The retailing decreased in November demonstrating -0.3 per cent m/m, +3.1 per cent y/y; while the forecasts expected the growth for +0.5 per cent m/m and +3.7 per cent y/y. It was a first drop of the monthly indicator starting form May 2009. The data of this indicator having appeared later from the Confederation of the British Industries (CBI) for December flattened a bit though failed to improved the situation as the retailing index in Great Britain stayed at +13 at the expectances of the decline till +11. The inflation expectances’ information for 2010 showed the previous level of 2.4 per cent which was expected generally speaking. In other words these data from the Bank of England declare the inflation expectances are confidently restricted at the level a bit higher than the target value amounting to 2 per cent. Meanwhile, if remembering the question about the widening of the quantitative softening program is still open it’s possible to expect for even higher levels of inflation next year in case the pumping of the fresh-printed banknotes’ supply into the economy not only lasts but also increases. The essential information about the British state finances is going to be publicized today. It’s expected the net capacity of the state sector’s loan funds increased in November to 23.1 Billion of pound from 11.4 Billion, and the capacity of the net state demand of the borrowings grew up to 17.3 Billion from 5.9 Billion of pound. The money supply according to M4 wide set enlarged less than in October, 1.4 per cent m/m, 10.0 per cent y/y, compared to 1.6 per cent m/m, 10.8 per cent y/y in a month before. It should also be mentioned such a macro statistics setup won’t support the sterling if the data appear to be worse than the forecast the pressure upon the GB pound will enforce.
JPY
The Japanese currency didn’t make an exception and also decreased against the US dollar on Thursday, though it should be the yen’s losses were much less than the GB pound and euro ones. The most important for the yen event – the BoJ decision concerning the rates has already been published; the Bank of Japan has left the standard bank rate at zero. The financial regulator of Japan will obviously last to follow the effect from the stimulation programs adopted before. As known, CB has adopted the Crediting Program for the total amount of 10 Trillion of yen two weeks before. The BoJ commentaries accentuated on the readiness to struggle against the inflation and it was also spoken about the consumer prices should stay positive – “the Administrative Council of the Bank of Japan won’t sustain the CPI index value equal or less than 0 per cent on an annualized basis” – is said in the CB announcement. “The Bank acknowledges that it’s extremely important for the economy of Japan to overcome the deflation and come back to the durable economic growth and the prices stability”. Concerning the today perspectives the political component can add the significant corrective into the events’ development of the current sessions. The rumors of the state insurrection in Pakistan can warm up the interest to the dollar and increase the yen sales.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst