The development of the Wednesday events was very similar to the scenario of the previous session. The US dollar turned out to be under pressure all over the currency pairs in the beginning of the trading day again, however, it still fixed the minus in the controversy to the GB pound only, whereas it managed to improve the affairs concerning the euro and yen and completed the trades with more efficient result – the increase. The difficulties of the American currency were caused in the beginning of the session by the successful Greek Bonds’ auction, good statistics from Great Britain and also repatriating inflows into Japan in the eve of the finish of the fiscal year. Later on, however, the sales of the Greek Bonds and also the profitability of the US T-Bonds provided the support for the “buck”, which passed over into the positive sector as for the yen and euro. As already mentioned above, the sterling has maintained its dominant positions amidst positive supplements in the shape of nice statistics concerning its domestic economy, which was publicize during the European session. The US economic data, which were published on Wednesday, might also provide the support for the US dollar as they depicted the positive dynamics. The home prices demonstrated a significant curtail of the annual decrease in January as the S&P / Case-Shiller index for 20 American megacities fell down for 0.7 per cent y/y, while it had been -3.1 per cent y/y before; it was also observed +0.3 per cent in January in a monthly comparison. The last increase of this index compared to the analogous period of the former year was observed in January 2007. The US consumer confidence index, which is usually published by the Conference Board private research group, also showed good results in March. In accordance with the represented data the consumer confidence index grew up to 52.5 in March against 46.4 in February. At the same time, the February data were revised, as it had been reported about 46.0 before. The forecasts resolve themselves to the fact that the consumer confidence would be at the mark of 51.0 in March. However, it should be noticed also, that more encouraging picture was observed both in December and January, 53.6 and 56.5 correspondingly. The employment troubles obviously continue to suppress the consumer and maintain the absence of confidence in the future at high enough level. Moreover, the news planned for today will afford to some degree thought-provoking information as for the labor market, the forecasts predict the growth of the private payrolls for more than 50 thousand in March. However, this figure varies in the reports of different analysts from 38 to 50 thousand. Nice results of this report may probably perk up the investors’ mood as they will make hint on the probability of the successful data in the main report, which is going to be represented on Friday. Besides, the manufacturing orders for February, which are expected with the growth for 0.5 per cent, and the Chicago purchasing managers’ index (Chicago PMI), where the decrease till 61.5 since 62.6 may happen, will be in the focus of attention. This very indicator is advancing and may favor some alienation of positive mood at the market in concerns of the US dollar.

  The common European currency was traded with rising amidst diminishing of the apprehensions concerning the debt troubles of Greece. The Greek Bonds’ auction marked out the interest to this asset and confirmed the probability of the situation’s strengthening. However, the market circumstances slightly changed later as the news that IMF had worsened the forecasts of the economic increase in Germany and expressed warning about significant decreasing risks by reason of the banking sector’s dullness due to the troubles in the Southern Europe, returned great anxieties. It has afforded ground for re-estimation the success of the auction and also grounded the sales-outs of the Greek Bonds. Besides, the euro was sold amidst nice data from Great Britain and also the sales of the foreign currency profit by the Japanese international companies. There wasn’t any significant statistics concerning EU. The February import prices index for Germany, which is already published, demonstrate the growth higher than forecasted, 1.0 per cent m/m and 2.6 per cent y/y, at the expectances of 0.5 per cent m/m and 2.0 per cent y/y, though it has made no influence upon the market. The key point issue of current news is unemployment. It’s supposed that the payrolls number is further decreasing, and the unemployment level will reach 10.0 per cent since 9.9 per cent, concerning Germany this indicator will stay as previous – 8.2 per cent. Moreover, the March consumer prices dynamics will be stated for the Euro zone: the forecasts presume the growth of CPI till 1.1 per cent y/y after 0.9 per cent y/y. No negative is expected from the side of the fundamental data, if certainly unemployment does never surmount the forecast. However, the most important factor, which attracts the investors’ attention, will further be the problem of deficits, and the negative news of any kind from this side may provoke the raise of pressure upon the euro.

  The sterling was the only currency among all majors again, which managed to keep the positions that were won against the US dollar at the beginning of the Tuesday session. The GB pound increased due to good news as for the “Isles” economy. The beginning of the positive was provided by the data from the Nationwide as the home prices index increased for 0.7 per cent in March, since after the February falling down for 0.8 per cent, while the forecasts expected 0.2 per cent only. Furthermore, the final estimation of British GDP for the 4th quarter also supported the “cable”, as the revision was to 0.4 per cent from 0.3 per cent. The positive opinion to the pound was favored by the shortening of the payment balance current account’s deficit for more than expected. The negative totals of this indicator in the 4th quarter curtailed till -1.7 Billion from -5.9 Billion of pound, whereas the decrease was expected to -4.6 Billion of pound only. Most likely, some support came from the last Gallup poll, which demonstrated the growth of the break in the rating of the Conservative Party of Great Britain against the Labor Party till 7 per cent points. That exactly encourages as for the possible majority in the parliament and relatively enlarges hopes for success in solving the task of the budgeting deficit’s shortage in the country. Today the British news has already been published; and the GfK consumer confidence index suddenly fell down till -15 from -14 in March, alongside to the forecast of improvement till -13, that slightly lessened the investors’ appetite concerning the sterling’s purchases, and this currency is under the pressure at the market up to the moment. Quite possibly, the willing to fix the profit may suppress the “cable” at the today session. Besides, the expectations of the US Labor Report may set seal upon the sequence of events, that’s why the ranging trade is possible with the risk of some decrease of the sterling.

  In the beginning of the Tuesday trades the yen was enforcing again, while both the US dollar and the euro decreased during the Asian session by means of the Japanese exporters sold the profit gained overseas for making payments in last days of the fiscal year. Later on, however, that very raise of profitability of the US T-Bonds reversed the situation in favor of the “buck”, and the yen completed the day with losses. The Japanese economic statistics, which has already been published today, demonstrated both the comeback and strengthen of negative trends. The number of recent developments curtailed in February again, -9.3 per cent y/y against -8.1 per cent y/y before. The development orders fell down to -20.3 per cent y/y, the average salary shortened for 0.6 per cent y/y from -0.2 per cent y/y, and finally, the ISM index for the manufacturing lowered down to 52.4 in March from 52.5. The currency of Japan enlarged its decrease thank to this information. As it seems, it will also continue this decrease as the complete of the fiscal year today will diminish the apprehensions concerning the probable purchases of the yen for the conversion of the overseas profit. Besides, the expectance of the positive data in the US Labor Report for March, which is going to be published on Friday, encourages the investors to the enlargement of the US dollar’s purchases in the pair of USD/JPY.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst