The Wednesday session turned out to be volatile, the trades were carried multidirectional, but as a result the US dollar fixed the enforcement all over the “front”. At the beginning, the hopes that the European Union would help Greece afforded grounds for the American currency’s sales; but the ambiguity that appeared with the announcement of the German Government about the absence of plans in this respect, and later the events in the USA changed the investors’ direction and the US dollar began to be an attractive asset again. The support to the “greenback” was provided by the speech of the Head of the FRS USA B. Bernankey who reported about the possible stiffening of the course of the monetary-crediting policy, when the USA economy demonstrated a desired level of recovery. It was accepted at the market as a comparative moment between the USA economy, which get outs of crisis step by step and the Euro zone that faced the debts troubles of the countries - members of the block. The macro statistics of Wednesday was represented by the data about the foreign trading of the USA in December. The trading balance deficit increased more than expected; according to the presented data the growth of the negative totals summed up to 10.4 per cent and achieved the level of 40.2 Billion of dollar after 36.4 Billion in November. The forecasts expected that the foreign trading balance deficit would shorten in December till -35.0 Billion of dollar. The export from the USA has increased for 3.3 per cent; whereas the import enlarged for 4.8 per cent i.e., the negative dynamics resided, which didn’t promise any positive perspectives. The news set of this day will be less rich both as per quantity and quality than expected as the publication of the retailing data and commercial supplies is postponed for Friday. That’s why the data for the Federal Budget for January and also the number of the preliminary jobless claims will be represented only. It’s also expected to observe the budget with even bigger minus, till -70 Billion while before it had been fixed - 63.5 Billion of dollar. Concerning the number of jobless claims for last week, it’s expected that will be denoted the shortening till 468 thousand from 480 thousand demonstrated a week earlier. The negative which may contribute some corrections to the “greenback” enforcement isn’t expected if certainly nothing sudden and special for the support to the euro happens at the EU summit dedicated to the aid for Greece going to take its place today. The US dollar will probably continue to find a ready market; however, the continuation of the ranging trade is also possible.

EUR
   The common European both resided under the pressure and favored with the support in different moments of the trades on Wednesday. The ambiguity based upon the contradictory news in concerns of the bailout for Greece has instigated the investors both to purchase and sale the euro. The optimistic splash and purchases of the common currency were caused by the rumors that both Germany and France would suggest the financial aid for Greece; though the CBs of these countries refused to comment after the conference with the participation of the President of ECB J.-C. Triche dedicated to the Greek affairs. However, the announcements of the representatives of the German state authorities on the absence of the outline of such a kind have reasoned the sales-outs of ht euro. As known, different variants of relief action for Greece concerning the state financial rehabilitation at the EU summit that is going to take its place in Brussels today; though no decision has been adopted still yet, and all rumors are nothing more than speculation around this issue. Against this background the euro has decreased against both the US dollar and yen. No essential statistics was represented as for the Euro zone on Wednesday. Neither will it be published today. However, the economic-political news will entirely indemnify the absence of the macro statistics. The ECB monthly report will be represented. Besides, the market will find out the results of the EU summit i.e., what the Euro zone countries have decided to undertake as for the aiding for Greece. As it’s supposed at the market the European Union will undoubtedly intensify its potential targeting to avoid the default of the Greek sovereign debt; however, at the same time it raises the risks of the further decrease of the euro as the first will be connected to some variants of conditions extenuation in the crediting policy and also may establish precedents for other countries, which may turn out to be in the analogous situation in future.

GBP
   The British pound found itself under the pressure again and completed the session on Wednesday with the greatest possible losses against the US dollar among other majors. It should be mentioned that the sound economic results published at the last session didn’t become an encouraging factor for the investors, whereas the hints on the maintenance of the quantitative softening programs arouse very intensive sales-outs of the sterling. The British pound was traded almost without any changes after the publication of the data that demonstrated the rapid growth of the production in the processing branch and higher than expected manufacturing growth in Great Britain. In accordance with the represented data the production in the processing area grew up for 0.9 per cent m/m in December after the increase for 0.2 per cent m/m in November, at that the November data were revised to the side of rising. In the annual comparison the processing sector’s producing curtailed for 1.9 per cent, in November it was observed -4.9 per cent y/y. the forecasts expected that the production in the processing industry would increase for 0.4 per cent m/m and lower down for 2.9 per cent y/y in comparison with the same period of the previous year. Meanwhile, the British currency exceeded the sales-outs after the publication of the BoE Quarterly Inflation Report, where it had been pointed out the inflation in Great Britain will be lower than the targeting level even if the rates were kept at the current low recorded levels. Moreover, the Governor of the Bank of England m. King declared that it was early days yet to renounce the further alleviation as the economic perspectives were further very uncertain still yet. This very situation will obviously maintain the mood of the market players in negative tunes concerning the sterling. That’s why the GB pound will further decrease; furthermore, the anticipation of the elections in Great Britain also strengthens this uncertainty. No news concerning the economy of the “Isles” will be published today, and the sterling will keep itself under the influence of the foreign factors.

JPY
   The beginning of the trading session on Wednesday was on the enforcement of the yen against the US dollar amidst the profit fixation by significant investors and the favorable economic data. However, later the US dollar has got back the losses and fixed the plus summarizing the day. The harangue of B. Bernankey has encouraged the participants of the market to the opinion that the USA would be the first one that would start the stiffening after all. It has certainly enlarged the US dollar’s popularity at the trades on Wednesday. It’s a day-off in Japan, that’s why the yen will be further kept under the influence of the information from other regions of the world, especially from the Europe first and foremost as the Greek issue would be explored at the EU summit. If nothing encouraging comes from this summit the interest to the yen as a shelter-currency may be warmed up again, and the currency of Japan will renew its enforcement.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst