The features of the visible economic recovery in the USA, an apprehension concerning the debts of Greece and other countries of the Euro zone, and also get out of the “short” positions as for the dollar just before the end of the year have stipulated the unconditional preferences of the investors in favors of the American currency. The intentions of the USA FRS to start the monetary emission curtail i.e., the liquidities’ supplying programs and the redemption of bonds from the companies-possessors of the toxic assets became an extra though not less serious argument in the context of rising of the interest to the “bugs”. Furthermore, the recurrence of the aids received before from the side of the banks has also favored the improvement of the tunes. All these factors became a cause of the dollar enforcement against all its major “opponents”. The economic statistics hasn’t also remained aside and supported the opinion about the durability of the recovering processes in most cases. The long-termed securities purchases’ balance appeared to be in favors of the US assets again; the foreigners bought the securities on amount of 43.4 Billion of dollars in October whereas the Americans purchased foreign assets for 22.7 Billion only. The transfer prices of the producers increased for 1.8 per cent m/m in November and the consumer prices – for 0.4 per cent. The recent developments increased for 8.9 per cent, the development permissions enlarged also considering the prolongation of the stimulation program period. However, the December indicator of activity form the National Academy of House Builders (NAHB) fell down suddenly while the growth was expected. The advancing indicators rose for 0.9 per cent, but the capacity of the redundant payment appeals increased as well, though this indicator raises great doubts and seems to be wigged out. The manufacturing increased quite decisive and amidst the capacity utilization’s enlargement encouraged to positive in long term. However, in the regions the December picture in the manufacturing was remarkable for ambiguity – the improvement was fixed in Philadelphia, though rapid activity decay in New York on the contrary. The week already begun will be shortened due to the Christmas on Friday though quite busy as for the news – the US GDP final estimation for the 3rd quarter is going to be published on Friday, the expectancies are connected to the absence of alternations, it’s presumed to watch 2.8 per cent q/q. Besides, the increased interest will be raised by the data of sales both at the secondary and the primary housing markets, the forecasts expect the increase of activity in November and the values’ uplift respectively. The analysts also predict the increase of orders for long-lived goods in November and the growth of both personal incomes and expenses in the same month. It’s also presupposed the housing prices index of October will be marked with growth for 0.2 per cent, the consumer confidence index form the University of Michigan for December with uplift, and the number of the redundant payment appeals – with the decrease for 10.0 thousand. To say it shortly, the macro statistics can continue to support the opinions considering the stable recovery in the USA and to provoke the market for further purchases of the dollar together with it.
EUR
The debts of the Euro zone’s countries still remained the main factor of the pressure upon the European currency as the rating agencies made a hitch of this point in the Europe in real earnest. The rating decrease for Greece by the S&P Agency just now and staying in the list of the potential “victims” of this process – for Portugal, Ireland, Spain, and even sometimes reckoning of Italy have largely increased the investors’ apprehensions and lowered the interest to the common currency naturally. Moreover, “fat into the flames” was added by the Austrian banks where after the nationalization of Hypo Group Alpe Adria another great bank of the country, Oesterreichische Volksbanken got up on the edge of socialization on account of great quarterly dilution, on amount of 470 Million of euro. Against this background the euro lost more than 300 points during last week and decreased into the sector of prices having been observed in the beginning of the summer. It should be also mentioned at that the EU economic data haven’t provided the improvement of mood so much; though sometimes shown not bad dynamics. The employment of the Euro zone for the 3rd quarter further decreased; the capacity of job places curtailed for 712 thousand. The manufacturing orders lowered and the manufacturing itself in the Euro zone fell down for 0.6 per cent m/m in October; the annual decrease was for 11.1 per cent. The producers’ transfer prices in Germany stayed in minus for 5.9 per cent y/y, but the consumer ones have already risen into the positive sector. The business activity indexes both for Germany and the Euro zone grew up; though it doesn’t concern the rest of the block’s members where the ambiguous situation was observed; ZEW mood were remembered with increase like to Ifo data. At the coming week the fundamental data of the EU economy will unlikely to support the euro at least owing to they’re very little in capacity and they’ll generally reflect the inflation situation in Germany. The forecasts presume the consumer prices raise in Germany accelerated in December, and the importing prices index grew up for 0.2 per cent in November and retarded the falling down to -5.2 per cent y/y from -8.1 per cent before. Moreover, the negative influence upon the common currency can be made by the announcement of ECB last Friday concerning the probable great beat of the Euro zone’s banks. The European regulator has revised to the side of increase its previous estimation as for the dilution connected to the crediting and securities depreciation. Summarizing it the losses forecast was increased for 65 Billion till 553 Billion of euro.
GBP
The British pound demonstrated the great durability against the dollar last week; nevertheless, the result of the session appeared to be not in its favors. At the beginning of the week the decrease of the apprehensions as for the troubles of the investment foundation in Dubai and also concerning the crediting rating of Great Britain have supported the sterling; the extra argument to optimism as for the “cable” became the part of the economic statistics from the “Isles” about the employment as it appeared to be in positive. However, later the same macro statistics became a cause for the sales-outs of the sterling when the retailing marked themselves with the decrease at the expectances of the growth. As the sources showed the retailing decrease in November was for 0.3 per cent against October. In accordance with the data from the Confederation of the British Industries (CBI) the retailing balance stayed in December at the November’s rate; though the future prospects appeared to be in negative due to expectances. This very information became the main reason for a very strong pressure upon the sterling; and together with the state finances data it caused the negative result summarizing the previous week. The British state sector demonstrated recorded high loaning in November as the net loans summed 20.3 Billions of pound against 15.5 Billion in a year before. The forecasts expected 23.0 Billion of pound i.e., the actual state of affairs appeared to be lower than forecasted; though at the same time the state debt reached 60 per cent of GDP that is the worst rate starting from 1974. The fine demand amounted 14.7 Billion of pound. The rest of the macro data was controversial though it greatly supported the sterling – the average wages showed +1.5 per cent against the data of a year ago; the consumer prices were higher for 1.9 per cent y/y in November. However, the housing prices in December fell down for 2.2 per cent m/m due according to the report from the Rightmove that was possibly the consequence of the mortgage loans decrease in November for 10 per cent. In the beginning of 2010 the validity period of the tax benefits for dwelling purchases completes, hence the further downfall at the real estates market is quite probable. The news background of the current week contains not much data though the significance of this news is quite essential and can support the British currency. The GDP final evaluation for the 3rd quarter will most likely reflect the revision to the side of increase and also demonstrate curtailing for 0.1 per cent q/q, instead of -0.3 per cent q/q as it had been imagined before. The minutes from the Bank of England December meeting which are also going to be published will most likely show the coalescence of the members of the Committee of Monetary-Crediting Policy concerning the key rates having been stayed at the level of 0.5 per cent and capacities of the assets relief at 200 Billion of pound. Besides, the payment balance current account deficit curtailing can also be denoted in the 3rd quarter and the growth of the business activity index for the services.
JPY
The Japanese currency didn’t become exclusion and decreased against the dollar in the previous week. The features of recovery in the States together with the possibility concerning the respectively rapid scraping of the stimulation programs got back the rates of the dollar in the advantageous comparison with the yen’s rates; against this background the Japanese currency was loosing its popularity among the investors having become the sales-outs object at the previous session. Besides, the announcements of the Bank of Japan concerning the deflation deepening wouldn’t be allowed, provokes the opinion about the possible addition to the softening conditions of the monetary-crediting policy, what naturally makes the pressure upon the yen together with quite discouraging economic data. The macro statistics news demonstrated: in October the average wages in Japan fell down for 1.9 per cent y/y; the activity index in the services increased for 0.5 per cent m/m, after the falling down for 0.6 per cent in September, and the manufacturing stayed at the level of +0.5 per cent m/m, and -15.1 per cent y/y in October. The BoJ Quarterly Report “Tankan” demonstrated the improvement of business activity, but the perspectives are illusive, as up to the end of the current fiscal year, i.e., till the end of March 2010, the Japanese companies intend to shorten the capital investments for 18.8 per cent, at that it had been spoken earlier about the intents to shorten the funds’ placement for 10.8 per cent only. There will be a lot of Japanese economic news as usual to the end of the month and now also to the end of the year. The central news day will be future Friday; though even today the government statistics organs will have demonstrated the trading balance total for November. The surplus curtail to 300.0 Billion of yen from 807.1 Billion is expected. The business activity index in the manufacturing for October which is also going to be represented may demonstrate the growth for 1.0 per cent after the decrease for 0.6 per cent earlier. However, the most shocking news set as already mentioned before is planned for the last day of the week – the unemployment level is foreseen with the growth renewal to 5.2 per cent, the consumer prices of December and November both for Tokyo and for the state in general will most likely be remarkable for the next decrease for 2.0 per cent. Although the households’ expenses are presumed with the plus for 0.4 per cent in November, but after +.16 per cent in October this dynamics doesn’t encourage to optimism.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
