The major part of last was under the sign of risks inclination’ sdecrease that instantly clarified in the trading results, where the US dollar enforced against the European currencies and lowered down against the yen. At the very beginning of the previous session only the investors showed the interest to the high-profitable currencies and the “greenback” was under the pressure. Nevertheless, as it seems, these sales of the “greenback” should be connected to the usual profit fixation, which resided after the massive purchases of the US dollar last week in January. The forecasts reflecting the expectances of the significant improvement at the labor market in the USA, and got back to the market the presuppositions of possible earlier increase of the rates, together with still relevant troubles in the state finances of Euro zone states, first of all Greece, provided the support to the US dollar. The statistics published in the United States demonstrated the results which didn’t cause any special optimism; though at the same time they didn’t afford grounds for negative mood. The incomplete accommodation selling transactions increased for 1.0 per cent m/m, at that they had been falling down for 16.4 per cent, in November. The manufacturing orders increased in December, and the business behavior indexes both for the manufacturing and services registered for increase, at that the sudden maximums were demonstrated in the manufacturing. The expenses of households disappointed a bit in December, increasing only for 0.1 per cent m/m, while the private money savings increased to 4.8 per cent it means the mood picture usual for the crisis times is still maintained. However, it should be mentioned that the consumer crediting retarded its decrease significantly, -1.7 Billion after -17.5 Billion before. The weekly unemployment statistics was speaking well for the weakness of the situation. The preliminary jobless claims started to grow again together with the total capacity of payment receivers. The main event of the week expected by the market the Labor Report, hasn’t justified the expectations as the job places shortened for 20 thousand in January instead of forecasted increase. Nevertheless, the unemployment level fell down also, at once for 0.3 per cent till 9.7 per cent. The first response after the data publication was negative for the US dollar, but later the purchases of the American currency renewed. It’s also possible that the decreased unemployment level became decisive for the investors’ opinion. The news background of the started week isn’t rich for significant events as for the United States economy. The retailing for January will be in the focus of attention, where the growth for 0.3 per cent is expected, and also business resources forecasted with growth also. The participants of the market will put their attention on the December trading balance as the shortage of the deficit till -35.5 Billion after -36.4 Billion of the US dollar i9s expected to be seen. In the great scheme of things there’re not many supporting factors for the American currency in that statistic. That’s why the ranging trade of the US dollar against the other majors is quite possible this week.

EUR
   The apprehensions concerning the sovereign debts of some countries of the Euro zone got “red line” through the investors’ mood as for the euro last week. This factor became also the main for the pressure upon the common European currency. Although the Greek budgeting deficit curtail schedule had been adopted by the Euro commission it provided the European currency’s demand steadiness cold minute. The sales of the euro have renewed as other countries of the Euro zone such as Spain and Portugal are in almost like situation. The EU economic indicators haven’t also pleased as the news cars’ sales in Germany showed their historic minimum in the first month of the current year as a consequence of stimulation schedule’s decline. This process will probably last further as the shortage of sales is expected for 25-30 per cent up to the end of this year. The retailing in the Euro zone kept them at the same level in December, however, they were directed to decrease according to the reports; and that was observed as per year. The monthly increase was fixed in Germany as the retailing grew up for 0.8 per cent m/m here, but they fell down for 2.5 per cent per annum. The manufacturing orders in the largest European economy fell down for 2.3 per cent monthly, and the manufacturing exactly – for 2.6 per cent. Both in the Euro zone and in Germany the business behavior was remarkable for rise in January as in the manufacturing so in the services. The economic news of the current week will afford no grounds for the total correction of the mood as for the euro as the advancing data of GDP both of the Euro zone and Germany in the 4th quarter going to be published on Friday are predicted with the increasing tempos’ retardation compared to the 3rd quarter. Moreover, the data about the manufacturing of the Euro zone will be represented, which are supposed to demonstrate a little growth in December. However, if to recall the Germany data the manufacturing forecasts may get no justification. The special attention will also be focused on the publication of the final data of the consumer inflation in Germany for January. The forecasts are resolving themselves into that point that the indicator won’t be revised compared to its previous value represented before, in the end of January. To say it shortly, the common currency continues to be a prisoner of the situation concerning the budgeting deficits of the countries – members of the European block; it may most likely keep its advantage for sales this week as well. The only thing, which can be the “bullish” hopes on is the technical factors i.e., the powerful supports and probable willing of the market to fix the profit after quite a significant decrease of the European currency.

GBP
   The British pound demonstrated the increase against the US dollar like to the euro as well at the beginning of last week only amidst the investors’ willing to fix the profit. The further development of the events has already been on the sterling’s decrease. It was provided with the apprehensions that the Bank of England could prolong the quantitative softening program enlarging its capacities, also the political factors due to anticipating elections in Great Britain, and finally the strengthened probability that the budgeting deficit of the country will put the “Isles” in the same league as the problematic countries of the Euro zone. The strengthen of the doubts concerning the GB pound was also provided with the portion of the economic statistics, such as the decrease of the business behavior in the services, that appeared to be much worse than forecasted, and that in its turn reasoned the massive sales-outs of the “cable”. The indicators of other economic branches of Great Britain, such as the manufacturing and development were remembered with improvement and supported the GB pound in the first days of the session. The statistics has demonstrated the growth of inflation as the producers’ incoming prices grew up for 8.4 per cent y/y and the transfer ones – for 3.8 per cent y/y. However, no response from the side of the market appeared. A day before the publication the Bank of England has already decided not to increase the rates. Moreover, no illusions concerning threatens of the inflation would encourage the regulator to make the step of stiffening could be already. As for the rest of the news it’s worth been mentioned the further raise of the real estates prices. However, it’s obviously the “last gasps” of optimism as both the number of mortgage loans and the capacity of mortgage lending have already lowered down for December. Furthermore, the moment making signal of the absence of intensity in crediting in the “Isles” became the data about the broad monetary supply (M4) that curtailed for 1.1 per cent per month. That became the most disappointing result for almost last 30 years. The data of the British economy going to be represented this week will be interesting due to information about the December manufacturing first of all. They’re expected with growth that in its turn may be a ground for the revision to the side of increase of the advancing GDP data for the 4th quarter. Besides, the attention will be put on the Quarterly Inflation Report of the Bank of England; whereupon it will be possible to get the information concerning the prices’ perspectives from the point of view of the Committee for the Monetary-Crediting Policy. The data about the foreign trade for December that will be also announced are expected not to demonstrate any special changes. To say it shortly, no special support for the GB pound will obviously come from the macro statistics; but the technical factors afford grounds for the suggestion of both the decreasing situation and the ranging trade on the contrary.

JPY
   As known, the reluctance to risk warms up the interest to the yen as a shelter-currency to large degree; against this background the currency of Japan enforced itself against all it “opponents” the last weekly session. Not much economic data were published. The average wages for December was lower for 6.1 per cent than a year before; at that it was observed -2.4 per cent in November, and the forecast expected for -2.6 per cent only. The advancing and coinciding indicators are fixed in positive dynamics. As mentioned above, the main factor that caused the yen’s enforcement was the departure out of risks and correspondingly the cutting of the carry trade deals, where the foundering currency was the yen. The major part of the economic news form Japan will be published in the first day of the started week i.e., today. The special attention should be focused on the results both of trading and payment balances of the country for December. The improvement is predicted in trading; though the decrease by invoice of current payments. Besides, the data about the monetary supply, M2 aggregate, will be publicized. The latter will probably mark itself with increase, but most likely with slow tempos. That in its turn will afford grounds for doubts in the success of the quantitative softening delivered by BoJ. The later publications of the current week are also quite interesting. The machine building orders for December are presumed to have grown up for 8.0 per cent m/m and retarded their annual decrease till -10.8 per cent y/y after -20.5 per cent y/y. The positive dynamics is also expected in the wholesaling prices as well. That is a significant and encouraging factor for the economy with the deflation process. Nevertheless, the statistics won’t be the main influencing factor upon the positions of the Japanese currency as usual. The yen will further depend on the level of the risks inclination i.e., how the investors are ready or not to the carry trade deals.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst