The things that haven’t happened after the US GDP final estimation’s publication for the 3rd quarter summarized the results’ disclosure as for the sales at the primary housing market in the United States in November. The American currency appeared to be under the pressure all over the “front” actually and fixed the minus concerning its major “opponents” on Wednesday session. In accordance with the data represented by the US Department of Commerce the sales at the primary real estates market in the USA fell down till the lowest level for the last seven months and found for 11.3 per cent worse than in the previous period, amounting to 355 thousands per annum only. The expectances predicted the growth to 438 thousand after 430 thousand in October. The causes for the sales’ downfall are supposed the activity at the existed homes market where the banks put the hypothec dwelling up for sale at low prices; and the buyers’ apprehensions concerning the housing sector’s prospects as the tax benefits for those who purchases the residence for the first time were to complete in November (as known this kind of benefit was prolonged till next spring). The information about the dynamics of the personal incomes and expenses in November appeared worse than forecasted and became a little negative preamble to the homes sales’ data as the incomes increased for 0.4 per cent by forecasted +0.5 per cent; and the expenses grew up for 0.5 per cent only while expected +0.7 per cent. The data from the University of Michigan were remarkable for the uplift though lower than the forecasts as well; the consumer confidence index fixed 72.5 in December against 67.4 in November alongside to the expectances of 73.5. The news going to be published today are little in capacity though containing amazing data: first of all there’re the durables’ orders of November being forecasted with the raise for 0.5 per cent after -0.6 per cent before and the capacity of the preliminary redundant payment appeals for the last week – here it’s predicted to see the decrease till 470 thousand after 480 thousand for the previous period. Concerning the next prospects as it seems the situation development on Wednesday is nothing short of the profits fixation by the investors after the decisive increase of the “bugs” amidst the state favorable for it. The scenario of the “greenback” sales-outs will obviously be short-running and the dollar will come back to its raise. The market still supports the opinion that the recovery of the USA economy is accelerated and FRS will start to stiffen its monetary-crediting policy before its associates in other regions.
EUR
The common European currency increased on Wednesday against all majors; moreover, if the raise against both the GB pound and yen was quite usual during the whole session, the growth against the dollar was jump-started with the data having demonstrated the significant downfall of the sales at the primary real estates market in the USA in November. Against this background the euro increased against the dollar almost for 100 points compared to the session’s opening price. As for the EU economic news – the importing prices index for Germany in November was represented; this indicator marked growing tempos’ retardation, +0.4 per cent m/m from 0.5 per cent m/m before. Despite the most active positive dynamics as for the euro comparing to other major currencies on Wednesday session the prospects of the Euro zone’s common currency are seen in negative hues. The apprehensions concerning the problems being observed in the Greek economy will spread over other economies of the Euro zone still stay at the market and even enlarge in the grand scheme of the things. As known the expectants for this list are considered the economies of Portugal, Spain, Ireland and also Italy as extends. Therefore, the confidence to the euro is quite shaky and can decrease even more at any moment – at the first announcement of the rating decrease for the before mentioned expectants. Thereupon, the growth of the common currency isn’t obviously necessary to be expected; and the forecasts predict the good basement for the “bugs”. Moreover, in anticipation of the holidays the market activity is less probable, even more the holidays have already started in some countries of the Europe. Therefore, the range trading will most likely be observed within the narrow ranges.
GBP
The GB pound completed the last session in neutral positions against the dollar; even the weak data of the United States real estates market didn’t induce the investors for massive purchases of the sterling. Obviously, the lack of surprises in the minutes of December meeting of the Committee for the monetary-crediting policy of the Bank of England where no signals of new changes in policy were denoted, and the commentaries containing big anxieties gave the reason for the modest attitude to the "cable" at the same time when the other majors were under pressure. The Bank of England denoted: – the influence of the quantitative softening will probably be conceived later, the consumption fell down, the labor market is under the pressure, the forecast of the inflation and the growth is vague. However, there was some part of optimistic maintenance, concerning the investment’s stabilization, and also the hopes for the positive alternations in the near future in the employment sector. The statistics represented on Wednesday demonstrated not bad trends at the mortgage market; the crediting increased in November to +3.3 Billion of pound from +3.2 Billion and the approved mortgage loans – to 44 713 from 42 200. There are no fundamental new as for the "Isles" economy planned for today, the GB pound will stay under the influence of the foreign factors, first of all from the United States, naturally. Before the American session beginning its enforcement against the dollar will be observed in the context of the investors’ wishes to fix the profit, however, in the eve of the holidays the serious activity is less probable.
JPY
The Japanese currency ceased its downfall against the dollar on Wednesday session; the willing to fix the profit after the essential raise of pair USD/JPY was fulfilled amidst the weak data form the USA. However, as it’s possible to presume the observed reverse of the dollar’s dynamics will be short-running in terms of the optimism in concerns of the economic recovery acceleration in the USA. Meanwhile, there’re also some other opinions at the market: first – the presuppositions about the rates’ increase in the USA won’t take its place within the terms which the investors lay hopes on; and second – the approach of the Japanese fiscal year’s finish which is March, 31 as facing this event (i.e., the end of the fiscal year in Japan) the corporations will repatriate returns being converted into the yen later. Essentially, the presuppositions are sound enough and on the assumptions of these factors it’s possible to expect the raise of the Japanese currency but a bit later. The minutes having already been published today stated CB of Japan would maintain and further support the velvet monetary-crediting terms for the recovery of the Japanese economy amidst the high ambiguity still yet; at that BoJ has increased its estimation having announced the economy was increasing due to the political steps made both in the country and in other regions of the world. The publicized business activity index in the manufacturing fixed the decrease to 13.2 against 15.5 in the previous period. As already mentioned in the previous surveys the main set of macro statistics will be represented on Friday what can cause the serious influence upon the pairs with yen in terms of absence of the majority of the participants at the market. On that score it’s obviously reasonable to manifest caution by trading the Japanese currency.
Moreover, it’s necessary to warn that the South-Eastern Asian traders take usually advantage of the situation in the days of Western Christmas for the retracement of their positions instigating a high volatility at the market as the investors of both the America and Europe are out of the market. Thereupon, in order to avoid the troubles it’s necessary either to stay out of the market or to establish hard stops.
Our analysts’ team wishes Happy Christmas!
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
