The Reserve Bank of Australia sprang a surprise on the market again; but this time not in the shape of the rates increases, when the investors were expecting the next step of stiffening for the monetary-crediting policy. Such development of events has afforded grounds for negative opinion increase and contemplations about the world economic recovery wasn’t powerful enough and that is why the Australian regulator decided to wait a little with the increase. That has encouraged the investors to forward the assets to the shelter-currencies; and the American currency grew up at the very beginning of Tuesday session. Nevertheless, as it seems, the desire to fix the profit after the prolonged growth of the “buck” in the anticipation of the important economic and politic events, which will reside later on this week, became stronger, and the US dollar appeared under the pressure all over the “front”. Besides, the decrease of the interest to the “greenback” was also provided with the gossips about possible little decrease of the exertion as for the Greek troubles, as the Euro commission may support the budgeting deficit curtail schedule on Wednesday. As a result, the US dollar completed the day with the negative result to all majors. There was little news as for the United State economy. The data about incomplete home sale transactions in December were published only. The results became better than the forecasts, the growth consisted 1.0 per cent m/m at the expectations +0.6 per cent m/m, and the annual dynamics demonstrated +10.9 per cent y/y. That news didn’t make any influence upon the market mood as it was quite expected. Today statistics may return the interest to the US dollar. The ADP data as for the job places in the private sector in January are expected with significant improvement in comparison with previous month -40.0 thousand, after -84.0 thousand in December. That information may become a signal for the suggestions about the totals of the main labor report that will be published on Friday. Besides, the pass over to the increasing area for the provision managers’ index in the services from ISM is expected. The indicator is forecasted at the level of 50.0, while it was 49.8 in December. If the data become better than the forecast, like to the recently published analogous index for the manufacturing, the “buck” may get the support despite the fact that alongside to good results in manufacturing the pressure upon the “greenback” was observed.
EUR
The profit fixation continued at the session on Tuesday as well. The euro was enforcing itself against the US dollar. The support was also provided with the gossips that the Euro commission would support the budgeting deficit curtail schedule in Greece on Wednesday. Against this background the spread between the profitability of 10-year Greek T-Bonds and the analogous securities in Germany narrowed making signal the anxieties reduction at the market. Not much economic information concerning EU was published. The retailing in Germany decreased for 1.8 per cent last year. That appeared to be the worst possible result starting from the common currency’s advent. However, the December data were remarkable for their raise still yet, though later than forecasted. The retailing capacity grew up for 0.8 per cent m/m i.e., less significant than forecasted. The expectances were connected to the increase for 1.0 per cent m/m. The data of the new cars registration in Germany were publicized for January. The number of the registrations lowered down for 4.2 per cent y/y, that’s motivated with expiry date for the state program for the old cars recycling. The continuation of decrease is also expected for long time. Due to these results it will obviously be possible to imagine the situation as for other trends as well when the rest of stimulating measures is scraped. The expectances of rapid retardation or even default of the recovery processes will be reasonable. The data of the manufacturing inflation represented on Tuesday showed insignificant growth of the producers’ prices in the Euro zone in December. The producers prices index (PPI) grew up for 0.1 per cent m/m and decreased for 2.9 per cent y/y. judging form such a dynamics it’s possible to conclude that the inflation pressure is still restricted under the terms of recovery. In course of the ECB next meeting this Thursday the key rates won’t be changed. As forecasted the prices index isn’t to be changed in December per month and is expected with decrease for 3.0 per cent in the annual comparison. The précised business behavior index for January for the services in Germany and the Euro zone in general are going to be published today. The forecasts don’t predict any changes in the advancing estimation, 51.2 in Germany, 52.3 in the Euro zone. Any improvements of this indicator can be considered as positive for the euro and vice versa. Moreover, the attention should be paid to the retailing in the Euro zone for December. The raise is expected as per month and the minus’ shortage annually, 0.4 per cent m/m, -2.4 per cent y/y. it had been -1.2 per cent m/m, -4.0 per cent y/y. the support for the euro is possible at the current session; though it seems not to be of mid-term character by no means. The threaten of default from the side of Greece together with the probability of the like troubles in other countries of the European block facing the debt difficulties will make pressure upon the European currency for a long time still yet.
GBP
Resulting the last session the GB pound increased against the US dollar; though in fact it has neglected the losses of this week only reached the close level of Friday. The purchases of the sterling against the “greenback” were dull. The absence of significant news together with still actual apprehensions concerning the weak budgeting-taxation state in Great Britain and also the anxieties that the Bank of England would decide at its meeting to prolong the expiry period and increase the capacities of the bonds release program make a retaining influence. Against this background the economic data of the manufacturing in the “Isles” published on Monday didn’t support the sterling like to the information represented on Tuesday. The provision managers’ index in the development sector of Great Britain (PMI) appeared at its maximum starting from the spring 2008. The indicator grew up in January from 47.1 to 48.6 by forecasted 48.3. This dynamics confirms the features of the recovery; though the result doesn’t reach out the mark of 50.0 dividing between the default zone and increasing range. The development sector of Great Britain has been and remains the main problem in the economic recovery, but the recent data give hopes for the change of the situation and the improvement of the perspectives. The news line of today will represent the final part of the general picture of business behavior in Great Britain. The services index i.e., the indicator of the main economic area will be published. The provision managers’ index for the services is predicted with decrease regrettable as it is, to 56.5 from 56.8. That in its turn may cause the enlargement of disappointment at the market. In general, all the before mentioned reasons don’t encourage the expectances of the steady enforcement of the GB pound. And it, together with the weak-forecasted statistics, may cause the return to the descendant trend for the pair of GBP/USD at the present session already. At the same time, the information published already today supports the British currency – the consumer confidence index from the Nationwide improves the mood as for the GB pound as the growth to 73 from 69 is also fixed as for it. The data of the January increase for the retailing prices to 2.3 per cent y/y from 2.2 per cent y/y feed the consideration about too rapid tempos of inflation in the “Isles” and increase the anxieties that BoE will have to take adequate measures.
JPY
The Japanese currency stayed within the narrow range on Tuesday trading. But, nevertheless, it fixed the plus in concerns of the “buck”. Obviously, the ambiguity as for the issue what was prevailing the market at that moment – either the willing to risk or, on the contrary, to escape out of risk has caused a dull activity at this pair. The initial impulse to the enforcement of the yen was the information from Australia about the maintenance of the RBA rates, which has shortened the number of the market participants who desired to risk. No economic news as for Japan is planned to be published today. The yen will be under the influence of the news from the USA as it happens more often than not. The positive of the largest world economy makes a pressure upon the yen today as well. In accordance with the forecasts as for the US data the exact scenario of the events’ development is possible as the good statistics from the USA, if certainly it appears, will make a pressure upon the yen.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
