The enthusiasm, which sparked last Friday by reason of adoption the Greece rescue outline, caused the opening of the Monday session with the gasp against the US dollar. Nevertheless, the development of further events stated that the investors kept enough doubts and also they haven’t been ready for high level of confidence to the euro yet. The low level of trading volatility, which, in fact, was carried within the narrow ranges against the Europeans and yen, served as the evidence of such tone of the investors. The market obviously needs some extra factor to make sure that the solving of the Greek troubles meets positive and steady grounds. The Greek Bonds’ auction, which is going to take its place till the end of this week, will probably prove this. As a result of everything mentioned above, the first day of the week has completed with the neutral positions of the US dollar against both the euro and yen, but with relatively slight losses as for the GB pound. The “greenback” got the support in its controversy to the yen due to the high probability of the American assets, which may be a target for massive purchases by the Japanese investors starting from the beginning of the new fiscal year, i.e., April, 1. The US economic data were represented with the incomes and expenses information and the business activity of the Texas region as well. In accordance with the report of the US Department of Commerce the personal incomes didn’t change in February as compared to January, but the expenses increased for 0.3 per cent m/m. The forecasts expected that the incomes would grow up for 1.0 per cent, and the expenses – for 0.3 per cent. The shortage personal saving rate was also denoted alongside to it, and that states some redefinition of the consumers’ tone to the side of better confidence. The saving rate made 3.1 per cent in February, whereas it was 3.4 per cent in January and 4.0 per cent in December. The personal incomes and expenses for January were revised: the incomes increased to 0.3 per cent from 0.1 per cent, the expenses curtailed and précised to 0.4 per cent, as it had been informed about +0.5 per cent before. The manufacturing index within the responsibility area of FRS Dallas has been increasing in March for the fifth month running and reached that very month the highest possible level for last two years. This indicator grew up to 8.7 against 2.3 in February, while the general purchasing managers’ index (PMI) increased to 7.2 from -0.1. The advancing components, which provide guideline for prospects, turned out to be very positive, while the new orders index rapidly increased in March, to 10.9 from -6.0 in February, and the employment index grew up to 2.8, whereas it had been observed -5.2 per cent before. There’s going to be not much economic news today. The housing prices index from S&P/Case-Shiller for January, which is expected with decrease for 0.6 per cent since after -3.1 per cent before, will be published together with the consumer confidence index from the Conference Board for March, where it’s presumed to see the raise from 46.0 to 50.0. However, the main object of attention will be the Greek Bonds’ auction and also other information about the default rescue for this country till the end of the current month. In case of publication the news, which enforces positive as for this matter, the pressure on the US dollar may last.

  The optimistic splash in concerns of the common currency was observed in the first half of the Monday trades only. Furthermore, the euro turned out to be pressed and lost its achievements as the market doesn’t clearly feel absolute trust to the fact that the agreement between the Euro zone countries about the granting of the financing to Greece has definitely solved all troubles connected to the obligations of this country. The Athens are going to enter the market with their own bonds issue till the end of this month, and the investors will probably expect the results of this event for them to have their own opinion. As it became known, the Greek state authorities suppose to float 7-year bonds in amount of 5 Billion of euro. If the demand for the Greek bonds isn’t provided the negative attitude to the common currency may return, and the euro’s sales-outs will renovate. The EU statistics demonstrated that optimism was raising in the Euro zone countries. The Euro Commission’s poll showed the increase of the general economic sentiment index within the block in March to 97.7 after 95.9 and alongside to the forecast of raise till 97.4. The increase of the business behavior also turned out to be significant as the confident index for the manufacturing grew up to -10 against -13 in February and over mounted the forecast, which had expected -11. However, such an important indicator as the consumers’ confidence, which determine the demand’s prospects, has been kept without changes – the consumer confidence index made -17 in March, the same as in February, and coincided with the presumptions. The business climate index, which demonstrates the tone of the business companies in the processing branch, grew up till -0.32 against -0.65 in February. The consumer inflation grew up in Germany in March as well. Moreover, its raising tempos were much more significant than expected – the consumer prices balanced index grew up in comparison with its February value for 0.6 per cent m/m and for 1.3 per cent y/y. In accordance with the forecast this indicator was to increase for 0.3 per cent m/m and for 0.9 per cent y/y in March. Nevertheless, it has never affected the market events as no one expects the increase of the interest rates from ECB in the current situation. No significant news form the Euro zone will be published today. The positions of the euro will further be influenced with the expectances of the Greek Bonds’ auction and any other news that concerns this matter.

  The British pound showed significant endurances at the trades on Monday and completed the day with plus to the US dollar. Even the message form the S&P Rating Agency about the maintenance of the negative forecast for the rating of Great Britain has made no influence upon the “cable” positions. However, that very agency acknowledged the current rating of the country at the level of AAA. It should be noticed that thereupon the publication of this information the sterling’s purchases ceased, neither massive sales-outs have been mentioned as well. The currency has kept to the US dollar its advantages, which were achieved in the beginning of the session on Monday. Quite possibly, the stability of the sterling’s positions was reasoned by respectively good information about the affairs in the crediting area of the “Isles”. In accordance with the represented data the general net consumer crediting in Great Britain made 2.1 Billion of pound in February, and that has become the highest possible level starting from the summer of 2008. These data have exceeded the forecast, which expected that the crediting volumes would amount to 1.4 Billion of pound only. At that the net mortgage loans made 1.6 Billion of pound in February, alongside to the expectations of 1.2 Billion. Obviously, the Bank of England’s pains aimed to intensification of the crediting branch begin to bear fruit. Though, the number of the approved mortgage loans for the home purchasing shortened to 47 094 against 48 099 in January, whereas the expectations were connected to the growth till 48 500. That fact, the M4 money aggregate had increased, also encouraged optimism, as in February the indicator grew up for 0.3 per cent m/m, and that turned out to be the most impressive positive dynamics starting from the autumn of the previous year, especially amidst the default for 0.1 per cent, which was observed in January. Today news background is quite fruitful for the sterling. The report from the Nationwide, which will demonstrate the housing prices index for March, will be represented. It’s expected to see the monthly raise together with the annual falling down, 0.2 per cent m/m and 8.2 per cent y/y. Besides, the statistics will depict the changes in the payment balance’s results: the decrease of the deficit in the 4th quarter from -4.6 Billion till - 4.7 Billion of pound is quite possible here. Though, the final evaluation of GDP of Great Britain for the last quarter of 2009 will turn out to be in the focus of the market. Some improvements are expected, in other words, the revision of the indicators to the side of increase; and if it doesn’t happen so the GB pound may be subjected to the decreasing pressure.

  The Japanese currency turned out to be under a slight pressure against the US dollar in the beginning of the trades on Monday, but later it has got back the lost positions and completed the day neutrally. The high profitability of the US T-Bonds, which is still kept, obviously further supports the US dollar in its controversy to the yen as there’s a probability of massive purchases of this asset by the Japanese investors thereupon the complete of the fiscal year. This week the fiscal year is finishing in Japan, and the repatriating inflows, which have recently supported the Japanese currency, will be obviously over, and that in its turn will weaken the Japanese currency. The data, which have already been published today, demonstrated the decrease of the manufacturing production in February, as it was fixed -0.9 per cent m/m, 31.3 per cent y/y, after 2.7 per cent m/m and 18.5 per cent y/y. The unemployment level was kept at the previous rate of 4.9 per cent in February. However, the household expenses curtailed for 0.5 per cent m/m last month. These data haven’t made any negative influence upon the yen still yet. The currency of Japan has increased since the beginning of the session, but the further development of events will depend upon the exterior information, which instigates the changes in concerns of the inclination to risk. Besides, there’re some apprehensions at the market in concerns of the Bank of Japan Tankan index, which is going to be published later on this week and will demonstrate the negative data as for the deflation’s prospects.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst