The US dollar enforced itself against all high-profitable currencies in the beginning of Thursday session thereupon it had become known about the high inflation in China. The investors disturbed with the probability of the monetary-crediting policy’s stiffening in the “Heavenly Empire”, what would respectively mean the economic raise’s slowdown, and against this background they enlarged the purchases of both shelter-currencies – the US dollar and yen. However, later on the “greenback” has decreased and fixed a minus against the Europeans summarizing the day, though it maintained a little advantage concerning the yen. The causes for such a development of the situation may considered to be the publication of more favorable economic data in the USA and also the optimistic splash at the stock markets; although, as it seems, the beginning of another step of the profit fixation is in evidence since quite a steady enforcement of the “buck”. The US foreign trading data showed a sudden shortage of the trading balance’s deficit in January. The reason of it lies in a significant curtail of the petrol import as the capacities of purchases have reached the least possible level for more then a decade. These data demonstrated a deficit shortage for 6.6 per cent to 37.3 Billion of dollar from 39.9 Billion of dollar in December, at that the December result was revised to better side as it had been reported about -40.2 Billion of dollar. The forecasts expected that the foreign trading balance would sum up to -41.0 Billion of dollar in January. The employment data also turned out to be not bad as the number of the preliminary jobless claims curtailed for 6 thousand last week and made 462 thousand against 468 thousand in the previous period; however, the capacity of the secondary claims grew up for 37 thousand till 4 558 thousand from 4 521 thousand a week earlier. The news set of today includes the essential data; first of all it concerns the retailing indicators in the USA for February: the forecasts expect the capacities’ curtail for 0.1 per cent. Furthermore, the publication of the Michigan consumers’ sentiment index will follow, which is presumed to be seen with a slight increase; and also the commodity stocks of January, where the enlargement will probably be demonstrated for 0.1 per cent after -0.2 per cent in December. Generally speaking, it should also be mentioned that the macro statistics doesn’t promise any special support for the US dollar; the attention will be focused on the retailing, and if any surprises are brought to the table, by the way, it’s quite possible by reason of the weather conditions in the USA, the pressure upon the US dollar may go on.

EUR
   Thereupon impermanent losses against the US dollar in the beginning of the session on Thursday the common European currency has flattened out its positions and completed the day with growth. The support for the euro was caused by the data from the United States that instigated the increase at the stock market. No significant economic statistics as for the Euro zone was published yesterday. The only ECB monthly report might be accentuated among the news as it stated the expectance of the unsmooth economic recovery in the Euro zone and also a moderate raise of the gross domestic product in 2010. Besides, it has also been announced that under the conditions of further uncertainty ECB would stick to a gradual resignation of special measures of the liquidities’ assignation. In general, no fresh news was pronounced; the report was similar to the commentaries of J.-C. Triche made at the press-conference after the key rates’ pronouncement. In consonance with this report the German Institute of the Economic Researches has reported that the German economy would recover with moderate tempos in the current year and also in next ones. The forecasts resolve themselves to the growth of GDP for 1.2 per cent this year; but the expectances for 2011 are much less than pinky as it had been declared before, because the forecast is decreased to 1.8 per cent against 2.0 per cent in the December press release. The information about the establishing of the European Currency Fund was also mentioned. Most likely, though J.-C. Triche stated that ECB didn’t deny this idea offhand the sidelines of the European regulator hold no brief concerning this idea apparently. The Member of the ECB Board I. Marsh said that even if this foundation had been approved it could never recon on the financial resources of the European Central Bank; another violent disagreement was spoken out by two German representatives in the ECB Governing Council – J. Stark and the Head of the Bundesbank A. Weber. There will be not much news as for the Euro zone today as well. The manufacturing data for January are going to be published. The forecast expects +0.8 per cent m/m, -1.0 per cent y/y; that is much better than the former results, which demonstrated -1.7 per cent m/m, -5.0 per cent y/y. Most probably, the euro may get a support and also continue its increase that has been started against the “buck” in the previous sessions.

GBP
   The British currency travelled the same way as the euro against the US dollar in the trades on Thursday. The falling down in the beginning of the session due to the news from China changed by the growth because of the splash of optimism at the stock markets and also the news from the United States. The report of the Bank of England about the expectations of the inflation is also named among the supports for the sterling. According to this research the inflation at the level of 2.5 per cent against 2.4 per cent earlier is expected in Great Britain. Quite possible, in some degree it influenced upon the “cable” purchases, but very slightly as it seems. Most likely, the massive decrease of the “Briton” in the beginning of this week provided very attractive conditions for the profit fixation. Against this background the sterling fixed a plus against all majors. Today news tape brings no economic data as for the “Isles”. However, there’s a political component: the Member of the Committee for the Monetary Policy of the Bank of England Spenser will come out. The speeches of the Bank of England functionaries very often make some pressure upon the “cable”, but if to remember the recent announcement about the absence of necessity of the quantitative softening program’s widening, it’s possible to suppose the changes of direction in the rhetoric of the British regulator’s top management of. In this forefront the GB pound may get additional support and continue its growth.

JPY
  The anxieties that the monetary-crediting policy may be more hardened in China have provoked the purchases of the shelter-currencies. Against this background the yen increased in the beginning of the session, but later rebated its achievements and completed the day with a little minus to the US dollar. At the same time its losses against the Europeans were much more significant. Obviously, the revision of Japanese GDP to the side of decrease was accepted adequately by the market. However, as it seems, the main factor of the pressure upon the Japanese currency is still the expectations of further softening of the monetary-crediting policy by the Bank of Japan. Next week BoJ will decide the issues as for this matter and the investors fear of the twofold enlargement of the crediting program’s volume (till 10 Trillion of yen), which the bank began to implement in December. The perspective of lingering deflation encourages the expectations of the exact kind. The information published already today has demonstrated that following the revised data the Japanese manufacturing increased for 2.7 per cent m/m in January against 2.5 per cent m/m represented earlier. As for the yen perspectives they still keep themselves to large degree on the expectances of derogation. The appliances of the Prime Minister I. Khatojama that it’s necessary to adopt measures against outrages enforcement of the yen, and also the appearances of the Head of the Bank of Japan M. Sirakawa that the monetary-crediting policy must stipulate the demand, encourage the expectances of such kind.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst