The American currency decreased at the trades on Tuesday concerning the Europeans and grew up against the yen while determining the situation of the raise as for the risks inclination. The publication of the minutes of the Reserve Bank of Australia’s meeting with the confirmation of the fact that RBA hadn’t thought better of further increase of the rates has given birth to the raise of optimism. Furthermore, the easing of tensions concerning the Greek troubles gifted more enterprise to the market players together with the willing to purchase risky assets amidst that the EU Ministers of Finances had managed to persuade the markets of the promptitude of aid for this country if it were necessary and also the facilitation of the compliance control of the obligation incurred by this country as for the budgeting deficit curtail. Furthermore, the recorded capacity of short speculative positions as for the European currencies, the euro first of all, might become a precedent for the profit fixation – which was as it should be at the trades on Tuesday. The US economic news has demonstrated quite not bad results in general as the repot of New York FRB showed the growth of the manufacturing index to 24.9 in February against 15.9 in January; by forecasted of the maintenance of the level at 16.0. The net purchases of the US long-term securities appeared to be in December a bit less in capacity than in November and amounted to 63.3 Billion of dollar compared to the purchases summed up to 126.4 Billion of dollar in November. Nevertheless, the trading balance deficit has been overlapped. This fact affords ground for considering the result as satisfactory. The data of the confidence of the American developers were also positive in February. The NAHB real estates market’s index grew up for two points and made 17 after 15 had been before. The news set as for the United States that is going to be represented today is quite fruitful for important information. The indicators both of the development sector and manufacturing will be published. The forecasts expect the raise of the new constructions’ number in January together with the shortage of the development permissions. The following figures are supposed to be: the new constructions’ capacity is 580 thousand after 557 thousand; the development permissions – 616 thousand after 653 thousand. The manufacturing of January is predicted to be seen with growth for 0.7 per cent. However, the attention of the investors will be attracted to the publication of the FOMC last meeting on Wednesday. The appearance of B. Bernankey that took its place last week returned to the market the opinion about the probable increase of the rates in a short run. That’s why the market quite possibly has the hopes to achieve something peculiar concerning this issue form the context of the minutes.
EUR
The common currency increased on Tuesday. The investors ignored the fact that no specific outline was represented in concerns of the Greek troubles, which had stipulated the supporting steps for this country. The EU declarations of the readiness to render aid to Greece to cope with the budgeting difficulties were enough to ease tensions. The European currency increased thanks to the strengthening of the risks inclination as the latter was risen by the RBA information firstly, and later on by the optimism splash at the US stock market and also the raw material markets. The probability of the support for this very raise might be also brought on by the investors’ willing to fix the profit. Last Tuesday the significant news events for EU were February data from the ZEW Institute. In accordance with the represented data the economic sentiment index fell down in Germany till 45.1 points against 47.2 points in January; whereas the forecasts expected the decrease to 41.5 by reason of Greece and also the apprehensions for some other countries of the unity. This indicator has fallen down to 40.2 from 46.4 before for EU in general. The current conditions index grew up in Germany for 1.8 point till -54.8 in February. It was spoken in the commentaries of the Institute’s representatives that the economic activity would demonstrate slight fluctuations around the current level. The EU economic news for today will be represented with the information about the state of affairs in the foreign trading – following the forecasts the trading balance surplus grew up in December to 5.0 Billion from 4.8 Billion of euro fixed before. This information will unlikely afford grounds for the response of the market of any nature in concerns of the common currency. The investors will obviously trade at the current session with caution of the USA where the minutes of the FOMC meeting are currently being prepared for publication.
GBP
The sterling was traded multidirectional on Tuesday; although it has finally fixed the convincing growth against both the US dollar and the yen. The raise of the wiling to risk amidst the increase both of the US stock market and the raw materials markets favored the warming up of the interest to the sterling. Before the beginning of the American session the information about the positive statement of profits from the largest British bank – The Barclays laid the foundations for the raise of the appetite for risks. The income of this bank doubled last year in comparison with 2008. Besides, the announced DCLG housing prices index for December demonstrated growth for 0.8 per cent m/m and 2.9 per cent y/y, while before it had been observed 0.6 per cent y/y. the British inflation data showed the continuation of the increase as the consumer prices index has grow up till 3.5 per cent against 2.9 per cent in December; while forecasted 3.7 per cent y/y. The result worse than forecasts even greater weakened the expectances in concerns of the Bank of England would have to increase the rates the current year; moreover, the Head of BoE M. King has emphasized that this very increase should be of the temporal nature only. The causes of the inflation increase are supposed to be the VAT increase, the petrol prices growth, and the rapid downfall of the GB pound’s rate. The unemployment data from the “Isles” together with the minutes of the British CB last meeting concerning the rates will be in the focus of attention today. The capacity of the jobless is predicted to mark the tendency to curtailing, and its level will never show any changes in December. The investors hope to gain the information about the monetary policy’s perspectives from the minutes; though the recent numerous announcements about the maintenance of the policy velvet seem to leave no doubts whatsoever. In regard to the GB pound its little increase against the US dollar is still possible during the current session. In the long view the sterling will probably be kept under the pressure. The neutral position of the Bank of England in concerns of the inflation also encourages such expectances together with the rest of the reasons.
JPY
The Japanese currency decreased on Tuesday – that usually signs about the common situation when the market starts to prefer the risk, and as a consequence, the interest to the yen as carry trade foundering currency increases. At the same time the losses of the Japanese currency weren’t significant as the coupon yield payment for the USA securities and their partial redemption have flattened, or, better said, balanced the purchases of the Japanese currency as the convert of the US dollar profits to the yen has taken its place. The statistics published today has demonstrated the decrease of the demand for the services in Japan in December; the activity index in the services that consists 63 per cent of economy decreased to 0.9 per cent m/m; whereas -0.2 per cent m/m were expected. The perspectives of the yen may be considered ambiguous enough. The government’s appliances that the new recession’s risks are retreating amidst the report published on Tuesday that had demonstrated the acceleration of the economic increase in the 4th quarter 2009 encourage the thought that the Bank of Japan will obviously abstain from further weakening of its policy. At the same time the deflation pressure proves the opposite probability.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
