The results of the session on Tuesday afforded ground to consider the market starts to return to the mood that reasons the special interest in concerns of the American currency. The disappointing macro data from different regions got back the apprehensions as for the steadiness of the recovery in the global economy to a high level. Against this background the US dollar not only enforced against the euro but also fixed the “profit” as for the yen. The negative total was maintained as between the “buck” and the GB pound, though the losses were significantly less than at the previous sessions. The US economic news appeared to be multidirectional. The positive concerning the securities’ purchases was neglected by the negative dynamics in the mood of the American home developers. In accordance with the data represented by the US Treasury Department the foreign investors intensified the purchases of the long-term US securities in November. The amount of the net purchases was 126.8 Billion of dollar against the purchases in capacity of 19.3 Billion of dollar in October. The October indicator was revised as it had been reported about 20.7 Billion of dollar before, and the forecasts expected much less interesting capacity, 30.0 Billion of dollar. Meanwhile, the report of the National Association of the Home Builders of the USA (NAHB) represented less successful data than expected. The home market index decreased in January and made 15 points. It has reached the lowest possible level starting from June; the forecasts presumed the raise till 17, and the December data showed 16. The decrease has been observed for the second month running. The weak labor market maintains the uncertainty at a high level and makes pressure upon the consumer demand at the primary market. It has also been mentioned in this report that the conditions for the residence’s purchase are still kept favorable; though the consumers are looking forward for the evidence of the labor market’s stabilization. The US economic statistics that is going to be represented today reflects the changes both in the manufacturing inflation and the dwelling development’s affairs. The producers’ prices index (PPI) for December is predicted to be seen with growth per annum and without any changes monthly, 0.0 per cent m/m, 4.4 per cent y/y, as it had been earlier 1.8 per cent m/m, 2.4 per cent y/y. Whereas the core indicator, fuel and food products excluded, will be with less growing than it was, 0.1 per cent m/m, 1.0 per cent y/y, after 0.5 per cent m/m, 1.2 per cent y/y in the previous period. The data of the new developed objects are predicted with growth in December, to 589 thousand from 574 thousand. The advancing indicator – the development permissions is foreseen with shortage to 580 thousand after 584 thousand at that. Unlikely, the inflation data can intensify the market; though the development data can trigger a reaction of the investors up to the moment, moreover to the side appointed by the inflation. It means that at the good statistics the US dollar’s increase is possible, but in case of bad one – the downfall of the “greenback” will take its place. Certainly, the profit statements of the US biggest banks need special attention. Today the following ones are scheduled: the Bank f America – the forecast presumes -0.52 dollar per share; the Morgan Stanley – +0.36 dollar per share; at last the Wells Fargo – as well with minus: -0.02 dollar per share.
EUR
The euro continues to be kept under the pressure which is caused by the Greece financial situation and probable join of some other countries of the Euro zone to it. Meanwhile, the tensions of the situation which has reached a high level lately will decline. Because of the Greek state authorities’ plan of the budgeting deficit’s shortage was congratulated at the summit of the Ministers of Finances of the Euro zone. And also the EU Commissioner of Economy and Monetary-Crediting Policy J. Almunhia announced about the relevance of the Greek plans concerning the budgeting-taxation consolidation. Besides, the most important thing is that the Moody’s Rating Agency has also estimated positively the Greece’s Program for the Endurance and Growth Implementation. Nevertheless, the euro continued its decrease and completed the Tuesday trades with the losses to the US dollar. However, not only the troubles of the budgeting deficits made influence upon the trading process, but also the EU economic data published yesterday didn’t encourage to positive as well. According to the report of ZEW the economic sentiment index fell down in Germany to 47.2 in against 50.4 in December, at that the forecasts expected 49.8. The sub-index reflecting the current economic situation in Germany appointed to the improvement of the affairs, at that it stayed within the negative territory. The indicator grew up for 4.0 points till -56.6. The economic behavior index form ZEW demonstrated the same trend for the Euro zone in general as it fell down to 46.4 from 48.0. The development capacities in EU weren’t also remarkable for the positive dynamics for November as it was fixed -1.1 per cent m/m, -8.0 per cent y/y, and the previous period noted -0.6 per cent m/m, -7.7 per cent y/y. AS it’s possible to mention there were enough reasons for the sales of the common currency. The EU news set for today is very modest. In fact, the December inflation in Germany will be represented only. The producers’ prices index (PPI) is presupposed to demonstrate 0.2 per cent m/m, -5.1 per cent y/y, while earlier it was 0.1 per cent m/m, -5.9 per cent y/y. Probably these changes may be taken as a positive feature; though they will make no influence upon the market. The attention will be still attracted to the budgeting troubles and the information about the measures taken for their decision.
GBP
The total of Tuesday trades demonstrated the continuation of the growth of the British pound, though much less impressing than before. The support for the sterling was provided by the information about that the companies Kraft and Cadbury had agreed on the merger-deal, and also the expectations of the high data of the consumer inflation in Great Britain. The prices dynamics on the “Isles” has justified the expectations of the investors and appeared to be better than the forecasts. However, up to the moment the positive reply was short-term. The "cable" began its decrease and almost got back to the prices of the day open. Obviously, the investors spent all "gunpowder" on rumors exactly. That is why the profit fixation has happened on the facts, i.e., the purchases. The growth of the consumer prices on the “Isles” became more significant in December than expected. The consumer prices index increased for 2.9 per cent in comparison with the same period of the previous year, while the growth was expected for 2.5 per cent, against 1.9 per cent in November. The indicator appeared to be much higher than the target level of 2.0 per cent settled by the Bank of England. The same dynamics was fixed as for the retailing prices. Here it was observed 0.6 per cent m/m, 2.4 per cent y/y. Later, the GB pound started to regain the losses, but the speech of the Governor of the Bank of England M. King stating that there would be no stiffening of the policy in the shortest run, got back the British pound under the pressure. The Head of BoE announced on Tuesday at the end of the trades that the absence of certainty in the steps of the Government for the recovery of the normal budgeting characteristic had direct consequences for the monetary-crediting policy. Today news background as for the British economy is quite rich. First of all it is the information about the employment – the forecast doesn’t predict worsening. The level of unemployment in December must be kept at the rate of 5.0 per cent; though the statistics of the international counting methods considers the growth of the level in November for 0.1 per cent, till 8.0 per cent. Besides, the market will put much attention to the BoE last meeting’s protocols as for the monetary-crediting policy fate’s decision. No surprises are expected, but there are hopes to get the information about the opinions for the perspective, and especially concerning the February meeting’s events.
JPY
Great pessimism of the Japanese consumers in December that was mentioned in the government report has stimulated the beginning of the US dollar’s purchases against the Japanese yen on Tuesday trades. The currency of Japan has lost some part of its positions won before and fixed almost -100 points. The data showed the decrease of the consumer confidence of the households in December till 37.6 from 39.5 in a month before. This disappointing information has significantly enlarged the doubts of the recovering process’ stability in the Japanese economy. Moreover, the attempts of the Chinese state authorities to retard the growth of their own economy by means of the rates’ increase add some extra anxieties as for the favorable prospects of the Japanese economy. The recent splashes of the activity in the foreign trading of the country were grounded upon the Chinese demand exactly. The data having already been published today demonstrated the decrease of the activity in the services of Japan. The November business behavior index in the services fell down after the growth in the previous period, 0.2 per cent m/m from 0.5 per cent m/m. Concerning the perspectives, as it seems, the yen will last its decrease against the “buck”. The domestic employment provokes cautions and may strike on the demand while worsening the consumer confidence. The like picture is for the prospects of the foreign demand. It is likely to be weak amidst the unsatisfactory economic data from the regions all over the world. And it in its turn aggravates the situation in the Japanese economy as the latter is export-oriented.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
