On Wednesday the US dollar mainly declined, however it didn’t decreased below the former minimums against the Europeans and kept within the already shaped ranges at the same time. The raise of the willing to risk supported the high profitable currencies, and the totals of the previous session turned out to be just not in favor of the “buck”. The initial splash of enthusiasm was reasoned by the Asian events as the GDP of Singapore increased much higher than forecasted, and the state authorities have decided to widen the trading range of the national dollar. The market considered this moment as one of the signs of the global economic recovery and also the risk of the probable revaluation and stiffening the policy in other Asian countries. Moreover, the speech of B. Bernanakey in front of the Congress of the USA has also provided the pressure on the US dollar, because this functionary not only stated that FRS would increase its key interest rate in the near future, but also mentioned about the maintenance of the low interest rates “for quite a long period of time”. The statistics, which was published on Wednesday, demonstrated quite significant positive results, though it didn’t provided the increase of anxieties as for the policy’s stiffening from the side of the US regulator amidst the announcements of the Head of FRS and so never supported the US dollar. The retailing in the United States grew up in March and surmounted the forecasts as the raise was for 1.6 per cent m/m, whereas the forecasts expected the increase of the sales for 1.3 per cent y/y. The increase of the retailing was the most essential for last four months and it was aroused by the intensive car retailing. However, even if not to take into account the car segment the retailing were good in general as well and grew up for 0.6 per cent. The increase of the consumer inflation was also observed as the general consumer price index (CPI) rose in March compared to the former month, though the core prices were kept without any changes. The consumer price index (CPI) grew up for .1 per cent in comparison with February, and that coincided to the expectances; though excluding the food products and energy resources’ prices the core index stayed without any changes alongside to the expectances of the raise for 0.1 per cent. The annual dynamics was more intensive as the consumer price index (CPI) grew up for 2.3 per cent y/y in March, while the core one increased for 1.1 per cent y/y. The corporative commodities stocks rose for 0.5 per cent m/m in February, whereas the stocks grew up for 0.2 per cent in January, at the same time the forecasts predicted the indicator would have risen for +0.4 per cent m/m. Concerning the news tape of today, the weekly data as for recruitment are remarkable as they’re expected with the improvement as the capacity of the jobless claims are shortened to 440 from 460 thousand; and also the information about the purchases of the American securities by the foreign investors in February, where the advance is predicted till 20.3 Billion from 19.1 Billion of dollar before; and finally, the data about the production activity in the US regions, which were represented by the FRB Philadelphia. Quite unlikely, this very statistics turned out to be the factor of influence upon the market – the attitude to the US dollar will obviously stay under the influence of the exterior factors, and the positions f the American currency will depend on the degree of the willing to risk.

   The stiffening of the monetary-crediting policy in Singapore and also the publication of the positive data concerning the economic activity increase in this country, which were considered by the investors as one of the factors of the global economic advance, instigated the intensive purchases of the common European currency. The manufacturing data from the Euro zone have also supported the cheerful mood concerning the euro. The represented statement demonstrated the advance of the manufacturing within the region for 0.9 per cent in February thereupon the raise for 1.7 per cent in January. Furthermore, concerning the annual comparison, the dynamics was even more amazing as the advance was for 4.1 per cent /y, since after +1.2 per cent y/y before, and forecasted +2.9 per cent y/y. The euro increased against the US dollar at the session on Wednesday, though it failed to get new maximums at the same time. Obviously, the debt troubles of Greece further restrict the market players. The auction for the Greek state bonds’ placement, which was held on Tuesday, never relieved the market of anxieties about the possible default; moreover the apprehensions concerning the tax-budgeting troubles in Portugal are raised as well. The English for it is that the escalation of these anxieties is fed by the news, which recalls that the situation is poor not only in Greece, but also in some other European countries. And that will become a hard problem, which should be solved by the European Union at some point. There’s going to be not much EU news today. The February data about the trading balance will be published, they’re expected with improvement, and also the ECB monthly statement will be represented. The euro’s positions won’t obviously incur any radical changes. Most likely, the ranging trade will last until the new checkpoints are got, because the uncertainty as for the EU countries is still the deterrent for the investors.

   Both the events of the previous session and the current situation state that the British pound is the most steady currency at the moment, while it continues its advance today as well thereupon its enforcement against the US dollar on Wednesday. In the absence of the economic news from Great Britain the support to the “cable” was provided with the exterior factors – for example, the optimistic messages from Singapore and continent announcements of B. Bernankey encouraged the market to purchase the GB pound as a high-profitable currency, furthermore, the next coming splash of the advance of gold price at the stock market also pushed to it. There’s no political information from the side of the British state authorities – it’s obviously reasoned with the anticipation of the parliamentary elections, which will take their place in the “Isles” on May, 6. The economic statistics has already been published today. The March consumer confidence index from the Nationwide stated the significant descent of mood as the indicator demonstrated 72 since after 81 points before, alongside to the expectances of the maintenance of 81. Nothing more interesting as for the economy of the “Isles” is going to be represented today. The sterling will stay under the influence of the exterior information, which still favors the maintenance of the inclination to risk at high degree.

   The ambiguity concerning the Japanese currency is still maintained. On the one hand, the pressure from the side of the government to the Bank of Japan arouses the yen’s sales-outs; though from the other hand, the European countries’ problems don’t afford grounds for the steady support of short positions as for the Japanese currency. Besides, the monetary policy of the United States doesn’t encourage the investors to leave the shelter-currency for a long time. After the dullness in the very beginning of the Wednesday session the yen suddenly enforced at the American session, when B. Bernankey again remembered the low interest rates for a long time. As a result, the pair of USD/JPY completed the day at the opening prices, and that confirms the ambiguity and uncertainty, which predominates the market concerning the yen. Today the statistics, which contradicts to the statements of the Bank of Japan concerning the improvement in Japan, has already been published. The February manufacturing was revised to slightly better side, -0.6 per cent m/m, 31.3 per cent y/y, alongside to the advancing estimation, -0.9 per cent m/m, 31.3 per cent y/y; though the capacity utilization index turned out to be much worse in February, 0.0 per cent after 3.9 per cent m/m. Obviously, the Japanese currency will stay within the ranging trade for a while, till new checkpoints, which may come later from the United States, appear.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst