The first day of the week is best remembered for dull and languid trades. The initial US Dollar’s strengthening to the European currencies and simultaneous loss to the Yen was obviously a consequence of the maintained “bubbling” of Friday. Moreover, the weekend news most likely favored the inclination of departure out of risk. The reports of the German mass media about admissible resolution of The High Court of Germany (Der Bundesgerichtshof Deutschlands) prohibiting the country to participate in creation of the stabilization fund and also the discovery of break between the Euro zone countries in course of the G20 summit couldn’t naturally provide any support to the European currencies. Later on, however, the European economic information supported the currencies of the Europe, and the losses were neglected, even more, both the GB Pound and Euro became the leaders of the trades for some moment. Despite that, the day was completed neutrally if considering the last Friday closing prices as a reference point. There wasn’t much economic statistics from the USA. The data from the Conference Board were the only thing worth remembering as they stated the positive dynamics in the labor market’s recovery as opposed to the Friday information about the US employment. The US employment trends’ index grew up for 0.6% till 95.7 in May against the revised April value of 95.2. As stated before, this indicator made 94.7 in April. The information about the consumer crediting in April caused some disturbance as the indicator demonstrated raise for 1.0 Billion of dollar, but the March value was revised downgrading to -5.4 Billion from +2.0 Billion of dollar. There’s going to be not much economic news today as well. The IBD/TIPP economic sentiment index for May is forecasted increasing to 49.3 from 48.7 so it will attract attention. The interview of the Head of FRS B. Bernankey, which has already taken its place today, was optimistically severed and stated that the American economy was currently demonstrating the raise, the recovery was steady, and the private sector was the driver of the recovery. Nevertheless, he also mentioned the recovery was sluggish and the interest rates would low for some time. This speech has made no impact on the market, and the US Dollar is currently traded declining to the European currencies. In general, the near prospects of the “buck” may obviously be connected to the profit fixation and so, the short-term weakening of the US Dollar is probable.

   The apprehensions concerning the spreading of the national debts’ default over the Euro zone is still the main driver of the market and also the ground of the investors’ attitude. Moreover, the matter looks like changing manner as the talks about the dissolution of the Euro zone greatly strengthen. In other words, the nature of this crisis is rapidly changing, and so, the investors take stock of the European system in general. Nevertheless, the Euro could keep gaining to the US Dollar for some time at the European session on Monday due to fair good data on the EU largest economy, i.e., Germany. The German processing orders suddenly grew up for 2.8% in April by reason of the raise of both the inner and foreign demand. The result significantly succeeded the forecasts, which predicted the shortage for 0.5%. The increase of the foreign orders for 4.7% m/m states that the dull Euro helps greatly the German economy. The today news background is again connected to the German data. The manufacturing indicators of the European largest economy are going to be published. The monthly slowdown of the manufacturing increase is predicted as the forecast says about +0.7% m/m in April thereupon +4.0% in March. Besides, the April data on the trading balance will probably show the cutting down of the surplus, though by a finger’s breadth. As it’s seen, the Euro shouldn’t expect the support from the side of the statistics. So, the Euro’s sales may increase if no surprise happens, just like yesterday data mentioned the

   The British Pound reviewed the Euro’s stunt, recovered just after the initial move and then showed the steadiness to the US Dollar during the major part of the former session. Though, it lost some of its positions, but managed to complete the day above the opening prices, though at the closing degree of last Friday only. Also possible, the announcements of the British Prime-Minister D. Cameron favored the weakening of the Sterling, because it was stated that the analysis of the state sector’s financial state, which had been made by the new government, discovered more serious difficulties than expected. Quote as saying of the new leader of the country, up to 2015 the interest payment would be higher than the total amount of the budgetary expenditures on the education, transportation and climate changes, and exceed almost twice the budgetary revenues of the corporate profit tax. By all means, the prospects of the kind could never serve as a factor of interest maintenance as for the Sterling at high rate. The today published data have shown the recovery of the retail sales in the “Isles” in the previous month. The British Retailing Consortium (BRC) research finding stated the May increase of the retail sales for 0.8% y/y thereupon -2.3% y/y in April. Quite likely, these particular data are currently supporting the Sterling, which is advancing at the present session. Also possible, the upturn may go ahead, though, as it seems, it’ll be impermanent after all. The investors will renew the subject matter of the British budgeting troubles and the probability of the economic recovery’s slowdown due to the state expenditures’ cutting down.

   On Monday the Japanese currency was traditionally traded: it strengthened in the high profitable currencies’ sales-offs moments and weakened when the inclination to risk increased. The fluctuating climate of the market reasoned both the advance of the Yen in the opening and closing of the trading day and its sagging in the middle of the session. The market is looking forward for the comments of the new emerged of the Prime-Minister of Japan N. Khan expecting to get the sign of any changes in the financial policy of the country. The information about the indicators of the Japanese economy has already been represented today. The main indicator showed heartening results – the Japanese current transactions’ surplus extended in April, and that stated the fact of supporting of the economic recovery from the side of the export. The data demonstrated the raise of the surplus to 1.242 Trillion of yen, whereas the forecast predicted 1.3 Trillion of yen. Besides, the growth of the M2 and M3 money supplies was noted in May for 2.3% y/y compared to +2.2% and for 3.1% y/y against +2.9 correspondingly. However, the banking crediting curtailed even more in May – for 2.1% y/y thereupon -1.9% in April. The currency of Japan renewed the decline at the today trades despite the positive data of the foreign trading. The Yen will obviously maintain the multi directional volatility until the new checkpoints are given by the new Head of the Japanese Government.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst