The American currency enforced itself again, though the Thursday growth of the “greenback” wasn’t as absolute as at the trades of the previous sessions. The first half of the trading day was mainly the pressure on the “buck”. The correction of the positions in the anticipation of the EU summit together with the later information about probable reaching a consensus concerning rendering aid for Greece, and also the appearance of the Head of FRS have jointly favored that. The Chairman of the Federal Reserve System of the USA B. Bernankey has confirmed the necessity of maintenance of low interest rates for a long period of time during the Congressional hearings. That fact that B. Bernankey was speaking about the dullness of the US economy much more than the exit strategies, which should have been the principal matter of his speech, has caused the strengthening of pressure on the US dollar. The claims about the necessity of maintenance of the velvet policy made by the Head of FRS Cleveland S. Pinaltoe might also become the extra arguments for the sales of the “buck”. However, the “greenback” regained its dominant positions against the European currencies till the end of the day; because the relevant doubts as for the results of the EU summit, the default of the US stock market at the complete of the session, and also the growth of the United States Bonds’ profitability have together warmed up the interest to the US dollar against the Europeans. As for the controversy between the “buck” and the yen, the first became self-confident in the beginning of the European session already. There wasn’t much news concerning the economy of the USA. The publicized capacity of the primary jobless claims for last week curtailed for 14 thousand and amounted to 442 thousand. This result turned out to be better than predicted as the forecasts expected 450 thousand of claims. The decrease was also observed as for the number of the secondary claims, because here it was -54 thousand, and that shortened the general quantity till 4.648 Million. The data of the FRS Kansas-City manufacturing activity report within the responsibility zone of this bank demonstrated that the purchasing managers’ index (PMI) made 18 in March against 19 in February, however, the annual index grew up till -1 from -9 before. The advancing indicators, which compound the general indicator of the activity, afforded ground for optimistic prospects as the index of new orders rose to 12 from 11 in February, and the employment index grew up till its biennial maximum i.e., till 3 from -4. The final estimation of the US GDP runup for the 4th quarter may be considered as significant information of today, because it won’t probably denote any changes and maintain its former level of 5.9 per cent according to the forecasts. Another item of important news is the Michigan consumer confidence index for March, where the figures set mind on the optimism as they presume the growth till 73.0 from 72.5. Most likely, the US dollar will turn out to be under the descending pressure due to the predictable results of the EU summit, which could announce the settlement of the issues about the assistance for Greece, and also the investors’ willing to fix the profit.

   The euro experienced the support and was increasing at the stock market during the first half of the trades. The changes of the tone of the German Bundeskanzlerin A. Merkel, who has declared that the EU countries may get over the consequences of the crisis through joint efforts only, moreover, Greece might reckon upon the double assistance – not only from the EU countries, but also from IMF, have caused the purchases of the common currency. Furthermore, the announcements of the President of ECB J.-C. Triche that the bank would further grant credits upon the security of the debt liabilities of Greece next year also provided a good tone. However later, that same J.-C. Triche, who was speaking in the public several times on Thursday, has also provided the return of the pressure on the euro by means of his announcement that the participation of IMF in the processes of rendering aid for Greece was undesirable and negative moment. Not only the above mentioned fact, but also the default of the stock market in the United States, and finally, the wait and see attitude of the traders got back the common currency to the decrease up to the end of the trades. Besides, the difference of profitability between the EU and US Bonds, which is currently in favor of the US dollar, has determined the warming up of the investors’ interest to the latter. The economic data all over the Euro zone have never encouraged the opinions about the steady process of the recovery as the crediting in the private sector was dull during February, and the borrowings curtailed again, for 0.4 per cent y/y, since after the decrease for 0.6 per cent in January. The crediting capacity for the non-financial institutions fell down for 2.5 per cent y/y in February, while it was observed not less impressive default, -2.7 per cent in January. Certainly, the money supply shortened. The M3 aggregate demonstrated -0.4 per cent in February, whereas more positive result was observed in January, +0.1 per cent. That’s why the raising of the interest rates should obviously be postponed in the Europe as well. The dullness of the banking crediting has strengthened the opinion of the market that ECB had no reasons to consider the issues connected to the raise of the interest rates. No essential news about the EU economy is planned for today. At the same time, the EU summit’s result will attract attention: if the decision of the Greek questions is surely got the euro may happen to be in the forefront of the purchases.

   The movements of the British pound were just the same as the changes of the other majors against the US dollar at the trades on Thursday, like to the causes for the increase/decrease of profits during the session. Obviously, besides the support for the “cable” was also provided by the good data about the retailing in the “Isles”. The information, which was represented yesterday, demonstrated that the retailing in Great Britain increased for 2.1 per cent in February, alongside to the prediction of growth for 1.7 per cent. In annual comparison that indicator grew up for 3.5 per cent. However, the optimistic splash, which has happened to be since after that information, was restricted by the disappointing updating of the previous data; because the January indicators were revised to the worse side even more – the decrease in the first month of the year was for 3 per cent m/m, whereas it had reported about -1.8 per cent m/m earlier. Obviously, the factors that specify the situation concerning the economic perspectives of Great Britain have also favored the decrease of the GB pound. It runs about the fact that on Thursday the Minister of Finances A. Darling made commentaries concerning his decision to reject the rapid decrease of expenses for the purpose of curtailing the budgeting deficit. His announcements resolved them to that the resignation of the economic support in the current moment might expose the recovery to the risk. The English of this is: it was quite possible to hear the hint on the troubles in the economic recovery and also to suppose the possible prolongation of the quantitative softening, in spite of the assurances of the British government about the shortening of the borrowings. Obviously, the budgeting revenues further stay dull amidst the slowly recovering economy; consequently, the questions of its further stimulation are still relevant. The data about the capacities of the commercial investments in Great Britain for the 4th quarter are going to be represented today. The picture is far from being rosy here. The previous result has denoted -5.8 per cent q/q, -24.1per cent y/y, neither improvements are expected after the adjustment as it will probably be -5.6 per cent q/q, -23.9 per cent y/y; certainly, that can’t help to improve the opinion in concerns of the sterling. Although, today the most important factor of influence upon the market is the decision of the EU summit, and the GB pound won’t become exclusion. The positive results concerning the Greek issues will provide the support, while the negative ones will cause the pressure. However, the latter will possibly be not as powerful as before; because of the reason of the significant supports’ sector for the pair of GBP/USD.

   Thereupon a slight enforcement by reason of the profit fixation at the pair of USD/JPY the Japanese currency continued its decrease as for the US dollar and completed the Thursday trades next to the new local minimums. The raise of profitability was observed at the auction biddings both for 7-years T-Bonds and 5-years ones, which were placed on Wednesday. That has certainly enlarged the sales of the yen for the US dollar. In other words, the investors considered the investments into the United States securities through the Japanese currency foundering transaction attractive. Since after the auction for the sales of the 7-years US T-Bonds the yen was denoted at the maximum i.e., 92.85 after 92.15 on Wednesday. The data, which have already been published today, demonstrate the prolonging and worsening deflation processes in the domestic economy as the consumer prices index (CPI) marked -1.8 per cent in February, at that the core indicator of the consumer prices showed -1.2 per cent y/y. The prices in Tokyo also decreased in March as the consumer prices index for the capital denoted -1.8 per cent y/y. The situation of this kind does never set mind on the expecting the support for the yen by any means, at any rate concerning long term. The current positions of the Japanese currency will depend upon the European decisions during today session. The negative outcomes for Greece either the absence of any peculiar measures aimed to the dealing with the troubles of this European country may instigate the impulse of the escape out of risk, and that will consequently determine the enforcement of the yen.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst