The beginning of Tuesday session turned thumbs up on the lasting of the US dollar’s sales against all majors. The decrease of the US T-bonds’ profitability and the risks inclination having been maintained at the high level made pressure upon the “greenback”. However, later on the American currency stole thunder and completed the day with the increase against the Europeans. The “bugs”; continued to demonstrate its tenderness in the confrontation to the yen and fixed the losses again. The lowered petrol and gold prices; the absence of distinct optimism at the stock market of the Europe together with the rhetoric of the British state authorities favored the dollar to exchange the bad for better. The US economic data published on Tuesday has made non influence upon the currency markets; though later after some reasoning the investors considered the statistics from the United States being confirming the economic recovery which exactly has added some support to the dollar. The raise of the production orders in the USA in November exceeded expectations; the indicator remarked the growth for 1.1 per cent against the forecast of +0.5 per cent; this very dynamics has been observed for 7th month running and proves the endurable increase of corporative expenses together with manufacturing growth. Meanwhile, the signed real estates contracts index for the USA lowered in November much more than expected, and it was fixed -16.0 per cent m/m by forecasted -3.1 per cent m/m. The recent growth at the housing market having resided considering the buyers rushed to make deals before the expiry of the tax benefits amounted to 8.0 thousand of dollar has obviously made an effect of the basement; that’s why the November results appeared to be in such “a deplorable state” compared to the previous period. Nevertheless, the indicator stated within the increasing sector in an annual accounting, +15.5 per cent y/y that certainly gives a reason to presume the demand’s endurance, and the benefits’ prolongation causes the further sales’ increase at the real estates market. The news set as for the United States going to be publicized today contains a very important information as the ADP Private Sector Employment Report will be represented, and the forecast predicts the curtail retardation till -63.0 thousand after -169.0 thousand in November. The ISM business behavior index for the services in December is presupposed to be seen with growth till 50.0 (the positive sector) from 48.7 in a month before; and the FOMC last meeting minutes’ declaration will become the crown of the day as the market will try to determine from them if FRS starts to scrape the monetary-crediting stimuli and increase the rates before than it had been expected. Certainly, if the macro statistics will demonstrate the results better than the forecasts the trades’ participants will get extra evidences of the economic increase, and the dollar will get extra support.
EUR
The major part of the common currency’s positions won on Monday against the dollar faded away into nothing at yesterday trading session. The risks inclination decrease and not bad data from the USA revitalized the apprehensions concerning the probable stiffening of the US monetary policy in a short run. The Euro zone economic news were founded to be multi directional and made no influence upon the market. The data of the labor market in Germany noted the worsening of the situation as the total number of the unemployed ones amounted to 3.423 Million last year that’s 200 thousand more than in 2008; the unemployment level grew up to 8.2 per cent against 7.8 per cent a year before. In accordance with the represented data the unemployed ones’ capacity shortened for 3000 in Germany in December with respect to season deviations’ correction at the forecast presupposing the growth for 10 thousand. The analysts remark these data have made an influence the changes of the calculation methods effective in September. Even without taking into account the correction the total capacity of the unemployed ones made in December 61 thousand more than in November. The commentaries accompanying this publication appointed the rapid growth of the unemployment in this year. The data of the consumer inflation were announced later. In accordance with the official sources the annual inflation in the Euro zone has grow up till its 10-mooths maximum for 0.9 per cent against 0.5 per cent in November. These results confidently curtailed the lately observed apprehensions in concerns of the inflation. The already made ECB forecasts as for the probable tempos of the inflation increase are coming true and it neglects some recent expectances regards to the European regulator will have to take some measures for the inflation threatens suppression. The ECB target is known to be the inflation rate’s withholding a little lower than 2 per cent in the middle-termed prospect and the inflation will most likely keep lower than the target level during this year. The economic news from the Euro zone going to be publicized today has the data of the business behavior indexes for the services in December both for Germany and for the Euro zone in general; the indicators are forecasted with growth. The analogous dynamics is expected for producing prices of November for the zone of the euro as the PPI index will increase for 0.2 per cent m/m and till -4.6 per cent y/y, after -6.7 per cent y/y before; yet at the same time the expectances as for the new production orders in October can afford the disappointing result per month -1.0 per cent m/m, after 1.7 per cent m/m before; in the annual comparison however, the significant retardation of the decrease is probable till -11.1 per cent y/y from -16.4 per cent y/y. these data are unlikely to make the market to change its attitude to the euro having been observed on Tuesday. The market’s driver will most likely become the information from the USA.
GBP
The British pound continued the tendency started to manifest itself to the end of the trades on Monday and decreased against the dollar at the previous session. The supplementary pressure on the "cable" was provided by the market doubts concerning the interest to the state bonds of Great Britain may be kept even after the quantitative softening programs’ expiration, and that put into the great question the financing of the budgeting deficit reached its record levels. The economic data of the "Isles" didn’t also give a reason for the improvement of the mood, the published business behavior index in manufacturing area (PMI) demonstrated in December the results much lower than expected, the indicator fixed 47.1 at the expectancies of 47.8. The indicator resides lower than 50, as known, it denotes the default zone. Furthermore, the appearance of the Chancellor of the Exchequer A. Darling contained the negative announcements added the pressure on the sterling; the remarks concerning Great Britain hadn’t got out of the recession still yet, and that unemployment would continue its growth during 2010, helped the "bears" to fling the currency down to the new minimums. The economic data having already been published today demonstrated the “Nationwide” consumer confidence index in December appeared to be much lower than the forecast expected the level of 73.0 and the result of the previous period as the indicator fixed 69.0 after 73.0; and the BRS consumer prices index vice versa increased significantly up to 2.2 per cent y/y, from 0.2 per cent y/y, provoking the anxieties concerning the inflation. The last part of business behavior in December will be represented to the market attention later – that is the business behavior index in the services – PMI forecast expects the growth of the indicator to 57.0 from 56.6. As for the perspectives for today the sterling seems to stay within the trading range expecting the information from the USA about the FOMC minutes.
JPY
The profit fixation alongside to the US T-bonds’ profitability decrease lowered down the pair of USD/JPY till the minimums of the previous week. The interest to the yen was warmed up by still keeping anxieties as for the credit situation in the Europe that provokes the investors not to purchase the euro for the Japanese currency. No data as for the economy of Japan were published and as for the news of the previous session – the resignation the Minister of Finances of Japan Fuji may be denoted as the only providing the influence upon the yen. The investors suppose the new Minister of Finances will most likely be more composed in his commentaries and actions while striking for the yen’s enforcing. The positive mood at the Asian stock markets pressed down the Japanese currency at today session a little; though as it seems, the main influencing factor in the nearest future will be the information from the United States; and expecting its publication the active trading of the instruments with the participation of the Japanese currency is less probable, the ranging trade will be observed instead.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
