Last Thursday the US dollar gave up both the GB pound yen again, though it confidently advanced against the euro. The trouble spot, which is connected to the matter of the Greek debts, is still the main driver at the currency market. The enlarging of discrepancy between the Greek and German 10-year bonds’ profitability caused the raise of apprehensions concerning the debts of this Balkan country, at that the insurance cost for the Greek national debt against the default increased as well. In the opening of the trades the enthusiastic splash was aroused by the news from China, as GDP in this country grew up for 11.9 per cent in the 1st quarter, whereas it had been forecasted +11.5 per cent. The data from the USA about the domestic economy were mainly good, though the recruitment information disappointed as the number of the preliminary jobless claims increased for 24 till 484 thousand last week in the USA, while the shortage for 15 thousand had been expected; the secondary claims also rose for 89 thousand. However, the affairs in the manufacturing of FRS Philadelphia improved in April greater than expected as the Institute of Supply Management index (ISM) amounted to 20.2 against 18.9 in March. The advancing indicators also demonstrated an advance: the new orders’ index grew up to 13.9 in April against 9.3 in March. The things were reasonably good in the responsibility area of FRB New York as well, because the general ISM index grew up to 31.9 in April from 22.9 in March here, the employment rose up to 20.3 from 12.4, and finally, the new orders – till 29.5 from 25.4 in a month before. The data as for the investment assets dynamics in the USA – the Tenants in Common index (TIC) demonstrated the confidence pickup form the side of the foreign investors; and the indicator of the net streams for the long dated securities transactions in the USA stated the purchases totally amounted to 47.1 against 15.0 Billion of dollar in January (according to the précised data). On the assumption of this situation it’s reasonable to conclude that the foreign demand for the US long termed securities is still relevant, and the overseas investment into the US joint shares is recovered, on the contrary, the USA investment into foreign securities is curtailed, and that certainly favors the positive statement for the trading balance deficit in the USA, and for the American currency as well. The report about the US corporative developers’ mood was also favorable. The reckoning of the tax benefits, which were granted by the government, would increase the real estates purchases have obviously been reflected in the consumer confidence indicator in the primary home market’s sales (in accordance with the NAHB report), as this value grew up to 19 in April since after 15 in March, while the forecast had predicted the increase till 16 only. Concerning the current news, which may attract the attention of the market, the data concerning the development may be emphasized as the recent developments are predicted with the increase to 610 from 575 thousand, however, the development permissions are presumed with the shortage, till 625 from 637 thousand. The Michigan consumer confident index will also attract market’s attention, because here the improvement is expected, the advance till 74.7 from 73.6. The political component will include the speeches of the FRS functionaries, and especially the appearance of the member of FOMC Henning, who is famous for his “hawkish” view of the current state and also persuasions of the necessity to begin the stiffening of the FRS monetary-crediting policy. The present session has begun with the US dollar’s advance against the Europeans, and the American currency has all chances to continue this trend under the terms of absence of any negative amidst the raise willing to escape out of risk.

   The euro declined against all its “opponents” during the Thursday trade, because the burden of the Greek debts causes the raise of the default apprehensions again. There’re some fears against this background as for the possibility of the “knock-on effect” by reason of the debt matters are also adverse in other countries of the Euro zone. The increase of difference in profitability between the Greek and German 10-year bonds till 425 basic points has determined the trouble escalation degree and pressed on the euro. Some smoothness of the situation appeared thereupon the announcement that the Greek authorities were going to hold a summit with the IMF representatives in the nearest Monday for them to discuss the long-termed financing program, and the IMF Managing Director D. Strauss-Kahn confirmed this information. No EU macro statistics was published. The only European Central Bank Monthly Bulletin was represented to the market. This paper told the Euro zone countries should restructure their expenses for lessening the deficit. Concerning the present policy of the European CB, the “adequacy” of the current interest rates was mentioned under the circumstances of still relevant ambiguity as for the economic and inflation prospects. Today the data about the EU foreign trading and the consumer inflation are going to be represented to the market. The shortage of the trading balance surplus is expected for February, and the monthly raise of the consumer price index (CPI) for 0.9 per cent m/m in March. Nevertheless, needless to say, the main influencing factor on the euro will further be the European countries’ debts matter, the Greek ones first of all, as this Balkan country instigates great anxieties again, and that in its turn encourages the maintenance pessimism in concerns of the common currency.

   The British pound, as often happens, demonstrated increased multi directional volatility, but as a result, fixed another profit against the US dollar resulting the day. Some support to the sterling was provided by the results of the new public poll, which had stated the Conservatives as were gathering pace and increasing the rating gap. Meanwhile, the anxieties as for resulting the general election in Great Britain the situation would arise, when neither of the Parties would get the majority in the British Parliament, continue to press on the British currency, which has already collapsed in the beginning of the current session. The data that were published on Thursday as for the consumer tone in March, which denoted the decrease of the indicator till 72 from 81, never reflected upon the market. Obviously, in case with the “cable”, the leading positions are taken with the political factors all the same; and this component contributes great portions of ambiguity and consequently instigates multi directional fluctuations of the British currency. There are no economic new from Great Britain for today again. The sterling will further stay under the political influence, at that both as European generally, it means the problems of the Euro zone countries, and its own, which is connected to the elections. The beginning of current session has stated that the market prefers the prudence and escapes out of risk. Most probably, it’s connected to anticipation of Sunday vacations as recently very important news, which influences upon the beginning of the next week’s trades, begins to appear at the weekend exactly. Following this presumption, it’s reasonable to presuppose that the sterling decline is going to continue today.

   The behavior of the pair of USD/JPY was like to the fluctuations of GBP/USD. The yen was within the multi directional oscillation against the US dollar, but as a result the Japanese currency fixed the advance against the "greenback" and the other majors. The unwilling to risk thanks to the anxieties connected to the problems of both the Continent and Great Britain reasoned the means taking out of the carry trade transactions and returning into the foundering currency like the yen was. There has been no economic news published in Japan today. Neither appearance of the Japanese government representatives was represented. In the beginning of the session the currency of the “Land of the Rising Sun” suddenly enforced against the main “opponents” and denoted the strengthening of the unwilling to risk. If the information, which levels the situation, doesn’t appear the yen may continue its consolidation against the US dollar.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst