The celebration of the Independence Day in the USA left a mark on the Monday trading session. The trading was remarkable for dullness amidst the limited liquidities by reason of the absence of the American market players, and so the major currency crosses completed the day almost with no changes – at the opening prices in fact. The US Dollar fixed no changes both to the Euro and Yen, because the former advance of the “greenback” due to the lock-in of the Friday opened positions was neglected. As concerning the GB Pound, there was a little profit of the US Dollar summarizing the day thanks to the pressure on the Sterling from the side of the inner economic data. Yesterday no US economic statistics was published; though today the only ISM index for the non-production branch for June is going to be represented. The indicator is predicted downgrading to 55.2 from 55.4 – just as it previously was for the manufacturing last week. The result of the kind may cause the negative attitude of the market to the American currency as the recent events have demonstrated lately the market focuses its attention on the data on the USA especially if they’re disenchanting. If it occurs so this time again and the ISM actual value appears to be worse than expected the pressure on the US Dollar will go ahead.

   The common European currency managed to keep the opening prices on Monday, though it slightly lost to the “buck” in the first half of the session. The news from the Europe was quite intensive as the statistics demonstrated the results of the investigation concerning the services branch’s activity both in some Euro zone countries, and all over the block in general, the data on the composite indicator of the business activity and also represented the information about the retail sales. In accordance with the represented data, the final value line composite purchasing managers’ index (PMI) for the Euro zone slid down to its three-month minimums at 56.0 in June against 56.4 in May. The value of the indicator for the services branch occurred to be higher than predicted: 55.5 after 56.2 in the former month, alongside to the forecasted decline till 55.4. The Euro zone retail sales increased in May for 0.2% m/m and 0.3% y/y, while the raise was foreseen for 0.4% m/m and for 0.7% y/y, moreover, the April values were revised upgrading. This statistics, especially the purchasing managers’ index (PMI) for the Euro zone, obviously prove the current recession of the economy after reaching the peak. That doesn’t certainly favor the popularity of the common currency. Furthermore, the investors never forget the EU countries’ troubles. That’s why the market will renew this subject in the mid-term anyway as soon as the slightest features of the exacerbation appear. Today no EU news is going to be published. So, the Euro will be influenced with the extra factors.

   The British Pound incurred the pressure during the major part of the last session and so completed the day with losses to the US Dollar, Euro and Yen. The negative attitude to the Sterling was reasoned by the publicizing of the disappointing data on the business activity in the predominant economic branch of the “Isles”. The purchasing managers’ index (PMI) for the British services fell down to 54.4 in June compared to 55.4 in May, despite the forecasted sagging to 55.0 only. The layout of the kind determined great disturbance as concerning the current state of affairs in the services branch and also the general economic recovery. Moreover, the Governmental intents of the expenditures reduction never invigorate long term. Also, this sagging was the third running decline of the index for the services. Today no British economic indicators are going to be represented. The Sterling will go ahead being under the impact of the extra information and general market’s attitude to the US Dollar. As the climate is negative in general the further advance of the “cable” may occur.

   Yesterday the Yen slightly lost to the US Dollar in the begging of the trading day and also during the Asian session because of the “buck” attractive rates purchasing by the Japanese importers. Later on, however, the price equaled out because of great apprehensions concerning the American economic data will go ahead showing their weakness. The daily result was flat i.e., the cross of USD/JPY completed the trades at the opening price. Today the beginning of the trading has been favorable for the Yen as the stock market has opened downgrading, though the rollback to the pair’s opening prices is observed at the very moment because of the Nikei index’s move above zero and suppressing the Yen. As concerning the short term prospects, the expectance of the dull values from the USA seems to recall to the Yen’s popularity, and so the cross of USD/JPY will be downgrading again. No significant statistics concerning Japan is going to be published this day. The May values of both the leading and coinciding economic indicators have already demonstrated sagging in the today reports.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst