The US Dollar was traded to the European currencies mainly ranging at the Wednesday session. However, the range was broad enough concerning the GB Pound, and narrow as for the Euro. Finally, the neutral result was stated as for the GB Pound and very little loss to the Euro, while there was a confident gain to the Yen, because the Japanese currency yielded to the US Dollar its attractiveness as a currency shelter in the current political environment. There wasn’t much data on the US economy. Strictly speaking, the only outstanding realty sales transactions attracted attention. As it turned out, in April much more than forecasted completed sales contracts were booked thanks to the expiration of the federal tax benefits on April, 30. That’s why the households hurried to fulfill their intents to purchase residence. In accordance with the represented statement the ready home sales contracts index grew up for 6.0% in April, whereas the forecasts expected the raise for 5.0% only. There’s going to be much more economic information concerning the United States today. Moreover, it’s very essential. First of all, it’s the statistics package that touches upon the labor market i.e., the ADP data, which are forecasted increasing for 56 thousand payrolls and the number of the jobless claims, which are foreseen with the decrease of preliminary ones for 10 thousand. Furthermore, the speeches of the FRS top-management will occur in the very focus of attention: Rosengran, Hannig and certainly the Head of the Institution B. Bernankey are among them. In anticipation of publication of the Main Labor Report the information about the employment might be taken at the market as calling for dynamic action, that’s why the volatility splash is quite possible since the beginning of the American session. Besides, the FOMC Member Hannig is famous for his “hawkish” position so his speech may also become one of the factors influencing upon the market. as concerning the US Dollar’s positions, most likely, the expectance of publication of the tomorrow report will restrict the investors and cause the ranging trades during the current session.

   The former session completed with the Euro’s slight growth to the US Dollar, which might be considered as a surprise in the current terms of still relevant apprehensions as for the national debts of the Euro zone’s countries. The common European currency demonstrates evident raise of steadiness to the “buck” as even the announcement of the National Bank of Iran about the intent to sell 45 Billion of euro drawn on the reserves to purchase the US Dollar and gold never caused massive sales-offs. The yesterday represented data on the EU economy noted the increase of the price pressure within the Euro zone. The producers’ prices index (PPI) demonstrated in April the most significant upturn for almost 2 years due to the power resources and noncapital items prices increase. Following the statistics reports the PPI grew up for 0.9% m/m and 2.8% y/y in April; that became the greatest raise since the second half of 2008. The analysts’ forecasts presumed the increase for 0.7% m/m and 2.6% y/y. today not much economic data are going to be represented again. The April retail sales in the Euro zone will be publicized. Here the month increase is presumed for 01.1% and -0.1% tumble per annum. Besides, the May PMI for the services of both the Euro zone and Germany are going to be published: here the positive result is expected, which will coincide to the advance estimation of 56.0 and 53.7 correspondingly. This indicator will be published for Italy and France as well, at that the growth is expected in Italy in comparison to the former estimation. Obviously, the home statistics will make little influence on the Euro, and the data from the USA can be the main dirver.

   The British Pound showed impressive crests and troughs at the Wednesday trades, but completed the day at the opening prices and so stated neutrality finally. Obviously, the splash of purchases was provided with the confirmation that The Prudential declared its refusal to purchase AIA. That involved new investors into the GB Pound purchasing. The British Clearing Bank neglected the currency hedge buying transactions as for presupposed purchasing. The afterwards GB Pound tumble can be reasoned by the profit fixation from the side of the market players, which had opened long positions over the Sterling before basing on hearings. The publications about the “Isles” economy noted the restriction of the British net consumer crediting in April as the general volume of the consumer crediting grew up for 354 Million of pound in April compared to the increase for 304 Million in March, whereas the March value was revised downgrading as firstly it had been spoken about the growth for 600 Million of pound. The forecasts resolved to the possible upturn for 1.0 Billion of pound. The mortgage loaning was more impressive as the April increase was for 490 Million since after +168 Million of pound in March. However, the growth of the M4 money supply retarded in April, because this indicator grew up for 0.3% m/m only last month just after +1.0% in March. Despite the inflow of 200 Billion of pound, the dull dynamics considering the money supply accumulation proves the slow tempos of the crediting market’s defrosting. That certainly never sets mind on expectances of increasing tempos of the economic recovery. The yesterday published PMI for the development branch noted the raise of activity in May, because the indicator upturned from 58.2 to 58.5, while expecting of 58.3. The development branch is the weakest in Britain so the confident growth of this indicator surely proves the positive changes. The last third of the British business activity’s “triptych” i.e., the services PMI for May is going to be published today. Here the growth from 55.3 to 55.6 is expected. The services branch is the most voluminous in the British economy, and so the good data on it may add to the Sterling’s support at the current trades.

   The Yen became a hostage of the political crisis in Japan at the Wednesday session and so stated quite great losses to all Majors. The dullness of the Japanese currency was caused by the resignation of the Prime-Minister of Japan Yu. Khitoyama. This fact reasoned the ambiguity concerning the further strategies as for the Yen. On the other hand, the hearings that the Minister of Finances N. Khan is the most probable candidate for the Prime-Minister favored the increase of pressure. The Minister of Finances N. Khan is known as the advocate for the dull Yen, that’s why the sales of the Japanese currency can go ahead until it becomes clear who heads the Japanese Government. The today published information has stated the shortage of the capital expenditure in the 1st quarter had occurred to be more than expected, because the fact was -11.5% q/q since after -17.3% q/q, alongside to the expectances of -9.5% q/q. Obviously, the political component will further be the main factor of influence upon the currency of “The Land of Rising Sun”. Nevertheless, it isn’t worth of expecting the great dullness most likely, because the apprehensions considering the European troubles are great and so the comeback into the Yen as a currency shelter may renew.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst