The Thursday result was the same as the day before – the US dollar decreased against the Europeans and enforced itself as for the yen. The perspective of longer weekend by reason of the Easter holidays may obviously be considered to keep relevant both the willing and necessity to come back into the total asset from the side of the investors. This very decision was probably reasoned with the event, which will take its place during this weekend and is also able to make a significant influence upon the market, – it’s run about the publication of the US Labor Report. Besides, the inclination to risk, which was observed on Thursday, proceeds from the high inspiration at the stock market, which occurred after the representation of the data concerning the US manufacturing, while the splash of the purchase of the European currencies for the US dollar and also the sales of the yen were observed just after the publication of this information. The manufacturing index from the Institute of Supply Management of the USA (ISM) grew up to 59.6 in March against 56.5 in February and also 58.4 in January. The forecasts expected much less success as they presumed to observe to growth till 57.0. The highest possible value of this indicator from July 2004 encouraged the opinion that the US economic recovery was accelerating. However, the development branch’s data were disappointing, though within the forecasted extremes. That’s why, they didn’t become a surprise. The development expenses lowered down in February as compared to the previous month for 1.3 per cent m/m, while the January value was revised to minus even more, till -1.4 per cent m/m, alongside to the previous pronouncement of -0.6 per cent m/m. The preliminary jobless claims turned out to be better than expected and demonstrated the shortage till 435 from 445 thousand, what had been a week before. It’s probably very important before the publication of the basic Labor Report for March, though these data have never made any effect upon the market. The information, which is planned for today, is looking forward by the market, despite the majority of the currency markets are going to be closed by reason of the Holy Friday. The Non-farm Payrolls of the USA are presumed to increase in March for 200 000 thereupon the decrease for 36 thousand in December. Meanwhile, as already mentioned above – in the former analyses, the changes of such kind are the result of the state recruitment, which is targeted to the population census; that’s why these changes couldn’t be considered as essential for the labor market. So the great surmount of the mark of 200 thousand may become informative for the positive tone, on the contrary, the much less number will become the same for negative. The unemployment level will certainly become the indicator of the market: while the forecast presumes no changes the level should keep itself at 9.7 per cent.

   In the beginning of the Thursday session the common European currency was marked renovating its sales-outs. Both the apprehensions concerning Greece, which are still relevant, and the February retailing in Germany, which turned out to be with the negative value for the second month running, have favored that. As it has already been stated, the retailing decreased for 0.4 per cent in comparison with January, and for 0.9 per cent y/y. The January data were revised to the side of decrease for 0.5 per cent m/m, moreover, it had been also spoken about the absence of any changes before. Later on, however, the positive tone of the investors concerning the recovery of the global economy gave rise to the purchases of the euro, which fixed the “profit” as for the US dollar summarizing the day. The nice data as for the manufacturing of the Euro zone in general and also of Germany for March aroused changing the tones. The purchasing managers’ index (PMI) turned out to be at its 40-months maximum as it grew up to 56.6 against 54.2 in February by forecasted growth till 56.3. This indicator demonstrated growth to 60.2 since 59.6 and forecasts of 59.6 in Germany. Furthermore, the support for the euro came from the US stock market, which started to increase basing upon the positive economic data from the USA. However, as it seems, one of causes was also an adjustment of the positions in the anticipation of the Easter holidays, throughout them the economic report, which is one of the most important for the market, is going to be published – the US Labor Report. The European markets are closed today, and the euro will be under the influence of expectances firstly and also the publication of the employment data in the USA a bit later. Besides, the principal and painful problem for the euro – the risks of the Greek debts troubles – is still important.

   The British pound continued to take leading positions on Thursday session. The factors, which supported the British currency “were pouring in the market like from the horn of plenty”. The publication of the last poll’s results, in accordance with which the Conservative Party of Great Britain had increased its gap from the ruling Labor Party till 10 basic points, may be referred to these factors. That tells about high probability of providing the minimal majority in the parliament, and relatively, facilitation of solving of the questions as for budgeting deficit. Further on, the good support for the “cable” was provided by the publication of the business activity data for the manufacturing. The purchasing managers’ index (PMI) got its 15-years-maximum and demonstrated 57.2 in March against 56.5 in February, whereas the forecasts expected the growth 57.0. In addition to this, the Bank of England announced that the banking crediting continued to grow in the 1st quarter for the companies, but the credits’ availability for the households stayed without changes, though it didn’t worsen at the same time. There was also the announcement about the expectations of the crediting raise in the 2nd quarter. Against the background of such news the GB pound added more than 100 points to its positions against the “buck” and found itself next to the maximums of March. There’s a day-off in Britain today. There’s going to be no news. Maybe, the sterling will reside within the ranges, while expecting the news from the USA.

  The recovery of the American economy amidst the deflation in Japan affords a good ground for purchasing the US dollars for the yen. The positive manufacturing data from the USA, which were published yesterday, became another confirmation to that as the decrease of the Japanese currency hastened. This implies the “buck” yielded its palm as a carry trade operations’ foundering currency to the yen, and now, after the complete of the reports, what’re connected to the finish of the fiscal year in Japan, these operation become more intensive. The Japanese yen has never got any support from the side of the Tankan index as well, which increased to -14 from -25 according to the quarterly report. The capital outflows because of new positions’ opening by the Japanese investors at the beginning of the new fiscal year, what was mentioned before; suppress the yen and reason its weakening against the all majors. The economic statistics concerning “The Land of the Rising Sun”, which s has already been represented today, demonstrated the shortage of the money supply’s volumes in March till 2.1 per cent from 2.2 per cent, which had been earlier. This couldn’t be considered as a positive factor in terms of deflation and means the lack of the volume of the quantitative softening programs, what’re provided by the Bank of Japan; it also encourages the expectations of further pressure on the yen. The information from the USA will be the prevailing factor for the yen at the today session – if the Labor Report turns out to be better than forecasted the yen will continue its decrease with the acceleration of loosing its positions.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst