The major part of the former session – from its very beginning till the FRS resolution’s publication – the US dollar was traded multidirectional against its major “opponents”. The American currency continued its enforcement against the euro. It was also decreasing as for the yen and exceeded the pressure from the side of the GB pound again. At one stage the pressure upon the “greenback” strengthened as the apprehensions that China would stiffen its monetary-crediting policy weakened a bit. It has probably happened amidst the announcements of the Deputy-Governor of the People’s Bank of China that there’re no causes for the concerns as for threaten of the “soap bubbles”. Most likely the declaration of this kind may mean the absence of the intents form the side of the Chinese regulator to increase the rates in the shortest possible time. Meanwhile, the trading was restricted with the edges of the narrow range, because of the expectances of the US Central Bank concerning the rates have made pressure upon the investors. The FRS decision was predictable. The rates have been maintained at the previous level. Moreover, the announcement has been made about their maintenance at the current level for a long time. That in its turn was considered as a risk of pressure upon the “greenback” in anticipation of the disclosure of the decision. Nevertheless, the US dollar has begun its enforcement all over the “front” and completed the session with the profit as for all majors. The mainland moment for the market was the discrepancy in course of the voting at the FOMC meeting. One member of the Committee for the Overt Market Operations has voted against the common opinion of nine rest members. This fact was obviously considered as the hint on the approach of the greater inclination to hard policy in FRS. That in its turn has warmed the interest to the purchases of the “buck”. Not much significant news as for the US economy was published on Wednesday. The main information that attracted the attention of the market specified the disappointing data. The demand at the primary housing market in the USA decreased in December suddenly. In accordance with the represented data the sales of the houses were worse than forecasted and lower than in the previous period. The downfall for 7.6 per cent was fixed i.e., only 342 thousand was sold; while the growth for 2.8 per cent till 365 thousand was forecasted. In general the sales decreased for 22.9 per cent in 2009 and made 374 thousand in a year. In 2008 it was 485 thousand. The November data were revised to the side of growth. The decrease was for 9.3 per cent that period. However, it had been stated the sales decrease for 11.3 per cent. The data about the orders for long-lived goods are going to be published today in December. The essential growth is predicted to be observed – for 2.1 per cent after 0.2 per cent before. Besides, the attention will be attracted to the information about the primary jobless claims. It’s expected to see the improvement here – curtail till 450 thousand; and it had been 481 thousand before the week under consideration. As is evident no negative as for the US dollar is expected certainly if the forecasts are confirmed. At the same time the market continues to comprehend the FRS commentaries. That keeps the risks of the “buck” sales’ renovation quite high inasmuch the outgivings about the rates’ maintenance at the low recorded level for a quite long period.

EUR
   The problem of the deficits in the Euro zone is still in the focus. Most likely, Portugal will be the next country incurred the attack of the rating agencies and be at the same level as Greece. The budgeting plans of Portugal, which wants by pledges to shorten the budgeting deficit this year to 8.3 per cent from 9.3 per cent by means of tight control over the expenses didn’t inspire confidence to the investors. The analysts reported that the program presented by this country before didn’t reduce the anxieties as for the national finances in the Euro zone. The common currency stayed under the pressure. The euro sales weren’t also ceased even by the message about Greece’s willing to plead China for help in financing of the deficit. However, the Ministry of Finances of Greece refused the information that the volume of the loan consisted approximately 5-10 Billion of euro. There was not much economic news at the previous EU session. The German government announced about the raise of its forecast for GDP growth this year. The reason for this decision was the enlargement of the export capacities; as it’s the main motive force of the German economy. This year the export is forecasted with growth to 5.1 per cent, after the falling down to 14.7 per cent in 2009. The increase of the import will consist 3.4 per cent, after the shortening to 8.9 per cent. The forecast of the GDP growth this year is connected to the raise for 1.4 per cent, but not for 1.2 per cent, as expected in October. At the same time the represented information as for the consumer prices in Germany at the beginning of the year denoted the decrease; at that more significant one than expected. The preliminary consumer prices index (CPI) of Germany lowered down in January for 0.6 per cent m/m, but increased for 0.8 per cent y/y. The forecasts stated the downfall for 0.3 per cent m/m, and raise for 1.1 per cent y/y. The harmonized consumer prices index, which is taken into account by ECB, fell down in January for 0.7 per cent m/m, and grew up for 0.7 per cent y/y. The Euro zone news going to be represented today give an idea about the employment in Germany – the forecast expects the enlargement of job places for 17 thousand and the maintenance of the level at the previous degree of 8.1 per cent; and also about the mood in the economy and business climate. These January "sentiment" indexes are presupposed to be seen with growth. The economic sentiment index is to increase to 93.0 from 91.3; and the business behavior index – with the shortening of the negative dynamics to -1.0 after -1.22. In general, the expectancies as for the macro indicators may be considered as positive; though they won’t provide the support for the common currency. The "bulls" may connect their hopes as for the euro to the technical factors – the profit fixation after prolonged sales at the powerful support levels; which the pair of EUR/USD had lowered down to.

GBP
   The sterling felt comfort best of all at the trades on Wednesday. The GB pound has increased due to the commentaries of the member of the Committee for Monetary-Crediting Policy E. Sentanace till the start of the Northern American session. The latter has announced that Great Britain would avoid the second wave of the default amidst the growth of the global economy under the term of this recovery continuation as well. Moreover, it was mentioned that the economic increase in Great Britain had probably been more significant than reported on Tuesday; and the GDP data may be revised to the side of uplift. It’s also possible to recall the claim that the inflation restrict at the targeting level may appeared to be a complicated task. This probability is proved with the inflation expectances data for next twelve months published on Wednesday. They increased to 2.2 per cent in January from 1.9 per cent in December i.e., till highest possible level for more than a year. As known the annual official inflation’s increase was in Great Britain at 2.9 per cent in December against 1.9 per cent in November; whereas the targeting level of the British CB equals to 2.0 per cent. Such a layout is quite suitable for the escalation of the suggestions about the stiffening of the policy in the “Isles” in the relatively nearest time. Nevertheless, the “cable” has lost the major part of conquered advantages till the publication of the information from the US FRS. Probably, the economic data from the “Isles” publicized on Wednesday have also provided to the optimism decrease. As it was represented by the Confederation of the British Industries (CBI) the retailing’s capacity decreased in January; the VAT raise curtailed the demand, that’s why the retailing index fell down to -8 against +13 in December. The prediction has expected the downfall till -10. However, according to the report the prospects are supposed to be more optimistic than predicted, concerning this index will sum to -1 in February. No macro indicators as for the British economy are settled to be published today. The sterling will be traded due to the influence of the foreign factors and the comprehension of the FRS commentaries.

JPY
   The greater part of Wednesday session the yen was traded with plus against the US dollar; however, the total of the day was on the “greenback”. The US dollar has increased against the Japanese currency after the proclamation of the information that one of the members of FOMC had voted against the maintenance of the rates at the level next to zero. The data published already today have appointed to the decrease of retailing for 1.2 per cent m/m and 0.3 per cent y/y in Japan in December. The demand in Japan further stays low; the dynamics is negative. That doesn’t coincide to the state authorities’ estimation stating the economic recovery. Moreover, the information was also represented about the foreign securities’ purchases made by the Japanese investors and the Japanese shares purchased by the foreigners. The capacities of the investment to foreign bonds form the side by the Japanese players exceed those made by the foreign investors. That in its turn proves not so optimistic mood of the Japanese concerning their own domestic economy. The main portion of the Japanese economic statistics will be represented tomorrow. Today the yen will be traded basing the FRS commentaries represented at the former session and their over-thought as well.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst