The US dollar maintained its leading positions on Tuesday trades, but this time not only the sterling turned out to be under serious pressure, but also the euro’s sales-outs against the Us dollar were more significant than during the previous session. As a result the “greenback” has fixed the profit against the Europeans but gave up the yen. Probably, the former session may be nicknamed “The Rating Agencies’ Day”, as the latter greatly influenced the currency market with their declarations. The report of the Fitch that the rating of Portugal was under the threaten of decrease, and also the warning of the Moody’s Agency about the risk of the British banks’ rating decrease have assisted the “bulls” as for the Us dollar to support the American currency; but not only the above mentioned was on the “greenback” side. The unfavorable British economic information has also encouraged the “buck” purchases. The US dollar’s dullness against the yen is probably connected to the Japanese companies’ profits repatriation in the anticipation of the fiscal year’s end, which is to be finished in last day of the current month. No significant US economic statistics was published. The economic sentiment index of IBD/TIPP demonstrated lowering down till 45.4 from 46.8 alongside to the forecast expected the growth. As for the political events the speech of the President of FRS Chicago Ch. Edwance should be mentioned as he had declared the probable beginning of the monetary-crediting policy’s stiffening from the side of the United States’ Central Bank in 6 months. The appearance of this very functionary has made no influence upon the events’ development. The news set of today is more fruitful and interesting. The gross supplies’ data for January are going to be represented to the market, they’re predicted with growth for 0.2 per cent after -0.8 per cent before, and also the US Monthly Budgeting Report for February. The great increase of deficit is foreseen here, -210 Billion of dollar, whereas it had been -42.6 Billion of dollar in the previous month.
EUR
The Fitch Rating Agency helped to increase the pressure upon the common European currency again due to its manifest that the Portuguese rating was under threaten of decrease, moreover, Spain was also mentioned. Besides, the sales-outs of the euro were processed amidst the circumspection caused by the investors’ expectances of the outlined summit of the Prime-Minister of Greece and the President of the USA B. Obama and the US Minister of Finances T. Geitner. No significant EU news was on Tuesday; but the data of the number of the corporative collapses in Germany for December might be mentioned. As this information shows the indicator grew up for 15.5 per cent at once in comparison with the like period of the previous year; and the number summed up to 2 583. The capacity of those who took the benefit of the bankrupt grew up for 6.9 per cent last month i.e., the dynamics is far from being positive. The total capacity of the collapse declarations registered in 2009 exceeded 8.5 Billion of euro. The economic data going to be represented today hold the information about the foreign economic relations of Germany in January. The trading balance surplus is expected to be seen without any changes, at 16.7 Billion of euro; at that both the import and export curtail, whereas the export deliveries incurred even greater curtail. The current transactions account balance’s data are also going to be published; the surplus’ shortage is expected to 15.0 Billion from 20.6 Billion of euro here. These data are most likely to make no influence upon the market; though alongside to the results worse than forecasts may add to the euro’s problems. The speech of J.-C. Triche is worth noticing, which will already have occurred during the American session and may implement some corrections to the market events if it holds something peculiar concerning the budgeting troubles of the European block.
GBP
The GB pound again, the second session running, turned out to be among the most suffered majors against the US dollar. The RICS report proved that the housing prices index for February made up to +17, and that turned out to be the least possible level from August 2009, when it was +9.4, at that the analysts expected +32in February. Investors responded with the sterling’s sales, and that encouraged the opinion about the distinctly negative attitude to the GB pound amidst the anxieties concerning the British economy. Furthermore, the enforcement of the negative opinion as for the GB pound was also promoted by the Moody's & Fitch Rating Agencies, which expressed the apprehensions concerning the perspectives of the sovereign credit rating of Great Britain and possible further rating decrease of the British banks. More over, the data of the foreign trading turned out to be far from prominent as the foreign trading deficit of Great Britain in December increased amidst the significant growth of import, which exceeded the growth of the export. In accordance with the represented data, the foreign trading deficit increased almost to 8 Billion of pound (7.98 Billion) against 7.3 Billion of pound in November; by the way, the forecasts’ expectations resolved themselves to the deficit’s shortage till 6.7 Billion of pound. As a result, the sterling collapsed and approached to its local minimums denoted in the beginning of the current month. Today information will illustrate the state of affairs both in the manufacturing and the processing production in Great Britain in January. It’s supposed that industrial production increased for 0.3 per cent m/m and -0.8 per cent y/y, while in December it was 0.5 per cent m/m, -3.6 per cent y/y; and the processing sector – for 0.2 per cent m/m, -1.4 per cent y/y, alongside to 0.9 per cent m/m, -1.9 per cent y/y in the previous month. The positive dynamics of the annual comparison may provide some support for the “cable”; however, most likely for a while, as it won’t be enough to change the general mood in concerns of the British currency.
JPY
The Japanese yen got some support at Tuesday trades. As like as not, the causes for it were the repatriating cash flows in the end of the year. As known, March is last month of the fiscal year in Japan; and in the anticipation of statements generation the profit received abroad is transferred into the country. Against that background the market will be traditionally concern the Japanese currency with due diligence as the probability of the yen’s massive purchases greatly increases. At the same time the deflation troubles and the measures taken by the Bank of Japan aiming to struggle with it determine the high probability of increasing of the special crediting program for the Japanese banks, and that in its turn speaks well for probable sales-outs. To say it shortly, the Japanese currency’s current state turns out to be ambiguous, but nevertheless, in a greater degree encourages expectances of its weakening. The Japanese economic news published already today demonstrated that machine building production orders index fell down for 3.7 per cent, and that was less than forecasted -4.1 per cent. Besides, the corporate products’ prices index for February has also been represented; the indicator has fixed the retard of the deflation processes as it was reported about -1.5 per cent y/y against -2.1 per cent y/y in January.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
