The market passes for normal: events swiftly change, and the excessive inclination to risk occurred at the Thursday session once again. The successful bid auction for bonds’ placement in Spain calmed the market and favored the US Dollar’s sales-offs. Besides, the partially good statistics from Great Britain also gained momentum to the departure into the high profitable GB Pound and Euro. Nevertheless, the optimistic attitude didn’t spread to the Yen, which strengthened its positions to the US Dollar. Despite the dull statistics of the US economy even supported the “greenback” at some moment; the daily result was mainly unfavorable for the American currency. The represented information stated the inflation in the USA was restricted as the consumer price index (CPI) fell down in May for the second month running, and the core index increased a little. The May sagging was for 0.2% m/m, while in April the consumer prices showed -0.1% m/m. The core consumer price index (Core CPI), which doesn’t include the food products and energy resources prices and is taken into account by FRS in the course of determining its policy, grew up for 0.1%. The result of the kind was forecasted. By the way, the tempos of the kind allow FRS to keep velvet conditions and so maintain the economy. At the same time, some other data let down the investors – the Conference Board advancing index and purchasing managers’ index (PMI) of FRS Philadelphia. In accordance with the Thursday represented data stated 8.0 in June against 21.4 in May, while it was forecasted at 21. Further on, the number of the preliminary jobless claims grew up for 12 thousand till 472 thousand last week, despite the expectances of decrease for 6 thousand. The capacity of the secondary claims also increased for 88 thousand and blew up the total “army of jobless” from 4 483 to 4 571 thousand of persons. The negative trend was also observed in the foreign economic ties, because the current account’s deficit of the US payment balance in the 1st quarter raised for the third quarter running and made up to 109.0 Billion since after -100.9 Billion of dollar in the 4th quarter 2009. Frankly speaking, it was better than forecasted -120.3 Billion of dollar. There’s no significant statistics is going to be published in the USA today. It isn’t much in the Europe, too. That’s why it’s obviously reasonable to foresee the trading without any surprises just before the weekend. However, the burst of activity is also possible, of course, in case of publication of any political news.

   The Euro demonstrated advance during the Thursday session. The purchases of the common European currency increased thereupon the report about success at the action of the Spanish bonds’ placement. Though, this message was also suppressing as despite the living demand for both 10-years and 30-years bonds, the profitability turned out to be high, and the total amount of placement made 3.5 Billion of euro. Besides, the statements of the Swiss National Bank were also deterrent as they gave no hints on the disturbance with the Swiss Frank’s gain, and that in its turn determined slight chances for the Euro’s purchases by this financial institution. The beginning of the American session was remarkable for the transient pressure on the common European currency, because the inclination to risk decreased due to the dull achievements, which were represented in the US economic data, and also for the decline at the United States’ stock venues. Meanwhile, the market isn’t evidently going to put aside the apprehensions concerning the possible troubles in Spain and some other provincial countries of the Euro zone. As known, the negotiations between the representatives of EU / IMF and Spanish securities are currently held, and the information about this summit may be published today. Quite possible, it will be the main object of the market attention, and so, will make an influence upon the present events. The yesterday published ECB Monthly Bulletin represented the data on the debts of the Euro zone countries, and also noted the rapid growth of the net debt likely to the gross debt of the Euro zone’s governments – the former has already made 90% of the total GDP of last year. Furthermore, the presentation of development statement depicted the negative dynamics as the developmental volumes sank down for 0.3% m/m and 6.1% y/y in April. The present day news package isn’t large. The May producers’ price index (PPI) for Germany is going to be published with the raise for 0.2% m/m and 0.8% y/y. Quite unlikely, this item will make any significant influence upon the market. Obviously, Spain will be the most powerful factor of influence today as mentioned above.

   Initially, the GB Pound went ahead sagging at the Thursday session. This process had spread from the end of the preceding session due to the appearance of the Bank of England’s Governor M. King. The speech of the Head of BoE had announcements of further maintenance of the velvet monetary-crediting policy, even despite the inflation galloping over the country. The situation changed thereupon the publication of the data on the retail sales in Great Britain. These data demonstrated more essential raise of the retails in May and so supported the Sterling for the rest of the trading day, of course. The capacity of the retail sales grew up for 0.6% m/m and 2.2% y/y in May, while the growth was foreseen for 0.3% m/m, 2.1% y/y. The waiting for the Football Mundial, which caused the increase of the food products and electric devices’ sales, is considered as the reason for such an upturn. The investors’ spirits weren’t even abated by the later published data from the Confederation of the British Industries (CBI), which turned to be worse than forecasted. The British industrial production index (IPI) lowered down to -23 in June compared to -18 in May, despite the expectances of the increase till -15. The today economic news from the “Isles” is interesting and important for the Sterling, because the publicizing of the state finances is planned, and the net borrowings for May are predicted rising to 18.3 Billion since after previous 10.0 Billion of pound. If the values appear to be higher the “cable” won’t avoid the sales, just the same as in case of shortage of the M3 money supply, which is going to be represented today as well – the forecast expects 0.2% m/m, 3.2% y/y.

   The Japanese currency strengthened to the US Dollar at the Thursday session and fell outside the limits of the sideways consolidation range, where exactly it has resided for 8 days. The Yen’s advance to the “buck” began at the American session. It might obviously be connected to the publication of the dull statistics on the American economy and also to the completion of the carry trade deals by the deposed from their self-possession investors. The yesterday published April indexes of the advancing and coincident indicators stated decrease. Probably, that was partially depicted in the today represented minutes of the Bank of Japan. The members of the BoJ Governing Board were more Fabian while estimating the Japanese economic prospects due to the European troubles. Besides, in the end of May a new administrative body responsible for crediting of the commercial banks at the interest rate of 0.1% was established. As known, it was resolved to grant the assets for crediting in amount up to 3 Trillion of yen by means of this unit. As concerning the Yen’s prospects, it’s reasonable to predict the composed manner of the move at the cross of USD/JPY considering the current ambiguity, or even more, the comeback into the range and further sideways move.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst