The opening of trading in the first day of this week was remarkable for a massive optimistic splash, which caused the purchases of high profitable currencies together with the US dollar’s sales. The significant advance of the European currencies, especially the euro, was caused by the announcements that the Euro zone’s authorities had made an agreement about aid for Greece and also the peculiar volumes had been appointed as for the assets, which might be targeted for the liquidation of this country’s debts if required. Nevertheless, this very impulse for improving the investors’ attitude took its place in the very beginning of the session only. Later on the market started to correct its positions, and that caused the US dollar’s regaining of some part of its losses against the euro and also complete evening-out as for the GB pound. Concerning the yen, the profit has been fixed, as it usually happens during the periods of the risen willing to risk. Such a change in the tone obviously happened at the market due to still relevant investors’ doubts, which strengthened amidst several discouraging events, which are connected to the solving of the Greek troubles, whereas the European official functionaries had stated the presence of the peculiar outlines, though nothing of the kind had actually been afterwards. Most likely, the market made a pause with a view to get some extra evidences of the Greece’s ability to manage its tasks; and the bonds sale auctions, which are going to be held today, might become such evidences. There was little economic news from the USA. The only Federal Budgeting data for March should be mentioned, because according to the information from the US Department of Treasury the US budgeting deficit made 65.4 Billion of dollar in March. In the first half of the fiscal year of 2010 the budgeting deficit amounted to 717.0 Billion, while it was -781.4 Billion of dollar for the analogous period of 2009. However, the forecasts predicted the budgeting deficit would be equal to 62.0 Billion of dollar in March. Such a negative result has occurred for the 18th month running already, though the structural data afford little ground for optimism, because the revenues increased in March in the annual comparison, and the expenses curtailed. There’s going to be not much economic data today as well. The February results of the foreign trading will only be represented. It’s presupposed the trading balance deficit has grown up a little and it may demonstrate -39.0 Billion since after -37.3 Billion of dollar before. The market is unlikely to make an emphasis on this very message. The investors will further follow the events in the Europe, especially the results of the Greek bonds’ auctions first of all.

   The euro has increased as the positive emotions “slopped over” the market, because the Greece aiding plan, which was announced in the weekend, would deny the apprehensions of the possible default. The Ministers of Finances of the Euro zone agreed to grant to Greece 30 Billion of euro at the rate of 5 per cent in case this country faces troubles with borrowing at the capital markets, moreover, IMF would render 15 Billion. This announcement has obviously been accepted as the end of the panic and the radical solving of the Greek issue. Later on, however, the investors’ optimism greatly lessened, and the euro yielded some part of its achievements to the US dollar. Probably, the market players have researched the situation and decided to wait for the confirmations. The auction for the placement of the Greek bonds in amount of 1.2 Billion of euro is going to take its place today; and if the rescue schedule is applied, whenever necessary – because the assistance might not be needed, the confirmation will be got. Meanwhile, as it seems, the market players also take into account the risks connected to such borrowings as the necessity to loan 11.6 Billion in May and also 20 Billon of euro till the end of the year. No EU macro statistics was published on Monday. Today the data as for the consumer inflation in Germany will be represented. The forecasts presume the final estimation will make no changes as for the March value, which is still 0.5 per cent m/m, 1.1 per cent y/y, though the wholesaling prices index may demonstrate an advance, 0.2 per cent m/m and 3.6 per cent y/y since after 0.1 per cent m/m and 2.1 per cent y/y before. However, the factor of influence will certainly stay the Greece’s rescue plan’s affairs together with the results of the auction. Most likely, it’s reasonable to presume the euro has good chances to continue its advance.

   The British pound grew up against the US dollar in the beginning of the session on Monday with the gap as well, like to the euro, but less. The general raise of optimism, which was connected to the Greek issues, reflected itself on the controversy between the GB pound and US dollar, but not only that became the reason of the sterling’s popularity. At the weekend the results of the pre-election polls were also published, and that elicited the increasing advantage of the Conservators in isolation from the Labor Party. The statements of such kind are perceived as menace-lowering concerning the occurrence of the “poised” Parliament in the “Isles” since after the election, which are going to be held on May, 6. The perspective of absence of the majority in this authority may reason great problems as for the shortening of the recorded budgeting deficit, which takes place in Great Britain. Nevertheless, till the end of the day the “cable” has lost all its achievements and completed the day with minus against the US dollar. Obviously, the ambiguity as for the results of future elections, despite the polls’ data, occurs and makes the decreasing pressure on the GB pound. There was little news from Great Britain. The only advancing indicators’ index for February was published, which turned out to be lower than the previous one, 0.6 per cent since after 0.8 per cent. Much more statistics is going to be today. The February results of the foreign trading are outlined to be represented, and the forecasts expect the shortage of the trading balance deficit till -7.3 Billion thereupon the increase till -8.0 Billion of pound in the previous month. Besides, the Department for Communities and Local Government House Price Index (DCLG HPI) for February will be published, and the growth is expected till 7.9 y/y, after 6.2 y/y. The data, that have already been represented today, demonstrated that the RICS house price index increased to +9 in March, since after the increase for 18 in February, though the forecasts expected much more significant uplift, +20. The BRC retailing data were also declared, and the index demonstrated +4.4 per cent y/y, after 2.2y/y. Such a dynamics turned out to be the most rapid starting from April 2006. Nothing negative is predicted from the side of British economic indicators. If the fact justifies the expectations of the forecasts the GB pound may renovate its advance without any special troubles. However, the future elections may become a restricting factor.

   The optimistic splash pressed on the Japanese yen as well, which was mainly sold-out in the beginning of the Monday trades, though it managed to neglect the major part of its losses afterwards. However, the totals of the day were far from to the advantage of the Japanese currency. The data about the economy of Japan, which were represented on Monday, didn’t encourage the opinion in favor of the positive dynamics. The money supply indicators – M2 and M3 – showed a shortage, and the banking crediting decreased much more in March than it was in February. Nevertheless, the announcements of the Minister of Finances of Japan N. Khan, which he spoke out on Monday, resolved themselves to the statement that the economic situation had been improved in the country starting from the assumption of the power by the ingoing state administration in September. Moreover, he has also stated the absence of any special demands to the Bank of Japan in concerns of its position as for the state bonds’ purchasing. Quite probably, the claims of the kind reasoned the raise of trust to the yen as they had smeared the anxieties that the Japanese regulator might enlarge the softening program again, which is targeted to provide liquidities to the market. The volume of the program for the long-termed Japanese state bonds’ redemption has recently been enlarged and it amounts to 1.8 Trillion of yen. The data as for the prices, which have already been published today, stated the deflation kept up with its procession all over the “Land of Rising Sun”. The domestic wholesaling price index grew up for 0.2 per cent m/m, but kept minus per annum in March, while it had been 0.1 per cent m/m, -1.6 per cent y/y before. The annual retardation of the default tempos might be considered as a good sign, though the forecasts expected more, 0.3 per cent m/m, -1.1 per cent y/y. The currency of Japan enforces itself during the current session against all its major “opponents”. The diffidence, which occurs at the market thereupon the enthusiastic splash, has obviously encouraged the investors to play it safe and also caused the comeback into the shelter, which is the yen.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst