The American currency continued its own muscle-flexing as for the Europeans on Thursday session as well. However, the “buck’s” enforcement was often interrupted by its sales as the market was certainly insecure of the “bears” would have enough strength to breach through the powerful supports at the local minimums; whereto the price had just approached. This diffidence was enforced at some moment with the economic news that had represented the worsening of the affairs in the employment. The preliminary jobless claims grew up for 31 thousand and amounted to 473 thousand last week, at that the growth was expected for 5 thousand only. Moreover, the data for the previous week were revised to the side of increase till 442 thousand form 440 thousand. The FRS dropped a curtain as for the issue of preferences at its last meeting when it increased its discount rates for 25 percentage points till 0.75 per cent. Due tot his very news the US dollar has skyrocketed till new maximums against all its “opponents”. Meanwhile, not all statistics compassed to disappointment in concerns of the “greenback”. The producers’ prices index (PPI) grew up higher than forecasted, for 1.4 per cent m/m, 4.6 per cent y/y; whereas it was expected 0.8 per cent m/m, 4.4 per cent y/y. As well as the analogous dynamics was observed at the core PPI (excluding the food products and fuel) – 0.3 per cent m/m, 1.0 per cent y/y, alongside to the expectances of 0.1 per cent m/m, 0.8 per cent y/y. The picture of this kind enforced the opinion about the probable stiffening of the policy from the side of FRS greatly and supported the US dollar. The news from the regions appeared to be quite not bad. The business behavior index from FRB Philadelphia demonstrated the growth to 17.6 from 15.2; while it was predicted to be seen 17.0. Not much statistics is going to be represented today. The consumer inflation for January will be published. The consumer prices index (CPI) is predicted with the increase for 0.3 per cent m/m, 2.8 per cent y/y; the core indicator – for 0.2 per cent m/m, 1.8 per cent y/y. Certainly, such a result couldn’t make any damage for the “buck”. If the fact is better than the forecast, like to PPI the “greenback” will get another portion of support.
EUR
The anxieties in concerns of the Euro zone countries’ budgets haven’t been chased away. However, the common European currency was resisting to the “bearish” pressure for a long time enough and was traded within the range next to the daily opening price. Nevertheless, the sudden “gift” from the FRS has cracked down the last doubts and the common currency has collapsed to its new minimums. No EU economic news had been published before the FRS information was presented. That’s why the positions of the common currency were under the influence of the exterior news. The news set of the current day includes the business behavior data both in Germany and the Euro zone in February considering the manufacturing and the services as well. The forecast presume that the services index will increase not much, to 52.5 from 52.2 in Germany, and to 52.6 from 52.5 in the Euro zone. But as for the manufacturing they’re a little more self-confident – Germany will have 54.1 after 53.7, and the Euro zone will face 52.8 against 52.4. Furthermore, the dynamics of the producers’ prices index in the EU largest economy for January will be declared. The monthly prices growth is expected for 0.3 per cent m/m, and the curtail of the deflation processes per annum should be to -3.9 per cent y/y from -5.2 per cent y/y which had been before. The macro statistics of the current day is presumed to make no influence upon the market; the investors will probably continue the euro’s sales amid impressions from the FRS steps.
GBP
The British currency resided under the pressure the greater part of the trading on Thursday; however, it didn’t hurry to fall down while demonstrating the splashes of growth grounded at the unfavorable news from the USA. The final collapse of the sterling happened after the announcement of the increase of the discount rates in the United States. This very news item has decreased the currency of Great Britain till its new minimums. Before the publication of the American news the pressure upon the “cable” was caused by the data of the domestic economy as the indicators stated that the situation concerning the British state sector’s deficit is gathering pace, because the governmental borrowings amounted to 4.3 Billion, while it was expected -2.8 Billion of pounds. The significant decrease of the taxation incomes was also stated despite the increase of VAT. Besides, after the report form BoE the corporative crediting shorted in December with the maximum recorded tempos in the annual comparison, and it was an analogous monthly dynamics. The crediting capacity shorted in December for 8.1 per cent after the decrease for 7.7 per cent in November. No wonder, the advantage data of the monetary supply noted the retardation of the growth as it was observed only +5.1 per cent y/y in January after +6.6 per cent y/y in December; though the money supply increased for 0.6 per cent monthly. Not much economic news from the “Isles” will be represented today. The results of the retailing in January are going to be published. The forecast expects their downfall, -0.5 per cent m/m, .1 per cent y/y, after 0.3 per cent m/m, 2.1 per cent y/y, what is quite reasonable if to recall the increase of VAT. However, if the result appears to be worse than the forecast the pressure upon the sterling will increase.
JPY
The messages from the Bank of Japan concerning the liquidities increase program would be ceased supported the yen on Thursday trades for quite a long time, and this currency was enforcing against the US dollar. But, as it turned out to be, the result of the previous session was foreclosed in the FRS lobby. After the announcement of the discount rates increase, the pair of USD/JPY grew up to its new local maximums. The data as for the Japanese economy already published today demonstrated the lowering down of the business activity in the manufacturing. The December index for this sector denoted -0.3 per cent m/m, compared to 0.1 per cent m/m earlier. The monthly report of the Bank of Japan was also presented to the market attention: the regulator maintained without changes the economic evaluation and stated that ‘the economic climate in Japan will probably continue to improve, but the increasing tempos will stay temperate”. However, it’s also necessary to take into account the technical factors. The pair of USD/JPY exercised the line of descendant trend, which take its beginning from April 2009, and not long ago, in January of the current year, passed the endurance checkup. As like as not, the “bulls” may go away with a flea in ear this time as well.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
