The US dollar continued its triumph procession at the Thursday session as well, but this time the British pound joined the number of the defeated. Both the political news and the economic statistics provided a support for the “greenback” at the previous session. The announcement that the Greece’s budgeting deficit had turned out to be more in the previous year than estimated before greatly increased the purchases of the US dollar. Furthermore, the information from the Moody’s Rating Agency concerning the next decrease of the Greek crediting rating contributed to the investors’ willing to sell the European currency for the “buck”, while the dull economic data from Great Britain and oppositely reasonably good statistics as for the Unite States favored the enforcement of the American currency against the GB pound. The number of the preliminary jobless claims in the USA curtailed last week, though it’s still at a reasonably high degree; because the decrease was for 24 thousand, till 456 thousand, and that turned out to be within the frames of the forecasted. The general capacity of the secondary claims also curtailed for 40 thousand. The producers’ prices grew up more significant than expected in March in the USA: in accordance with the published data, the producers’ prices index (PPI) grew up for 0.7 per cent m/m since after -0.6 per cent m/m in February, while forecasted 0.4 per cent m/m. Meanwhile, the core producers’ prices index (core PPI), which doesn’t include the food products and energy resources’ prices, demonstrated a dull raise as the enlargement was for 0.1 per cent only – just as predicted; it was observed +0.1 per cent in February. The ready home market sales’ data also turned to be up-and-up. The sales increased for 6.8 per cent to 5.35 Million of houses per year in March compared to 5.01 Million in February. The forecasts predicted the raise till 5.25 Million of houses. The desires of the Americans to catch time taking advantage of the governmental program of tax benefits for the first-time residence purchasers are considered as a cause for such an essential intensity, because the expiry time of this program is drawing on. The expected news will inform about the March sales at the primary real estates market in the USA. Here the raise is expected as well as at the secondary market. Probably, it’ll be possible to observe +4.6 per cent to 323 thousand thereupon the sinking for 2.2 per cent in February. The publicizing of the advancing indicator will also attract attention – it’s run about the durable goods orders, while here the growth is expected in March, though much less than in February – the forecast presumes +0.1 per cent, whereas it had been fixed 0.9 per cent before. The market won’t obviously change its tune at the end of the week, and that affords grounds for keeping the advantages of the powerful US dollar, however, if there’s no news about the realistic solving of the Greek troubles.

   The common currency sank down against all majors at the Thursday trading. The first knock out downward was provided with the reports of the EU Statistics Agency that the budgeting deficit of Greece had turned out to be more than proved in the statements and this estimation might have been far from being final as there was a risk of even more minus’s uncovering. In other words, the deficit was actually 13.6 per cent of GDP in 2009 instead of 12.7 per cent as it had been reported before, and it’s only the beginning. The euro has rapidly decreased against such a background. Another stroke came from the Moody’s Rating Agency, which had lowered down the crediting rating of Greece from A2 to A3 and also warned about the possibility of further decline. At such a course of events the profitability spread between 10-year Treasury Bonds of Greece and Germany, which appoints to the crediting risk’s degree, achieved its next maximum as the profitability of the Greek securities was up to 8.70 per cent while it was about 3.04 per cent as for the German bonds. Beside the concerns about Greece still make pressure on the European currency; these events arouse a high degree of disturbance in concerns of the Euro zone’s countries, which suffer from the like troubles. The EU data demonstrated the raise of activity in the economic branches as the purchasing managers’ index for the services grew up to 55.5 in April from 54.1 a month before; as for manufacturing, this indicator rose up to 57.5 since after 56.6 in March. The forecasts predicted less favorable dynamics – 56.7 for the manufacturing and 54.4 for the services. The likely picture is in the EU largest economy as in Germany the analogous indicator increased to 61.3 from 60.2 in the manufacturing for March, while no changes were expected at all, and for the services – to 55.0 against 54.9 in a month before. However, under the circumstances of great increase of the apprehensions as for the Greek matters, which also touch upon other countries of the Euro zone, the positive dynamics wasn’t taken into account at the market and provided no support to the euro. Today the news set includes the German Ifo Institute’s report; the April sentiment indexes are predicted with advance in all and every branches. However, these virtual indicators are unlikely to make any influence upon the market and ground the reversal for the euro. The pressure upon the common currency will obviously be maintained.

   Thereupon three-day advance against the US dollar the British pound fixed the decrease to the “buck”. The sterling attempted to continue its advance in the beginning of the trading day on Thursday, though it turned to be under the pressure a bit later, and as follows, completed the day with minus. Both the disappointing data of the “Isles” economy and more favorable results of the United States also pushed to such a finish. The data about the state sector’s finances, which were published on Thursday, stated that the net borrowings of the British state sector made 23.5 Billion of pound in March i.e., the highest possible level since the beginning of 1993. The expectances were about 22 Billion of pound as last year the borrowings amounted to20.1 Billion. Moreover, the M4 money supply’s aggregate grew up for only 0.1 per cent m/m since after 0.2 per cent m/m and also shortened to 3.5 per cent y/y from 3.9 per cent y/y, and that raises the reasonable apprehensions that the Bank of England will have “to turn on the money printing machine” again, because the crediting is far from being up-and-up. As an addition to above said, the British retailing data turned out to be duller than expected in March. The retailing volume grew up for 0.4 per cent m/m and for 2.2 per cent y/y, whereas the forecasts expected +0.8 per cent m/m and +2.6 per cent y/y. The manufacturing increase was reasonably good in April. The report of the Confederation of the British Industries (CBI) demonstrated +14 compared to +5 in March and was more powerful than forecasted. There’s going to be not much news from Great Britain today: the preliminary evaluation of the GDP increase in the 1st quarter will be published. The advance is predicted in the quarterly comparison – for 0.4 per cent q/q, but the decline for 0.1 per cent per annum. It has obviously input in to the sterling’s market price by the market already; that’s why any deviation may arouse the response.

   The historic advance of the yen at the Thursday trades amidst the stock indexes’ decrease in the Asia quickly exhaled. The Japanese currency turned out to be under slight pressure at the European session and also under more powerful impact during the American trades already. As a result, the daily total was negative as for the US dollar, though the plus was registered to the euro. As already reported the data, which were published on Thursday, stated the increase of the trading balance surplus in March. However, the export-import dynamics couldn’t be considered as favorable, because the shortage of these indicators was observed, but the import fell down greater. The dynamics of such kind proves the maintenance of the demand problems, and that never encourages the expectance of pinky prospects in terms of deflation. The data, which have already been published today, demonstrated the decrease of the economic activity as the purchasing managers’ index (PMI) for all branches of the economy fell down for 2.3 per cent in February thereupon the raise for 3.4 per cent in a month before; while the forecasts expected less impressive decline, for 1.3 per cent only. As concerning the near-term prospects, the yen is further predicted to be traded against the US dollar within the range, also facing the risk to be under the pressure and yield another portion of its positions to the “greenback”.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst