The former week was shorter due to Christmas holidays. The interest to the American currency still stayed at the sufficient high level considering the permanent opinion the key rates in the USA will increase earlier than expected amidst the bettering economic situation. The fulfillment of this mood was remarked in the trading session’s results while the dollar continued its growth against the GB pound and yen. Nevertheless, the downfall has been fixed concerning the euro, in this case the willing to fix the profit was obviously more desirable; furthermore, another quite sound reason was noticed in shape of the weak sales statistics from the primary housing market of the USA. The November statistics of the dwelling sales demonstrated collapse at the primary market as the sales decreased for 11.3 per cent, though the powerful growth at the existing homes market for 7.4 per cent caused by the derogation of residences-pledges by the banks and their following resale at lower prices. The US GDP for the 3rd quarter wasn’t also remarked with positive as it was revised downward till +2.2 per cent after +3.5 per cent having been initially per annum. The durable goods’ orders increased for 0.2 per cent per month in November after the lowering for 0.6 per cent in October; the consumers’ expenses grew up in November together with visible incomes. The consumer mood was précised to the side of decrease in accordance with the report of the University of Michigan. The number of the redundant payment appeals within the week shortened. The final week of the current year will be even more than the former as many of the markets will be closed on December, 31 earlier than usual, and some of them won’t work in the first day of the next session. However, the news set going to be published in the USA is worth noticing – the consumers’ confidence index from the Conference Board for December is forecasted to be seen with growth to 52.0 from 49.5, the business’ activity index in Chicago (PMI) – to 58.0 from 56.1; finally the number of the preliminary redundant payment appeals – with a little uplift only, for 3 thousand, till 455 thousand. In the grand scheme of things the dollar can recon upon the support at such expectances of the fundamental nature if certainly there’s no reason for disappointment.
EUR
The common currency of the Euro zone fixed the plus to the dollar the previous week. The profit fixation together with the weak data as for the USA warmed up the interest to the euro by the end of previous shortened session week; meanwhile, when in the beginning the common currency was under the pressure at the anxieties still keeping as for the state finances of the number of the countries in the European block. As like as not, some relaxation of tension was reasoned with the news from Greece where the parliament approved the budget 2010, in accordance with it the budgeting deficit must be shortened to 9.1 per cent of GDP against 12.7 per cent during this year. There was not much economic news from the Euro zone, at that they were remarkable for the downfall of demand, the consumer expenses fell down to 0.1 per cent m/m in France in November, in Italy the consumers’ expanses for October demonstrated the September level, the advanced indicator of the consumers’ attitudes demonstrated the falling down in January in Germany, at that enough convincing – from 3.6 till 3.3. There wouldn't be much news from EU in the started week –the consumer inflation in Germany and M3 monetary unit of the Euro zone in November. The consumer prices index in the largest economy of EU, as expected, will fix the essential growth in December, 0.6 per cent m/m, 0.7 per cent y/y, the same as the harmonized index which may denote the rise to 0.7 per cent m/m, 0.7 per cent y/y, after -0.2 per cent m/m, 0.3 per cent y/y represented earlier. The money supply is also expected with widening for 0.4 per cent. Generally speaking, the statistics promises the positive though it’s unlikely to help to the euro to get back the leadership at the market. Obviously, the low liquidity capacity will provoke the multidirectional volatility but as it seems with the incline of the preferences to the side of the US currency.
GBP
The British currency demonstrated its weakness resulting of the weekly trades once again, though this time not only against the dollar, but also in concerns of the euro. Obviously, the expectances of the economic activity uplift in Great Britain, although non-confirmed still yet, restrain the rise of confidence to the sterling. The final data of British GDP for the 3rd quarter appeared better than the previous ones, but worse than the forecasts, having set minds on more optimistic results, the quarterly rise was from -0.3 per cent to 0.2 per cent at the expectances of -0.1 per cent everything stayed without changes during the year, -5.1 per cent with the expectances of -4.9 per cent. The data of the payment balance’s current account deficit for the 3rd quarter appeared much better than the forecast but in view of the revision to the side of improvement of the previous quarter’s indicator, at that essential, the results demonstrated the deficit increase, but not its shortening. The British Banking Association reported about the growth of the mortgage in October though the falling down of the consumer crediting. The minutes of the Bank of England haven’t demonstrated anything new, but at the same time left the anxieties of possible widening of the assets’ redemption volume. The news from the 'Isles" will come to the publication of the report as for the prices at the habitation market this week at that the prices index from “Hometrack” may demonstrate the growth for 0.5 per cent m/m, and from “Nationwide” – for 0.3 per cent m/m. The information is quite positive but the anxieties have still existed among the investors for a long time already as a new "housing bubble" is puffed up at the real estates market of Great Britain, and they treat this dynamics with serious apprehensions. Obviously, the sterling won’t get the support during this short session and stay within the ranging trades till the beginning of the weighty sessions next year.
JPY
The yen’s decrease observed in the beginning of the previous week was ceased before its completion. The investors have fixed the profit after the sales-outs of the yen in this case as well. The Governor of the Bank of Japan m. Sirakawa announced once again the readiness of CB for rapid and decisive steps in case of unsteadiness at the currency market on Thursday. As known, the Bank of Japan has started to accomplish the new program of liquidity’s assignment in amount of about 10 Trillion of yen at fixed rate of 0.1 per cent within the constraints of three-month financing and left the key rates without alternation at 0.1 per cent lately. To say it simply, the market received the distinct signals as the policy of the Japanese regulator would stay velvet for a long time still yet and under the terms of the serious threaten of the deflation process’ escalation it could soften even more. Against this background the yen has got back its status of the asset that is the best suitable for the part of the foundering currency and also has been exposed to the impressive sales-outs against the dollar and euro. The economic statistics of the country noted the multidirectional results – the unemployment grew up for 0.1 per cent in November, the consumer prices lowered down for 1.9 per cent in the same month in general for the country and for 2.3 per cent for Tokyo. The households’ expenses surprised with its growth a bit, for 2.2 per cent that is higher than the forecast predicted +0.4 per cent. The downfall pace for the new development retarded to -19.1 per cent after -27.1 per cent. All significant news concerning the Japanese economy is going to represented today, in the first day of the started week, the manufacturing of November can show the improvement till 2.5 per cent m/m, -4.3 per cent y/y, and the retailing – till -0.1 per cent m/m, -1.0 per cent y/y, after -0.9 per cent m/m, -1.0 per cent y/y. Nevertheless, the macro statistics will make no influence upon the positions of the yen as usual. The market’s mood formed amidst the rhetoric of BoJ as for the firm commitment to the preservation of velvet conditions in the monetary-crediting policy together with the risks of possible taking of new measures directed to softening will further make pressure upon the yen. However, in the nearest time, even possibly till the end of the current year the ranging trade of the pair of USD/JPY will most likely last as the technical factors represented by the strong resistances at the levels of 92.00/92.50 encourages such an opinion.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
