The session on Monday was remarkable for dull and sluggish trades. In relation to the celebration of the Lunar New Year the majority of the Asian markets were close. Alongside to it the American market didn’t also work by reason of the President Day’s celebration. These events set seal on the Monday trades. The major currencies’ pairs resided within very narrow ranges. The dull news background hasn’t also provided the intensity of the market as the significant information was published in Japan only. Finally, the two-days-summit of the EU Ministers of Finances dedicated to the issue of the financial aid for Greece wasn’t favoring the market activity as well. Nevertheless, the US dollar has fixed a little plus against the Europeans and slight losses as for the yen. Not much significant information concerning the US economy is going to be represented today. It’s the NAHB development market survey for February, which is predicted to see with the growth of the indicator, till 16 points after 15 in January. The data of the net influx of the foreign capital for December are forecasted +40/+50 Billion of dollar. Moreover, Tuesday contributes a political component as well – it’s a speech of the member of FOMC Hennig who has recently approved himself as a “hawk” due to his announcement of the necessity to begin the stiffening of the policy. The statistics outlined to be published today won’t obviously afford grounds for the disappointments as for the “buck”. That’s why the US dollar will probably further find a real market. Moreover, the Greek troubles, the stiffening of the monetary policy in China, and finally, the hints from the side of B. Bernankey on the possible increase of the rates together increase the popularity of the “greenback”. The extra argument for the support of the US dollar as a shelter-currency is the recently appeared reports that the Dubai World Company hadn’t solved its debts troubles and failed to reach the agreement about the restructuring with its creditor-banks. The only risks for the US dollar may proceed from the Ministers of Finances’ summit if certainly the issue of the financial aid for Greece will be solved.
EUR
The day-off in some Asian countries and also in the USA together with the summit of the EU Ministers of Finances as for the Greek troubles were enough causes for the euro to be traded within very narrow ranges against all majors and to keep itself at one and the same level in its controversy to the US dollar. Frankly speaking, it hasn’t prevented the common currency from fixing a slight minus all over the “front”. As it follows from the opinions of the market players the two-days-meeting of the Minister of Finances, which is going to be completed today won’t afford grounds to the investors for changing their attitude to the common currency. Obviously, such expectances are reasoned by the former Thursday, when the leaders of the European countries hadn’t justified the hopes and failed to represent the plan of the financial aid for Greece. Besides, as it’s known, some EU countries don’t feel a fierce desire to render prompt assistance to this country. Obviously, as it may be generally concluded from the speeches of some functionaries in the Euro zone already, the European Union would offer to Greece to make put all its exertions for the way out of the current situation; thereupon only the rendering of the aid started. If it happens so the euro will be further sold and it’ll become clear that there won’t be a rapid improvement of the present state of affairs. Except for the risks mentioned above, the EU economic news going to be published today won’t also provide an uphear picture as the ZEW sentiment indexes for February may appear to be within the negative dynamics. It’s an extra argument for the pressure upon the common European currency.
GBP
The GB pound didn’t make an exception and was also traded within a little price range against the US dollar and other major currencies at the trading on Monday. However, it should be mentioned that the efforts to start intensive purchases and sales were observed at the pair of GBP/USD; though it was a consequence of the technical factors and didn’t achieve any long-term pulse. In the beginning of the trading session as or Great Britain the Rightmove Company’s data of the housing market for February were published. In accordance with represented information the residence prices increased against, even more, the most rapid tempo for almost three years has been observed. The housing prices index grew up for 3.2 per cent m/m and 6.1 per cent y/y. In December 2009 these indicators marked 0.4 per cent m/m and 4.1 per cent y/y. Such a dynamics encourages the apprehensions that another “housing bubble” is being blown up in the “Isles” at the very moment. If this information finds its confirmation the attitude to the GB pound may worsen even more. Incidentally, these data haven’t provided any support for the “cable”, and the sterling decreased after their publication. The dynamics of the consumer inflation for January will be represented concerning the British economy. Both the consumer price (CPI) and the retailing prices (RPI) indexes will be publicized. Both of the indicators are predicted to fix no changes per month, 0.0 per cent m/m; whereas per annum the growth would continue: CPI is to show 3.6 per cent y/y after 2.9 per cent y/y, and RPI – 3.8 per cent after 2.4 per cent y/y before. Nevertheless, it’s next to impossible for the market to show any response for these data after the BoE Inflation Report published recently. In general, as it’s possible to presuppose the reasoned prerequisites for the expectance of the change of the sales-outs’ leader at the currency market i.e., the euro may be superseded with the British currency. The results of the recent public opinion polls prove the probable absence of the majority as a result of the parliamentary elections and the exception for the possibility of any official coalitions’ shaping. Such a probability puts in jeopardy the solution of the issues in concerns of the budgeting deficit’s curtail, which resides its recorded maximums in Great Britain; and it’s a clear threaten for the sovereign rating of the country in other words.
JPY
Despite the other regions, the important statistics was published in Japan. The Japanese economy increased with more rapid tempos in the 4th quarter then expected. The domestic gross product has increased for 1.1 per cent q/q, and for 4.6 per cent y/y. The forecasts expected +0.9 per cent q/q and +3.63 per cent y/y. Later the trades were flowing very dull, by reason of little volumes of liquidity; however, the acquired preference against the US dollar the yen has maintained till the end of the session. No news from Japan is planned for publication today. Most likely, the yen will be traded under the influence of the exterior information, in particular from the Europe concerning the Greek troubles, and based upon the expectations of coupon yield payment upon the US T-Bonds. If it’s hard to presuppose anything concerning the influence of the information from Europe; the events from the USA may provide the support to the yen as the repatriation of the profits may reason the sales of the US dollar for the yen.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
