The US dollar was traded multidirectional in the first half of the session on Monday – it was increasing against the GB pound but lowering down against the euro. However, such a picture was observed only till the beginning of the trades in the United States. The good economic data from the USA have provoked the increase of optimism at the stock market of the United States. That has obviously raised the level of the risks inclination at the market, and this in its turn conditioned the pressure upon the US dollar from the side of the GB pound already. At the same time, as it seems, the investors decided to fix the profit at the European currencies, moreover, the price has lowered down to the strongest support levels. As for the yen the “buck” fixed the growth. The positive news from the USA, as a rule, provides the support for the pair of USD/JPY. The data, which reasoned the raise of behavior at the stock market, come from the Institute of Supply Management (ISM) of the USA. The activity in the manufacturing of the United States in January demonstrated the best possible results for last five years. The provision managers’ index for the manufacturing increased to 58.4 in January against 54.9 in December. The analysts expected the indicator would rise only to 55.3. The compounds of the report afforded grounds for good hopes for the perspective as the advancing indicators demonstrated the growth. The new orders index increased to 65.9 in January from 64.8 in December. The manufacturing index appeared to be at the level of 66.2 after 59.7. Finally, the employment index increased to 53.3 while it had been only 50.2 in the previous month. At the same time, the economic news held negative as well, – the development expenses in the USA in December lowered down much more than expected. The statistics demonstrated in the development expenses data -1.2 per cent till 902.55 Billion of dollar. The suggestions of the analysts are confide to that the development expenses in December would fall down only to 0.7 per cent. As for the results of 2009 the development expenses fell down to 12.4 per cent, in comparison with 2008. As mentioned in the report, the main obstacle for the change of the situation in the branch of designing and development continues to be frozen crediting markets. Today the news set as for the economy of the USA is poor enough. The data of the incomplete home sales transactions in December will be represented only. The forecasts expect the growth for 0.6 per cent after the abundant result in the previous period -16.0 per cent. Naturally, that will be accepted favorably by the market, but it will make no influence upon the development of events. Quite possible, the observed profit fixation will continue, but there wouldn’t be any massive falling down of the “greenback” as it seems. The expectations of anticipating publications as for the United States, the Labor Report in particular, will make a restricting influence.
EUR
The common currency increased against all its “opponents” on Monday. The confidence to the euro was caused at the trading on Monday by the publication of just not bad result as for the activity in the manufacturing both of Germany and the Euro zone and also the budget curtail schedule represented by Greece. The latter was considered by the Euro commission as possible to be fulfilled. Meanwhile, as it seems the profit fixation has also taken its place after so massive sales-outs of the common currency. Moreover, the prices at the pairs with the euro have reached the levels of the powerful supports. In accordance with the data publicized on Monday the provision managers’ index for the manufacturing of the Euro zone grew up in January and exceeded the advancing evaluation represented before as it rose to 52.4 against 51.6 in December. The expectances were connected to the maintenance of the advancing evaluation that had been at 52.0. This indicator grew up in January for the largest European economy as well, for Germany – to 53.7 against 52.7 in December. The advancing evaluation has been revised to the side of uplift as it fixed the index’s evaluation at 53.4. The activity indicator for the manufacturing of another leading economy of the Europe – France – appeared to be good. The index grew up here to 55.4 after 54.7 in a month before. Not much EU economic news is going to be today. The retailing data in Germany for December will be published. The growth is presupposed to be seen for 1.0 per cent m/m together with the negative dynamics’ shortage per annum till -2.0 per cent y/y as earlier it was -1.1 per cent m/m, -2.8 per cent y/y. Besides, the price affairs in the Euro zone’s manufacturing will publicized. The producers’ prices index for December may be kept without changes per month all over the block, 0.0 per cent m/m, and curtail the decrease per annum, till -3.3 per cent y/y as before it was 0.1 per cent m/m, -4.4 per cent y/y. The macro indicators’ dynamics may be considered as positive; though as it seems being unable to afford steady and powerful support for the euro. Judging from all over it, the sales of the euro will be renewed; though within the current session the further attempts to push-in the price to its new local maximums may reside. The troubles both of Greece and other countries of the block make the Euro zone less attractive for the investment of the capital, and it doesn’t fairly favor to the confident demand for the common currency.
GBP
The beginning of the first session this week was unsuccessful for the GB pound. The “cable” was traded worse than other currencies against the US dollar. The information about the troubles that may rise after the anticipating in Great Britain elections together with the anxieties that the quantitative softening program will still be enlarged and prolonged amidst the weak GDP have made pressure upon the sterling. Even the provision managers’ index (PMI) appeared much better than forecasted hasn’t changed the mood of the investors. However, later at the beginning of the American session and publication of the news from the USA the investors’ risks inclination increased, and the GB pound started to grow and neglected all before sustained losses. The trading Monday was completed by the British currency with the growth as for the “buck”; but as it seems, the principal motive force for the “British man” increase was the profit fixation at the powerful support levels at the pair of GBP/USD. The statistics demonstrated the activity in the manufacturing of Great Britain continued its growth in January. The provision managers’ index (PMI) for the manufacturing reached its maximum for more than 15 years and grew up to 56.7 after 54.6 in December. Moreover, the December indicator was revised to the side of increase as it had been stated 54.1 before. The result of January was much better than forecasted expected the downfall till 54.0. Furthermore, the data about the consumer crediting for December were represented. Here also the increase larger than expected was observed as it was fixed 1.2 Billion of pound, while predicted 1.0 Billion of pound. However, the descendant trends have also resided as the net mortgage loaning capacity decreased to 1.2 Billion of pound against 1.6 Billion of pound in November. The number of the approved mortgage loans fell down to 59 023 in December against 60 045 in a month earlier. That has become the first downfall of the indicator starting from November 2008. The situation with the indicator reflecting either the success or failure of BoE in its efforts to enlarge the liquidity at the market wasn’t better as well. The monetary aggregate M4 curtailed in Great Britain in December for 0.5 per cent m/m, after +0.9 per cent m/m in November. In annual comparison M4 monetary aggregate grew up for 1.1 per cent, while in November it was +1.9 per cent y/y. The news set of today contains the data concerning only the second part of the general picture of the business activity in Great Britain. It is provision managers’ index (PMI) for the development sector in January is presumed to be seen with growth to 48.3 points after 47.1 in December. The rate lower than 50.0 grounds the state of falling down; though the positive dynamics at this indicator may afford the portion of good mood as for the sterling as it notes the development sector is next the border at the pass to the positive sector, into the increase segment. Nevertheless, the sterling will most likely “hide adrift” as the publication of the Bank of England’s decision concerning the rates is anticipating and together with it the information about the further fortune of the quantitative softening program which are going to be represented at the market on Thursday.
JPY
The Japanese currency was the only one that conceded the US dollar at the trades on Monday. The good economic data as for the USA warmed up the interest to the high profitable assets and grounded the sales-outs of the yen. The representative of the Bank of Japan declared on Monday that the incurrence of the second wave of the recession in the country is less probable. Meanwhile, the data published already today disappoint a bit and cast doubt upon these announcements as the data of the average salary showed the collapse in December, -6.1 per cent y/y against -2.4 per cent y/y before. Also, the monetary basement curtailed in January and demonstrated 4.9 per cent y/y against 5.2 per cent y/y. Obviously, the perspectives as for the yen will further stay neutral-negative as some portion of the risks inclination will be kept at the market, but the expectances concerning the US Labor Report together with the decisions of two most authorized CBs of the Europe will make a restricting influence upon the investors’ activity.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
