Both the general picture of the market events and the result of the Wednesday session demonstrated that the investors didn’t want to risk evidently. As a result, such an attitude caused the next enforcement of the US dollar against both the GB pound and euro, though the weakness in the controversy to the yen. However, the GB pound held very grimly such a layout and since after the collapsing sinking in the first half of the session got back its losses, even more had an advantage over the “buck”, but yielded the pas till the end of the day; and finally, completed the day in minus just like to the euro. Obviously, the budgeting deficit’s troubles in the Euro zone countries and the political difficulties in Great Britain encourage the market’s participants to the departure into the shelter-currencies, which are the US dollar and yen. There wasn’t much news concerning the US economy. Concerning the statistics, the data of consumer crediting were the most amazing as they declined below the expectances in February. The crediting curtailed for 11.5 Billion of dollar against the January enlargement for 10.6 Billion of dollar, which had been revised to better side. The forecasts expected the lessening of the loans for 70 Million of dollar only. The rest of the news was of the political nature, including the appearance of the Head of FRS B. Bernankey, who had generally confirmed the commentaries of the members of FOMC, which had been published in the minutes us before. Although there were no words concerning “the low interest rates for a long period of time”, the utterance as for “the stimulating degree of the interest rates would provide the advance” was considered by the market as a confirmation of further liberal policy, and consequently, the “buck” incurred to the pressure. The data concerning the jobless claims for the former week are going to be represented at the current session. The forecast predicts +433 thousand since after 439 thousand in the previous period. Furthermore, thereupon the publication of these data there will be the speeches both of the representatives of the Office of Management and Budget – Duke, Tarullow, Kocherlacotta and also its Head – P. Orzague. Most likely, the utterances of these functionaries will cause the high volatility at the market in view of high probability of the controversies of the opinions concerning the interest rates’ behavior.

   Except that the annoying problems of Greece make pressure on the euro, the negative for the common currency has also appeared in the EU economic data. The cost of financing for Greece, which makes efforts to solve the issue of easing of loans, which are necessary for this Balkan country for it to settle accounts with the creditors, turned out to be the main factor of pressure on the euro on Wednesday. However, the data stating the worsening of the Euro zone’s GDP results for the 4th quarter due to its recent estimation have also laid a bad trip on the investors. The EU statistical offices suddenly announced the economic stagnation within the block in the last quarter of 2009. GDP was decreased from 0.1 per cent q/q to 0.0 per cent q/q, and that in its turn proved soft recovery and certainly, made damage for the common currency. The rest of the data, which were publicized on Wednesday, demonstrated quite not bad result, though it didn’t provide any support for the euro. The purchasing managers’ indexes for the services (PMI) both in the Euro zone and Germany for March were stated with the raise in their recent evaluation. The producers’ prices grew up a bit on February compared to the previous month, though they decreased as compared to the analogous period of the former year, +0.1 per cent m/m, -0.5 per cent y/y, whereas the analysts’ expectances resolved themselves to +0.2 per cent m/m and -0.4 per cent y/y. The German processing sector’s orders were kept unchangeable in February in comparison to the previous month, at that the raise of the overseas orders was noted, and the last fact is very important for the export-oriented economy of this country. The retailing data over EU for February are going to be represented today during the European session. It’s presupposed to see a more cheerful picture than before, as the indicator should demonstrate 0.0 per cent m/m, -0.4 per cent y/y, since after 0.6 per cent m/m and -1.7 per cent y/y. Though, the most important event of this day will certainly be the pronouncement of the ECB decision concerning the interest rates and also the press-conference of J.-C. Triche. No changes of the interest rates are presumed. The degree of 1.0 per cent will probably be kept as the dull result over GDP for the 4th quarter has finally convinced the investors in it. The attention will be focused on the claims of J.-C. Triche, as he will most likely tell about new rules and terms on loans’ pledges in case of disbursement by the European regulator. Unlikely, the euro will cardinally change its positions, but some enforcement is quite possible by reason of approximation of the powerful supports, whereto the pair of EUR/USD has already declined.

   The sterling was under the pressure during the first half of the Wednesday trading. If the Greece troubles are the main stimulus for the “bears” activity as for the euro then the political-colored information, namely about election campaign in Great Britain, becomes the main factor of the pressure on the GB pound lately. The ruling Labor Party continues to get behind according to the polls’ results, but the gap between this force and the oppositional Conservative Party is still not enough to provide the assured majority in the parliament. That disturbs the market as it makes threaten for the positive decision of the issue about the recorded shortening of the budgeting deficit in the country. However, not only that was the cause for the sales-outs of the “cable”. The evident retardation of activity was observed in the services area, which is most significant for Great Britain. The purchasing managers’ index in the services (PMI) lowered down as compared to the results of the previous period, till 56.5 from 58.4, while the shortage was expected to 58.0. Later on, in the second part of the trades, the sterling tried to get back the losses, and amidst the gold’s sharp increase it neglected the losses. However, it failed to complete the day with the plus and fixed small minus against the US dollar. Today the statistics will tell about the state of affairs in the industrial production of the “Isles” in February. The forecast expects the advance +0.5 per cent m/m and decline for 0.5 per cent y/y, and that is better then it was in the previous period, when it was observed -0.4 per cent m/m and -1.5 per cent y/y. In the processing sector it’s expected +0.6 per cent m/m, +0.8 per cent y/y, since after -0.9 per cent m/m and +0.2 per cent y/y. In general, good results are expected, and the support to the sterling is quite possible against this background. At the same time, the settler of the day for the “cable” will be the BoE decision concerning the interest rates and volumes of the quantitative softening. The analysts expect that the Bank of England will keep the base discount rates at the extremely low level of 0.5 per cent and won’t change the volumes of the bonds’ purchasing program, which amounts to 200 Billion of pound now. Probably, the regulator of Great Britain further needs to observe the processes of recovery and to understand, how the economy has already firmed. Though, the attendant commentaries may arouse the market activity as there’re hearings about the possible advance of the interest rates in near future amidst the anxiety of increasing inflation.

   In the beginning of the Wednesday trades the yen turned out to be under the pressure amidst its purchases from the side of the importers for settling the accounts. Later on, however, the currency of Japan has mainly enforced itself. Obviously, the apprehensions, which were caused by the threatens of default in the continental Europe and the political uncertainties in Great Britain, encouraged the departure out of the carry trade transactions for the comfortable being in “smooth water”. Moreover, the version appeared, according to which the yen is purchased due to expectances of the Yuan’s revaluation. These presumptions are subdued to great doubts, though they have all chances to become considerate thought-provoking information. The Governor of the Bank of Japan M. Sirakawa voiced his cheerful comments on the general situation in the domestic economy on Wednesday. He accentuated that the risk of the second wave of recession had been diminished, and the recovering trend had become more distinct for the economy of the country. Meanwhile, M. Sirakawa announced that the Central Bank was further going to maintain its extremely soft monetary-crediting policy. Te whole news set has already been published today: the equipment orders’ advancing index grew up till 262.1 per cent y/y from 217.4 per cent y/y before; and the economic analysts’ index rose up to 47.0 against 44.8 earlier, and forecasted 46.7. The payment balance’s surplus increased to 1.47 Trillion of yen in February compared to 1.14 Trillion of yen in a year before; whereas the trading balance demonstrated positive totals three times as much than it had been observed a year before, as it’s fixed +778.0 Billion of yen since after 196.9 Billion of yen in February of the previous year.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst