The American currency still maintained its leadership positions on Tuesday session. Meanwhile, some part of the news published at the previous session favored the splash of the apprehensions concerning the durability of the dollar’s ascendant trend being observed recently. Less favorable than expected data of the US GDP for the 3rd quarter stipulated the sales-outs of the greenback as inched to the doubts in concerns of the USA was coming out of the recession with quicker tempos than any other countries; and against this background FRS would start to stiffen its policy earlier than predicted. However, as appeared this affection was short-running as the Housing Market Report having fixed the impressive growth of the sales got back confidence to the “bugs” and specified its further enforcement against all majors. As the data of the US Department of Commerce stated the economic recovery in the 3rd quarter wasn’t so essential. In accordance with the third final estimation the main economic indicator grew up in the 3rd quarter for 2.2 per cent after the downfall for 0.7 per cent in the 2nd quarter of this year. The second advanced estimation of this very indicator proved the economic activity increase in the 3rd quarter for 2.8 per cent, and the first one presupposed the raise for 3.5 per cent. The forecasts presumed the final specification would demonstrate the increase for 2.7 per cent. This fact has discouraged the market to some degree, and the dollar appeared to be under the pressure. The situation was aligned by the sales data from the secondary real estates market in the USA. The November results exceeded the predictions essentially; low prices together with taxation benefits (the taxation benefit for the buyers purchasing the dwelling for the first time amounts to 8 000 dollar) brought about the elevated demand. The sales of the secondary market increased for 7.4 per cent till 6.54 Million of houses annually from 6.09 Million in October. The analysts presupposed the sales at the existing homes market would grow up for 3.3 per cent only, till 6.30 Million of houses. Though it should be mentioned that up to the moment after the publicizing of the information about the dwelling sales the market stickled with the response in favor of the “bugs”; as alongside to it the Richmond FRB data showing the negative dynamics in December were also represented. The bank announced the processing sector index decreased to -4 in December from 1 in November, and the provision index fell down till -6 after 6 before. The new orders in the processing sector moved into the negative sector, till -4 against 3 in November. The news set of today is also rich for the significant statistics, the personal incomes and expenses in November are going to be published and they expected with increase; the consumer confidence index of December due to the data from the University of Michigan are also presumed to be observed with growth to 74.0 from 73.4. Though as it seems the main focus of the attention will be concentrated on the information about the sales at the primary housing market in November, the forecast expects the raise to 438 thousand from 430 thousand, in case this indicator demonstrates the same success as the existing homes market the dollar will face the massive purchases.

EUR
   The common European currency still continues to loose its positions against the dollar at the currency. In the beginning of the trading the euro enforced as for the “bugs” even despite the Moody’s Agency has decreased the sovereign crediting rating of Greece subsequent to other agencies. That very fact the Moody’s rating is two points higher than both the Fitch and also Standard & Poor’s ones has obviously favored the endurance of the European currency. The final consumer confidence index of Germany represented by Gfk demonstrated a little decrease. The consumer confidence index from Gfk in January 2010 fell down to 3.3 against 3.6 in December, at that the December indicator was revised to the side of decrease. The forecasts presupposed the index would mark in January at the rate of 3.5. Besides, it was stated in the report the worsening of the situation at the labor market had enlarged the ambiguity and declined the consumers to the expansion of money-holdings; the purchasing aptitude decreased to 21.2 against 26.3 before. Nevertheless, the principal factor of the pressure upon the euro became the data of the sales at the real estates market in the United States having demonstrated more than sufficient raising dynamics. The today news set is not far richer as the importing prices index in Germany for November will be publicized; it’s expected with a little growth both monthly and annually, 0.2 per cent m/m, -5.2 per cent y/y after 0.5 per cent m/m, -8.1 per cent y/y, and also the manufacturing orders of the Euro zone for October where a little growth can also appear. Most likely, the common currency will be found itself under the dependence from the foreign factors again, first of all the information of the United States as the domestics news don’t provide its significance and can provoke the short-running reaction of the market by any quality of data only.

GBP
   The attitude to the British currency still stayed negative at the Tuesday session as well. The hopes for the Final Report of Great Britain GDP for the 3rd quarter would represent more favorable data and the final estimation would demonstrate the essential raise, even maybe till the positive growth compared to the previous quarter haven’t been proved. The indicator is fixed at -0.2 per cent q/q, -5.1 per cent y/y, by the expectances of -0.1 per cent q/q, -4.9 per cent y/y and advanced -0.3 per cent q/q, -5.1 per cent y/y. Up to the moment no negative response has followed just after the publication as the current account deficit in Great Britain in the 3rd quarter publicized at the same time amounted 4.7 Billion of pound only against expected -8.2 Billion. However, when it became clear this very indicator for the previous reference period had been revised from -11.4 Billion to -4.4 Billion i.e., it has become clear the deficit increased; the British currency was undergone to the rapid sales-outs. Summarizing the day the sterling fixed its losses against both the dollar and euro again. Not much news from Great Britain is expected for today sessions; the only meaningful event for the sterling will be the publication of the minutes from the Bank of England meeting in December. This paper will obviously reflect the unanimity of the members of the Committee for the Monetary-Crediting Policy of CB concerning the rates left at 0.5 per cent level; and also concerning the decision to leave the capacities of assets relief in the amount of 200 Billion of pound. Although, as it’s known the opinion is still maintained at the market that another wide broadening of the securities’ relief program can’t be excluded, and the hopes to hear something about it will matter the special interest and attention from the side of the market’s participants.

JPY
   The further announcements from the side of the Head of the Bank of Japan about the velvet policy loyalty for a long term added the impulse for the yen’s sales-outs. The BoJ Head M. Sirakawa declared ones more about the intention of the Central Bank to keep the rates almost at zero level for the purpose of the deflation processes overwhelming. Against this background the Japanese currency decreased against its all major opponents and fell down against the dollar almost till the October minimums. The Monthly Economic Report of the Japanese Government for December represented on Tuesday denoted the maintenance of the economic estimation without changes but demonstrated recall for the Bank of Japan about the importance of saving the velvet monetary-crediting policy for the deflation overwhelm. The declamation around this document was perceived as actual pressure of the Government upon the Central Bank and hasn’t contradicted the yen’s sales-outs respectively. There will be no economic news from Japan for today, though next Friday will be interesting for the yen as for it, when a great pile of the economic statistics will be published, which will be able to make an influence upon the Japanese currency particularly in the conditions of the majority participants’ absence at the market in view of the Christmas holidays. The next perspective as it seems will be connected with the technical factors suggesting taking into account the high probability of the profits’ fixation closely to the powerful resistances for pairs with the Japanese currency.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst