The US dollar got back on Wednesday all its positions lost this week and enforced itself all over the “front”. However, the beginning of the day was on the maintenance of the pressure upon the “greenback” amidst some raise of the risks inclination after the suggestions about the approving by the Euro commission of the Greece budgeting plan enforced, and publication of the data as for the consumer confidence in Great Britain appeared to be better than the forecasts. Nevertheless, the US dollar completed the Wednesday session with the growth against all majors. The negative opinions as for the American currency started to be neglected even at the European session, when the statistics of Great Britain was published, and the first were scuttled completely in the beginning of the United States session after the publication of the USA economic indicators. More favorable than expected ADP data of employment and the increase of the provision managers’ index (PMI) in the services provided the additional support to the “buck” and warmed up the interest to it from the side of the investors. The number of vacancies in the private sector of the USA shortened for 22 thousand only in January. This information was presented by The ADP Company, and the forecast expected the decrease of vacancies for 30 thousand. These data have possibly given to the market the imagination of what might be expected on Friday, when the official data of the Labor Report of January will be represented. Later the information about the behavior in the services in the USA of January as well has been represented. In accordance with the published data from the Institute of Supply Management (ISM) for non-manufacturing branch of the USA in January reached 50.5 after 49.8 in December. The forecasts expected the growth to 51.0. There will be little news as for the United States today. The data about preliminary jobless claims for the previous week may be considered as one of them. They’re forecasted with some shortage, till 460 thousand after 470 thousand earlier. Also the manufacturing orders in December should be referred to them as the positive dynamics is expected – the growth for 1.0 per cent m/m, after increasing to 0.6 per cent m/m before. Although, the main influencing factor upon the events’ development today will most likely become the information from the Europe, where Central Banks both of Great Britain and the Euro zone will represent their decisions concerning the rates and perspectives of the monetary-crediting policy. Besides, the trading restraint may be predicted for the today session by reason of the expectances of Friday events. Most likely, the investors won’t want to open positions before the publication of the data as for the number of vacancies excluding the agriculture of the USA last day of the week as there’s the probability of the strengthening of the opinion about earlier than expected increase of the rates in the USA.

EUR
   The budgeting troubles of the countries within the Euro zone are still the main factor of influence upon the market. The common currency continued its increase at the beginning of the Wednesday session. The support to the market players with the willing to risk was provided by the news that as expected the Euro commission had approved the deficit curtail schedule suggested by the state authorities of Greece. However, the strike went on by the largest trade union of this country together with the anxieties that these kind of protest may spread over and threaten to the schedule approved by the Euro commission have made some corrections. The euro found itself under the pressure and completed the day much lower than the opening prices. Not bad information from the United States became an additional stroke for the process of pressure upon the common currency on Wednesday. The EU economic results represented by the Euro statistics were better than forecasted but not enough for the splash of optimism and haven’t changed the situation. The provision managers’ index (PMI) for the services of the Euro zone summed up to 52.5 as expected 52.3 as for Germany – 52.2 at the forecast of 51.2. The retailing in the Euro zone countries stayed without any changes in December compared to the previous month. In accordance with the data the retailing were without changes – 0.0 per cent m/m in December and decreased for 1.6 per cent y/y, while the forecasts presumed +0.4 per cent m/m and -2.4 per cent y/y. The retailing dynamics stated that amidst the increase of unemployment the consumers spend money with great caution preferring to enlarge their money savings. The news background for today is very significant for the euro. Just after the publication of the data about the manufacturing orders in Germany for December, which are presupposed to be with the essential growth per annum: 0.2 per cent m/m, 9.6 per cent y/y after previous 2.8 per cent m/m, 4.5 per cent y/y; the most important event of the day for the euro will take its place: it’s the publication of the ECB decision concerning the rates and thereupon the press-conference of J.-C. Triche. The bank is expected to maintain the key rates without changes at 1.0 per cent and not to adopt any decision concerning the curtailing of the stimulating measures. As for the perspectives for the common currency, they’re most likely to remain in negative tenor as beside the current Greek troubles the budgeting difficulties are also remarked in other countries of the Euro zone. The next topical region, which will attract the attention, will most likely be Portugal and further Spain possibly.

GBP
   The support from the side of the positive data that demonstrate the increase of the consumer confidence index in Great Britain to 73 from 70 according to the Nationwide report in January has reasoned the further increase of the sterling at the session on Wednesday. However, this quite self-confident uplift of the British currency was interrupted by the results of the provision mangers’ index (PMI) for the services in January. This indicator has disappointed the investors having demonstrated the lowering down of the activity to 54.5 whereas it was expected at 56.1 after 56.8 in January. Such result didn’t encourage to the opinion that the further growth of GDP will be at the level forecasted by the British state authorities. Moreover, the Budgeting-Taxation Research Institute reported the Government of Great Britain should shorten the budgeting deficit more decisively than it had been scheduled in the Pre-Budgeting Report in December. Otherwise, Great Britain may approach to the level of Greece i.e., the budgeting deficit of the state sector will make 12.6 per cent of GDP. It was also mentioned the significant increase of the taxes or the decrease of the expenses this year may threaten the economic recovery. To say it English, both the Government of Great Britain and the Bank of England have likely turned out to be between “the devil and the deep blue sea”: that greatly enlarges the ambiguity and strengthens the probability of the negative attitude to the sterling. The news set as for the economy of the “Isles” will be represented with only one but extremely important event today. The Bank of England will read aloud its decision concerning the rates and the prospects for the quantitative softening program. No changes have been expected until recent times. However, the less convincing results concerning GDP of the 4th quarter and the provision managers’ index (PMI) for the services in January have significantly increased the risks of the probability to widen the quantitative softening program by BoE. If it happens so the “cable” will continue its way downward.

JPY
   The Japanese currency was decreasing on Wednesday against the US dollar amidst the enforcement of the interest to the “buck” all over the ‘front”. The good macro statistics from the USA exposes the yen to the pressure as a rule. This time the favorable employment report in the USA has afforded grounds to predict that the main Labor Report that was going to be published on Friday would reflect the improvement of the affairs of this the most problematic sector of the economy. No significant economic statistics was published n Japan. Neither were commentaries from the side of the state authorities of the “Land of Rising Sun”, which could intrude into the events’ development at the currency market. There will be no economic news published at the current session as well. The yen will be kept under the influence of the information from the CBs of both the Euro zone and England, and also the expectances of the tomorrow events in the USA.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst