After much thought at the weekend the market penetrated with doubts as for the European currency again; that’s why the Monday session opened with the gap in favor of the US dollar once more. Obviously, the hopes for that the aid to Greece would be made without any delays and difficulties diminished. The default insurance cost for the Greek debt up rocketed against this background again, while the US dollar was enforcing itself against the euro for the major part of the session. However, till the end of the trades the “greenback” yielded achieved positions and was content with a little minus as the stock market optimism, which is kept relevantly high, fed interest to the high profitable currencies. The US dollar’s decline renewed against the British pound, because the economic data still provide the support to the “cable”. There was little economic statistics from the United States. The only ISM index for April in accordance with the FRS Dallas report was represented. As it turned out, the massive advance was observed in Texas – the indicator grew up till 21.1 per cent. Besides, the researches of the National Association of Business Economy’s (NABE) were publicized and stated encouraging results. The US companies are expected to increase the hiring of labor and lessen the retirement. The number of companies, which enlarged payrolls, increased to 22 per cent compared to 13 per cent in January. The current news set is much more fruitful and it provides with important information – the February home price index from S&P/Case-Shiller for 20 United States megacities is going to be published, which will probably be kept unchangeable, and also the consumer confidence index form the Conference Board, where the raise is expected till 54.0 in April against 52.5 a month before. The forecasted version of the news background is reasonably not so bad, and the “buck” may reckon upon the support if the actual state of affairs turns out to be not worse. However, taking into account that two-day meeting of the Federal Open Market Committee (FOMC) is starting today, it’s reasonable to presume the daily trading will be modest and most likely ranging if certainly no news from the Europe in concerns of Greece – either positive or negative – appears.

   Thereupon the glorious after-game of its positions last Friday the euro again turned out to be under the pressure on Monday. The announcements of the German state authorities that Greece had to render the detailed and peculiar expenses saving schedule before any aid would be granted sent the market into pessimism again, as this temper is still relevant due to the ambiguity concerning the negotiations between Greece and EU-IMF. Besides, the investors worry about the implementation of the following contractionary adjustment as the disaffection of the Greeks is great enough. After all, large debts of other countries in the Euro zone also call for misgivings. In general, the decision making procedure is quite complicated as the next step for the aid render decision will be the enquiry assessment from the side of the Euro Commission and ECB. Thereupon the approval the unanimous consent of the Euro zone’s Ministers of Finances, in other words, it’s not all as easy and quick as it sounds. Later on, amidst the advance at the US stock market, the euro improved its affairs and completed the day with a little advantage against the US dollar. No EU data were published yesterday. The appearance of the Head of ECB J.-C. Triche was too general; while the necessity of maintenance of the governmental support was mentioned due to the economic raise hasn’t been autarkic still yet. The advance consumer confidence index of Germany for May, which has already been represented today, stated the advance to 3.8 since after 3.4 in April, while the import prices also grew up for 1.7 per cent m/m. J.-C. Triche is going to appear once more, but a bit later – during the American session. Though, if nothing especially important concerning the aid for Greece occurs no peculiar intensity will probably be at the market; and consequently, the trading will also probably be carried within the ranges while expecting the pronouncement of the FRS decision concerning the interest rates.

   The British pound renewed its enforcement at the currency market and actually mainly enforced itself from the very beginning of the session. The impact to the sales of the sterling was provided by the data about the British real estates market. The information of the Hometrack stated that the home prices grew up for 0.2 per cent m/m in April since after the March increase for 0.3 per cent m/m. In the annual comparison the prices increased for 1.8 per cent in April as for this very month a year ago – that turned out to be the most rapid increase since the beginning of 2008. Such a dynamics was observed despite the results of the polls, which predict the situation when neither of the Parties manages to get the majority thereupon the elections on May, 6. Immediately it will turn out when the effectiveness of this legislative body is doubted, moreover, Great Britain faces urgent necessity to solve the problems of curtailing the recorded possible budgeting deficit. The fact of this problem causes great doubts as for the steadiness of the sterling’s advance as there’re opinions at the market that it’s too early to place stacks on the advance of the GB pound by reason of risks, which is determined by the pendant elections. The economic news from the “Isles” will tell about the mortgage loaning in March today: here the growth is expected to 39.3 thousand from 35.3 thousand of pound; and also about the retailing in accordance with the line of the Confederation of the British Industries (CBI). The retailing indicator is presumed to rise up to 16 in April from 13 before. Obviously, there are no obstacles for the GB pound’s advance from the side of the macro economic indicators; though, as it seems, the political environment doesn’t presuppose the further enforcement of the sterling, still yet anyway.

   The dynamics of the yen’s trend against the US dollar at the Monday trades had nothing to be remarkable for as the Japanese currency resided within the narrow range for the whole session and completed the day almost neutrally to the “buck”. Obviously, some lull in the European market made the investors to have a short rest break. Even the steady optimism at the US stock market and good United States corporative statements didn’t afford grounds for further sales of the Japanese currency due to such background. Obviously, the market has already been entering a phase of expectances of FOMC resolutions and also commentaries that accompany them. On that basis it’s reasonable to expect the maintenance of the dynamics within the narrow ranges for the pair of USD/JPY before the pronouncement of such decisions. Meanwhile, there’s risks of some dullness of the yen at the current session – that may come true during the publication of the news from the United States if the data as for the real estates prices and the consume confidence in the USA are good and so favor the raise of the profitability of the American T-Bonds.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst