Last week the main market driver further stayed the departure from risks, amidst which the US dollar continued its enforcement against the Europeans and decrease concerning the yen. The “swords waving” from the side of the rating agencies for Greece and the British troubles, like to the Greek ones, add up to the political issues reasoned the negative attitude to the GB pound and euro, and that in its turn certainly meant the increased interest to the yen. Some cooldown to the warmed-over situation was contributed by the biannual report of the Head of FRS B. Bernankey, who had declared in the Congress about the intents to maintain the basic rates next to zero mark for a long time still yet. It has reduced the interest to the US currency a little and afforded grounds for the increase of the interest to risk. Nevertheless, summarizing the weekly trades the “buck” has fixed the profit as for the Europeans and significant losses to the yen. There were a plenty of news about the US economy, and the majority of them signaled rather the escalation of the troubles than the confident recovery. The précised evaluation of GDP for the 4th quarter turned out to be better than the advanced one. The main economic indicator was revised upward till +5.9 per cent q/q, though, as it was mentioned, for account of the retardation of the curtailing tempos of the commodity stocks from the side of the companies; at that the actual demand turned out to be worse than the primary estimation. The real estates market demonstrated a very poor dynamics as the sales wrecked in January both at the primary and the secondary market, and it is also together with maintained state benefits. The consumer sentiments for February suddenly showed the collapse in accordance with the data from the Conference Board. The primary jobless claims demonstrated the growth into the sector of 500 thousand maximums. The positive was observed in January orders for long-lived goods, as they grew up for 3.0 per cent m/m. Some improvement was fixed in the regions; however, not everywhere, as the provision managers’ indexes (PMI) of Chicago, FRB of Kansas-City and Richmond demonstrated the increase, whereas the worsening was stated in Texas following the data of FRB of Dallas. There is going to be much economic news this week; however, the main issue will be the employment area in the USA. The ADP data that predict the positive dynamics concerning curtail of the vacancies of the private sector in February, -10 thousand after -22 thousand in January will attract special attention. Another point of interest will be the number of the primary jobless claims, where also the shortage is expected to 480 thousand from 496 thousand. Finally, the Main Labor Report will certainly attract attention as the analysts come together in the presumptions that the Nonfarm payrolls will be in February worse than in January, -25 thousand after -20 thousand in January, and the unemployment level will grow again and achieve 9.9 per cent from 9.7 per cent. This information is planned for Friday as usual; heretofore the Institute of Supply Management’s indexes (ISM) both in the manufacturing and services, and also the manufacturing orders together with the demand indicators – the personal incomes/expenses and the consumer crediting will be the object of special attention.

EUR
   The issue of Greece as usual (for the recent times) pressed upon the European currency. The decision of the Fitch Agency to decrease the ratings of the 4 largest banks of this country elevated the apprehensions, and threatens of other agencies – S&P and Moody’s to decrease the sovereign rating exacerbated the situation even more. Against this background the common currency has rushed to new local minimums against the dollar and yen; however, as it turned out to be, this results were “relevant” for the first half of the week only, as even though the totals was far from being on the euro’s side, but the closing price was very narrow to the weekly opening of the market. To say it simply the losses of the euro were quite inconspicuous. Quite possibly, the investors are tired of all this debating around Greece; and the rhetoric of B. Bernankey concerning the low rates for awhile has afforded grounds for the warming up of the interest to risk and instigated the willing to fix the profit. The statistics of the Euro zone didn’t encourage to the opinion that the recovery was getting along with steady tempos. Even more, this statistics has determined more causes for pessimism as the GDP of Germany kept itself at the same levels; the households’ consumptions fell down for 1.0 per cent q/q, and the permanent investment – for 0.7 per cent. The “sentiment” indexes all over the Euro zone didn’t note the confident changes to the side of the increase, likely to the Ifo indexes as for Germany respectively; because the latter reflected the sentiments collapse. The companies’ crediting turned out to be for 2.7 per cent lower in January than a year ago all over the Euro zone. Meanwhile, the unemployment in Germany rose a bit. The consumer sentiments worsened in all and every leading EU economies in February and in the Euro zone in general respectively. The price dynamics sets mind on the expectance of further decrease of consumers’ optimism and private expenses accordingly. The downfall of the consumer prices proves that “the things have moved off the starting block”, and there’re development outlook. The dynamics of the manufacturing inflation’s growth encourages to such an expectance. The news set of the already started week may afford extra confirmations to the presumptions as for demand mentioned above as the PPI prices for January are expected with steady increase over EU and the consumer prices for February – with the retardation of the raising tempos. Furthermore, the retailing’s collapse is expected to be seen in the Euro zone in January, -0.3 per cent m/m, -1.6 per cent y/y, together with the increase of the January unemployment level in the Euro zone in general. The February ISM indexes both for the manufacturing and services of Germany as well as EU are predicted to be maintained without changes in the final estimation. The publication of the final estimation of the Euro zone GDP for the 4th quarter claims being the most important event of this week as it’s prophesied not to change the former results. Another claimant is the ECB meeting concerning the rates, where also nothing new is expected. However, the assurances to commitment to the rates at their current levels for a while still yet, which may come from J.-C. Triche now, likely to B. Bernankey, will note the changes as the market hoped for the rapid stiffening, in recent past anyway. It won’t certainly favor the warming up of the interest to the euro. Meanwhile, the general picture keeps the common currency within the pressure zone still yet, until the troubles in concerns of the Euro zone countries’ sovereign debts aren’t solved.

GBP
   The burden of troubles concerning the British economy and political situation in the "Isles" further stay the main factors of shaping the attitude to the sterling. The GB pound was further kept under the pressure during the whole week long in fact and fixed another impressive minus against the US dollar resulting that week. The extra argument to the sales of the "cable" was also the rhetoric of the members of the Committee for the Monetary-Crediting Policy of the Bank of England concerning high probability of the quantitative softening programs’ lasting considering the unsatisfactory tempos of the economic recovery. There was not much economic news, and for greater part they afforded ground for disappointing opinions. The main economic indicator – GDP of the 4th quarter was revised to the side of the growth but only for the quarter, +0.3 per cent, after primary +0.1 per cent, but the annual decrease rose till -3.3per cent, as earlier it had been declared about -3.1 per cent. The data about permanent investment took precedence of this information, as in the 4th quarter they fell down to 5.8 per cent q/q. The Banking Association reported about the collapse of the mortgage loaning in January, and that reflected on the home market prices – in accordance with the data from the Nationwide, in February the housing prices fell down. Besides, the termination of the tax abeyance for deals with some real estates objects in the end of 2009 began to influence upon the home market. This fact has certainly affected the demand in February negatively. Although, the retailing balance of February, following the report of the Confederation of British Industries (CBI), demonstrated a significant growth, but together with the increase of prices meanwhile represented earlier in the monthly news, the perspectives are seen as less encouraging. The great bulk of the economic news as for Great Britain was concentrated in the first day of the week and the month i.e., today. The data of the consumer crediting in January and mortgage lending in February together with the mortgage permissions for the same month will be represented. It’s expected that the news will demonstrate the negative situation in the crediting area that in its turn increases doubts in concerns of BoE neutrality maintenance next Thursday when the fate of the key rates is decided. Most likely, the rates themselves won’t increase, but the opinions about the capacity of the quantitative softening programs don’t presume such a decisive expectance. The money supply may also encourage the thoughts of this kind as it’s also going to be told on Monday and is expected with the next shortage. Further this week the publication of the ISM indexes in the economy for February will follow: the manufacturing may denote the decrease as the forecast suppose, but both the services and the development are expected with a little growth. In the end of the week the homes prices and producers’ prices indexes (PPI) will be published; here the growth is expected to be seen, but more modest than earlier. The fundamental data are most likely not to afford the arguments for confidence in the recovery processes’ hardening in the "Isles", and that doesn’t certainly add any positive under the sterling’s belt. At the same time, it’s reasonable to pay attention to the technical picture again – the occurrence of the serious supports/resistances for the GB pound and its oversold create good conditions for the profit fixation.

JPY
   The histograms of the currency pairs with the participation of the yen for the former week say that the investors didn’t “get away”, but in fact even “escape” out of the carry trade deals foundered with the yen. The mood determining the absence of the appetite to risk in the best way possible marked itself at the dynamics of the Japanese currency, which had enforced itself against the US dollar all over the rest of the “front”. The economic data were mixed, but to some extent they afforded grounds for optimism as both the export and import grew up in January: the enlargement in manufacturing demonstrated +2.5 per cent m/m; the increase was also observed in such a troubled area as the development as both the capacity of the new developments and the number of the development orders increased. The retailing grew up for 2.6 per cent y/y, but in this case the effective point became the services, whereas the downfall was observed in the supermarkets. However, the process causing the special anxieties of the state authorities i.e., the deflation pursues offensive; because the consumer prices excluding the recent data for the food products prices turned out to be for 1.3 per cent lower in January than a year ago. The economic estimation by the state authorities of Japan stayed the same i.e., the positive dynamics had been stated, but with less optimism as for the tempos than earlier. The statistics over Japan, which is going to be represented this week, will depict the state of affairs in the domestic unemployment in January as the forecast prophets the maintenance of the unemployment level at 5.1 per cent in other words, without any changes. It’s also predicted that the households’ expenses grew up for 2.5 per cent in January; and the salary’s level though stayed at the previous mark but with an essential retardation: -1.2 per cent, while it had been -6.1 per cent before. The changes of the reserve money’s capacity is expected with a little curtail, till 4.8 per cent y/y from 4.9 per cent y/y; that exactly suppose casting doubts on the relevance of the effects from the quantitative softening programs. Nevertheless, the economic statistics over the “Land of Rising Sun will keep itself beyond the sphere of influence upon the yen as usual; the driver will further be the level of the risks inclination at the market.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst