The news background of the last week wasn’t equal to the hopes for getting the new checkpoints determining the support for the main reserve currency. Neither FRS minutes, nor the US Labor Report for December have added the self-confidence to the investors concerning the American currency had serious bases and would be steady. At the last FOMC meeting the Members of the Board got worried with the consequences of the coming cease of the mortgage securities purchases and expressed the probability of this program prolongation; and the Labor Report for December was noticed with the disappointment – instead of expected zero dynamics the decrease for 85 thousand was demonstrated, though the unemployment level has still stayed at its previous values of 11 per cent. The ADP employment report was like; nevertheless, the market has expected better results than November’s ones from the official sources. The following of the report appeared to be the pressure upon the “greenback” and as a result of it the last week’s trades were on dollar in the controversy to the GB pound only; as for the yen and euro – the minus was fixed. By the way, the commodity stocks’ data as for the wholesaling published in November were remarkable for the growth for 1.5 per cent at the expectances of the decrease for 0.3 per cent, and it slightly supported the US dollar on Friday as the successive growth of the supplies in the wholesaling appoints to the prospect for the orders and the manufacturing increase (by the way, this dynamics has been observed for the second months running); otherwise the “bugs” could demonstrate much less endurance against its “opponents”. The rest of the statistics as for the US economy publicized last week hasn’t also satisfied as the S&P/Case-Shiller housing price in 20 mega cities of the USA stayed without change in October and fallen down for 7.3 per cent per annum. The development expenses curtailed for 0.6 per cent m/m in November; the outstanding accommodation sales transactions crashed down for 16.0 per cent m/m. However, the consumer mood from the Conference Board in December increased. The business behavior indexes for December also rose. There will be much news during this week; though the attention will mainly be focused at the November trading balance which can demonstrate the deficit increase, the FRS Report “The Beige Book” where the state of affairs in the US regions will be announced, the December retailing predicted to be seen with growth, and the US consumer inflation in December where the CPI indexes will most likely demonstrate the durable growth. Concerning the consumer inflation it’s necessary to denote the following: considering that much is confined to the rates the price growth can return to the high level of expectation the suggestion that the FRS policy’s stiffening will start earlier than expected despite the range of factors cut this likehood.
EUR
The common European currency increased against the dollar summarizing the previous week, but that positive result may be related for “a full due” of the bad US Labor Report represented last day of the weekly trades; when the Euro zone own economic statistics was remembered with the multi directional results and helped to the euro to demonstrate the ranging trades. The GDP of the Euro zone in the 3rd quarter increased for 0.4 per cent and fell down for 4.0 per cent annually; the foreign trading in November was denoted with the growth all over EU; though the manufacturing orders in October fell down for 2.2 per cent m/m. The labor market continued to weaken, the unemployment level in the Euro zone got 10.0 per cent in November and according to the official data in Germany vise versa enforced; however, that dynamics is greatly casted doubts by the analysts, and alias imputed to the new methods of calculation as without those innovations the unemployment level in the European largest economy would be not 8.1 per cent but of the order of 9.0 per cent. The retailing data for November appointed to the downfall in the Euro zone for 1.2 per cent m/m, and for 4.0 per cent y/y, and in Germany for 1.1per cent m/m, and 2.8 per cent y/y that may be estimated as a demand level indicator and agreeably not to feel illusions over rapid recovery. Besides, the growth of the consumer inflation doesn’t also get hopes up as for this indicator. The anxieties as for the situation with the state finances of some countries of the block are still maintained and even worsening against the background of announcements concerning EU isn’t gong to save Greece and it’s evidently relevant for the rest of the countries from the “unreliable” list. The EU economic news’ set for the current week is much less vast than in the United States but it consists such a significant event as the ECB decision concerning the rates: though no changes are expected but the press-conference of the Head of the European Central Bank J.-J. Triche will raise a great interest as usual. Besides, the manufacturing of November in will be in the focus where the growth is expected to see, the specification for the consumer prices’ index in Germany and the Euro zone in general, and also the EU foreign trading for November. As it seems the special support for the euro isn’t predicted from the fundamental indicators, and that determines the high probability of dependence upon the information from the United States.
GBP
The apprehensions concerning the Bank of England will already have continued the enlargement of the securities purchases’ volumes even at the previous week’s meeting together with the hints on the probability of the political turmoil in Great Britain became the principal factors of the pressure upon the sterling. The Increase of the British currency in the final day of the trading amidst the extremely sluggish US Labor Report haven’t managed to superimpose the losses of the previous sessions, and the “cable” kept staying “in red” against the “greenback”. It should be mentioned the economic statistics of the “Isles” gladdened more than afflicted – the housing prices are growing according to the versions of all respectable agencies like “Nationwide”, “Hometrack”, and “Halifax”. However, the business behavior index in the development has still been staying within the recession sector for 2 years already stating the mortgage activation is fraught with another “housing bubble’. The analogous indicators for both the manufacturing and services still kept their growth, and the positive dynamics of the main sub-indexes encouraged the opinion of good prospects. The inflation data demonstrated the further growth, the producers’ transfer prices rose for 0.5 per cent in December increasing the annual growth till 3.5 per cent. The data from BRC appointed to the retailing prices’ growth which enlarged for 2.2 per cent. Quite possibly it was the cause for the consumer mood’ worsening in December. Moreover, the price dynamics is expected with growth for further prospects as VAT will add 2.5 per cent starting from January. The British Government promises to curtail the budgeting deficit gradually for it not to disparage the economy but the deficit amount is quite large, and the market is watchful of the prospects of demand’s increase for the state securities after the stimulation programs’ expiration. It should also be said this very mood was a factor of pressure upon the sterling as well. However, there was also positive information as in accordance with the reports of the study advisory groups the labor forces’ demand is enlarging, and exactly that flattens out the positive situation within the trends of both permanent and temporary employments. The news set of this week isn’t very large as the manufacturing data for November will be published: here the growth is expected like to the processing industries’ sector. The further uplift of the housing prices for December is also predicted, this time both RICS and DCLG are going to represent their reports. The Great Britain’s foreign trading data for November promises to demonstrate the deficit’s curtailing. Generally speaking, any kind of negative isn’t presumed for the sterling, and that set minds on its increase’s expectations.
JPY
The “musical chairs” in the Japanese government were in the focus of attention during last week. The Minister of Finances Fuji, who stepped down because of his illness, was substituted with the Vice Prime-Minister N. Khan known as a true opponent of the yen rising. That appointment and mainly the announcements of the new Minister following right away concerning the necessity to weaken the Japanese currency to the level of 95.0 against the dollar have reasoned the yen’s sales-outs during the second half of the previous week trades. Nevertheless, the currency of the “Land of Rising Sun” completed the session with the advantage to the “greenback” as it was also provided with the disappointing data from the labor market in USA. The Japanese economic indicators were remembered with a good dynamics – the manufacturing in November increased for 2.6 per cent m/m, the annual comparison reflected the retard of lowering to 3.9 per cent. The retailing has increased for 0.2 per cent per month and shortened for 1.0 per cent y/y. However, the average wages fell down for 2.8 per cent per annum, that doesn’t promise any positive as for the demand. Concerning the Japanese news this week the data of the foreign economic activity will be the most interesting, it’s expected that in November both the payment and trading balances’ surpluses have decreased, and that is the serious minus for the export-oriented economy of this country. Moreover, the attention will be put on the wholesale prices in December, in the condition of the deflation residing in the country, the retardation of the prices’ downfall to -3.9 per cent y/y, from -4.9 per cent y/y having been fixed before, may be accepted as an encouraging factor. It is unlike to afford the slightest grounds for guiding the trades of the yen as the market will be geared to the information from the new Minister of Finances – the advantage is that the Japanese political functionaries are liberal for appliances while being appointed to their posts – and the news from the USA, wherefrom the new checkpoints for the presuppositions as for the perspectives of the monetary-crediting policy will be announced.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
