On Wednesday the trading was carried in a frosted manner and within narrow ranges with a slight pressure upon the US dollar. T was caused by the expectances of the B. Bernankey’s appearances and the presumptions as for the possible response of the market to the announcement of the Head of FRS in concerns of the discount rates’ increase does never implicate the increase of the key rates in the nearest future. Alongside with the expectances of the US dollar’s sales-outs there were also the opposite opinions that presumed the “greenback” would get the support inasmuch as the perspectives of the US economic recovery’s lasting. The Head of FRS has really declared that the economy of the USA still needed the extremely low rates during several months at least. Thereupon the rhetoric of this kind the US was exposed to the sudden sales-outs, however for awhile. The fact that B. Bernankey appointed to a living discussion of the instrument intended to be implemented in the stiffening of the monetary-crediting policy from the side of US CB has probably constrained the market and the US dollar began to comeback to its initial positions against all majors. Quite possibly, the investors’ mood was spoiled by the data about the sales at the primary home market in the USA for January as well, because they fell down suddenly. In accordance with the represented data the houses’ sales shortened for 11.2 per cent and made 309 thousand in a year. The forecasts expected the growth for 3.8 per cent till 355 thousand. At that the forecasts for December also decreased for 3.9 per cent according the revised data. It has obviously put a freeze on the willing to depart into the risky assets. As for the today news tape concerning the US economy the special interest will be attracted to the data of the durable goods’ orders in January as the it’s predicted to observe the growth for 1.5 per cent after +1.4 per cent before. The attention will be put to the preliminary jobless claims for last week as well: there will probably be curtail till 465 thousand after former 473 thousand here. However, the most important event of the day will be the speech of B. Bernankey after all.
EUR
The common European currency was remarkable for its greater steadiness as for the US dollar than other majors on Wednesday session; moreover, it has fixed a little profit to the “greenback”. It was probably favored with the production orders of the Euro zone in December as they demonstrated the most rapid annual runup for two years. The orders’ statistics showed the increase for 0.8 per cent m/m and for 9.5 per cent y/y; whereas it was +2.7 per cent m/m and -0.6 per cent y/y in November. It has probably invigorated the market and amidst the maintained negative concerning Greece, where the state authorities appointed that the bonds tender in amount of 5 Billion of euro couldn’t be held until the strike actions wasn’t ceased, have supported the euro. However, this announce of the Greek state authorities enlarged the ambiguity and encouraged the opinion that the investment wouldn’t be settled anyway: due to the latter it certainly worsened the attitude to the common currency. The rest of the news kind of turned out to be neutral i.e., no changes were depicted. The précised estimation maintained the German GDP at the previous level, 0.0 per cent per quarterly and -2.4 per cent per annum; but the decrease of the domestic demand was mentioned at that; and the consumer confidence index didn’t also change in Germany. The Gfk report for March has decreased this indicator for 0.1 point till 3.2 point. The February data were revised to 3.3 from 3.2 reported before. The comments added that the expectance of the unemployment growth’s lasting is initially maintained. The main part of today news from the European continent will be represented with the “sentiment” indexes for February, which are expected with the improvement of the values – the business behavior index is predicted at -1.05 after -1.12; the manufacturing confidence index at -13, while it had been -14 before; the consumer confidence index without any changes; and finally, the economic confidence index with growth to 96.4 from 95.7. However, more attention will be paid, as it seems, to the information about the money supply represented by M3 aggregate. The expectance of any changes’ absence, 0.0 per cent in January and the decrease for 0.1 per cent during 3 last months may cause damage for the euro if they’re proved. Besides, the market will pinpoint at the unemployment in Germany for February as no changes are expected here and the level may be further kept at 8.2 per cent; but at the same time there’re some suspicions of the increase’s acceleration. If the before mentioned reflects in the data the extra pressure upon the euro will be guaranteed.
GBP
The GB pound’s behavior was analogous to the euro’s movements at the trades on Wednesday. The currency of Great Britain increased a bit against the US dollar due to the expectances of the B. Bernankey’s appearance, and incurred to the splash of purchases amidst his announcement of the rates’ maintenance at low level for a long time; but later it decreased and fixed the negative result summarizing the day. The burden of its own economic troubles together with the political situation in the “Isles” obviously continue to make pressure upon the sterling as the economic recovery in Great Britain is utterly unsteady; and the apprehensions that the parliamentary elections, which are going to be held in summer, won’t lead to formation of the majority and will increase the threatens to the successful solving of the issue as for the budgeting deficit curtail, further maintain the “cable” as a miserable asset for purchases. On Wednesday no news were published as for the British economy; though today it’s sound to pay attention to the Nationwide’s data: the homes prices index is predicted with growth till 10.0 per cent y/y. The CBI overview about the retailing in February is also amazing and it predicts the improvement to -1 from -8. These economic forecasts may possibly be labeled under the belt of the sterling; however, the scheduled appearance of the Head of BoE M. King carries threaten of the extra pressure upon the sterling as the speeches of the chief banker of England include the negative information for the British currency as a rule.
JPY
The Japanese currency continued its enforcement. The investors’ unwilling to risk, that was maintained at the market, continues to provide the increase of the Japanese yen against other currencies. The economic data represented on Wednesday were not bad; and that might support the yen additionally. The splash of the Japanese currency’s purchases was observed during B. Bernanckey’s appearance as well. At that, the participants of the market weren’t embarrassed by the announcements of the Deputy Head of the Bank of Japan H. Yamaguchi, who told that the Central Bank was ready to the resolute actions at struggle with the deflation that had certainly determined the probability of new "interventions" of the Bank in the quantitative softening program. However, that didn’t afford grounds for the sales-outs of the yen, what becomes the most reliable shelter-currency again. In general, the diminishing of hopes as for the Federal Reserve will raise its rates affords grounds for supposing the continuation of the observed increase of the yen against the US dollar.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
