At some time the American currency found itself under the pressure at the session on Thursday amidst the strengthening of the investors’ inclination to risk. The self-confident dynamics of the European stock indexes at the opening and the growth of the gold and petrol prices have favored to it. Such a layout was enough for the US dollar to loose its positions achieved during the Asian session. However, later the “buck” has got back the advantage against both the euro and yen, though continued to decrease in the controversy to the GB pound. The situation changed after the Standard & Poor’s Rating Agency reported it didn’t reckon the banking system of Great Britain among the steadiest in the world and having the least risks ones anymore. It has become a cause of the sudden sales-outs of the GB pound and also the strengthening of the pressure upon the euro from the side of the “greenback”. Summarizing it the US dollar completed the pre-last day of the current week with a great advantage as for the Europeans; though it lost its plus positions as for the yen; because the currency of Japan as well as the “buck” incurred the massive purchases due to its status as a shelter-currency and increased risks. The news set has generally brought discrepant results concerning the US economy. They’re most likely to be considered as disappointing. The capacity of the primary jobless claims curtailed last week less significant than expected. The data represented on Thursday demonstrated the decrease of the primary claims for 8 thousand till 470 thousand. The number of the claims for the previous week was revised to 478 thousand after 482 thousand announced before. Alongside to it the forecast presumed the shortage the capacity of the primary claims for 32 thousand. The number of the secondary claims i.e., from those who have already been receiving the redundant payment for more than a week, fell down for 57 thousand. That curtailed the total army of jobless till 4 602 thousand. The orders for the durable goods in December were represented as well. As the statistics proves the orders have grown up for 0.3 per cent; but the analysts expected growth for 2.0 per cent. This indicator is supposed to be the index of the corporative investments, and the like dynamics spurs to the conclusions that the American business is still very prudent. The information from the regions has shown the national activity index from FRS Chicago lowered down in December to -0.61 against -0.39 in November. However, as it has been appointed in the report the basic trend of the indicator still maintains the features of the initial stage of the economic recovery. Meanwhile, the FRS Kansas-City has published the data demonstrating the increase of the business activity in the region. The index for the manufacturing amounted to 13 in January against 7 in a month before. The annual index made -10 against -30. The indicators considered to be advancing have denoted the reason for the positive hopes for the perspectives as the monthly new orders index increased to 9 from 0 in December; it was also observed -11 against -25 in annual comparison. The employment index summed 2 against -1 a month earlier alongside to -39 against -48 per annum. The US economic calendar is fruitful for the significant information for today. First of all, it’s the preliminary estimation of GDP for the 4th quarter. The growth is expected to be seen for 4.2 per cent q/q, while it was +2.2 per cent in the 3rd one. Furthermore, the market will follow the January Chicago Provision Managers’ Index (Chicago PMI), which is predicted with the decrease to 57.2 from 58.7, and also the Michigan consumer confidence index, where the growth till 73.0 after 72.8 is foreseen on the contrary. It should be mentioned that from the point of view of the macro statistics no negative is predicted for the “buck”. That’s why it’s reasonable to suggest the further enforcement of the US dollar taking into account the favorable situation and the mood as for the other “majors”.
EUR
The euro continued its way downward against all “majors” at Thursday session. The contradictions from the side of the French and German governments of the information about their assistance to Greece strengthened the pressure upon the common European currency. The profitability spread between ten-year Greek T-Bonds and the equivalent German securities has achieved the new record maximum of 405 basic points. At the same time the record increase of the default insurance cost for the sovereign debt of Greece was observed. The “conforming kill” for the euro was made by the Standard & Poor's Rating Agency at the yesterday session, when the information defining strengthens of the diffidence to the British banking system was represented. Such a development of the event caused the sales-outs of the euro and its falling down lower than 1.4000. Meanwhile, the economic indicators of the Euro zone represented on Thursday demonstrated, in general, a positive dynamics. The economic “sentiment” index increased in January higher than the forecast till 95.7 against 94.1 in December; whereas the expectations were connected to growth only till 92.5. The business conditions index in the Euro zone also increased till -1.12 from -1.30; although the consumer confidence stayed at its previous level, the index fixed -16 against -16 earlier. The employment data in Germany were published as well. The situation at the labor market in the EU largest economy in January became better than the forecast. The number of jobless increased only for 6000; but the unemployment level increased till 8.2 per cent against 8.1 per cent in December. All over the Euro zone the level of unemployment in January will be represented today. It’s expected that the growth of employment shortening continues, and the level will rise to 10.1 per cent after 10.0 per cent. Besides, the information will be represented that may be taken as an increasing problem for the euro zone – this is a dynamics of the money supply i.e., M3 aggregate. The forecasts expect the lasting of the shortening, -0.6 per cent in December after -0.2 per cent in the previous month. Such an order of changes adds the negative background for the common currency together with the growth of unemployment – that seems to reflect on the positions of the latter.
GBP
The GB pound renewed its increase against the US dollar at the session on Thursday. The purchases of the GB pound from the side of the British companies thanks to the delivered payments, the increase at the stock market and the maintained optimism from the Wednesday commentaries of the representative of the Bank of England E. Sentanance provided the support to the British currency. However, the information form the S&P Agency concerning the diffidence to the British currency has simply rushed down the currency of Great Britain. Summarizing it the “cable” has lost the before achieved positions and completed the day with losses as for the US dollar and yen, though with a little plus against the euro. No macro statistics was published on Thursday. As for the financial-political news, the only items worth of attention were: the announcement of the Minister of Finances of Great Britain A. Darling about the absence of the necessity to divide the banks into retailing and investing. In other word, he demonstrated just the different opinion form the positions of the American administration having pointed out the necessity of the reforms, which implementation has already been adopted, at first instance. The economic news from the “Isles” has already been published today. The consumer confidence index in January from Gfk grew up to -17 against -19 before. That may be taken as a positive moment for the sterling. The Nationwide housing prices index for January will be represented later. The forecast predicts the further growth for 0.4 per cent m/m and 7.3 per cent y/y. It will probably change the mood at the market in favor of the sterling a bit; though for a short period of time. As for the mid-term perspectives, the opinion differs – it’s necessary to be prudent concerning the GB pound’s purchases as the results of GDP for the 4th quarter in Britain arise apprehensions as for the probable widening of the quantitative softening program at the next meeting of the Bank of England that will take its place next week.
JPY
The Japanese yen appeared to be under the decreasing pressure at the first half of Thursday trades amidst the growth of the American securities’ profitability. Besides, the pressure upon the currency of Japan was also provided by the information about the downfall of the retailing during 16 months running already. Nevertheless, the day was completed with the plus against all “majors”. The interest to the yen as a shelter-currency suddenly increased after the S&P Agency announcement about the diffidence to the British banking system. The last working day of this month has a large portion of data about Japan as a rule. The statistics showing the December unemployment level lowered to 5.1 per cent against 5.2 before has already been published today. The consumer prices basic index of December for the whole country in general retarded its decrease to -1.3 per cent y/y against -1.7 per cent in the previous period. The consumer prices index for Tokyo fell down to -2.0 per cent y/y in January from -1.9 per cent y/y. The households’ expenses shortened in December, but less significant than predicted, till 2.1 per cent y/y after 2.2 per cent y/y and by forecasted 1.9 per cent. The business activity in the manufacturing decreased in January. The relative index demonstrated 52.2 against 53.8. Such a multidirectional statistics of the results hasn’t inspired the market for the further purchases of the yen. The currency of Japan is further decreasing at the current session and most likely it will be kept under pressure.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
