The pressure on the US Dollar occurred during the Wednesday session as well, but it was evidently squeezed. That’s why the “buck” losses were much less than before. Such weaker activity could obviously be explained with the investors’ caution in the anticipation of the publication of the important statistics in the USA and mainly the publicizing of the minutes from the last meeting of the Federal Open Market Committee (FOMC). However, the representation of this desirable news never afforded grounds for the deals’ increasing; so, as a result, the “greenback” lost slightly to the Euro, though a bit more to both the GB Pound and Yen. The American currency’s “opponents” were also supported by the unexpectedly better corporative income statements of the Alcoa and Intel companies. As concerning the economic data, they occurred less encouraging this time again, because the US retail sales were sagging down for the second month running in June – it was reported -0.5% m/m despite the forecasts of -0.3% m/m, and compared to the May value of -1.1% m/m. This parameter is the key indicator of the consumer expenditures and it currently demonstrates the downgrading trend in the demand processes, which in its turn causes doubts in the stable recovery. The corporative commodities again increased in May, though less than predicted, as it was +0.1% m/m, whereas the analysts foresaw the upturn of the indicator for 0.2% m/m. The minutes of the FOMC meeting failed to live up to the market’s hopes for getting the checkpoints, because both the risks of the slowdown in the recovery were claimed and the economic forecasts were downgraded. According to the opinion of FRS, the US GDP upturn is to be for 3.0%-3.5% this year, while the former forecasts predicted the increase for 3.2%-3.7%. There’s going to be quite a lot of news: the June value of the producers’ price index (PPI) is going to be represented; it’s predicted going ahead easing the prices’ pressure as -0.2% m/m is currently expected after -03% m/m. Also, the manufacturing output is most likely remaining unchangeable in June, 0.0% m/m, and finally, the weekly capacity of the jobless claims will probably curtail for 4 thousand. Besides, the regional data on the business behavior from the FRB of Philadelphia and New York will also arouse interest. As for predicting the market prospects, it’s worth being taken into account that there were no changes actually, and the US Dollar will go ahead being suppressed most likely. On the other hand, the ranging trades are possible with the quotation drift against the US Dollar in case of reluctance of more reasons for optimism.

   The Euro went ahead gaining to the US Dollar yesterday, though the totals were much less impressive than at the previous session. The market players were looking forward for some more trading checkpoints from FRS, and that certainly reduced the Euro purchasing activity. Moreover, quite dull data on the Euro zone economy also restricted the “bullish” intents of the investors. Nevertheless, the common European currency stated profit in its cross with the “buck” at the last session. As represented by the European Union Statistics Agency, the manufacturing output grew up for 0.9% m/m and 9.4% y/y in May, though the analysts expected more, as the raise should have been for 1.3% m/m and 11.3% y/y. That certainly disenchanted the market and suppressed the Euro for a while. Furthermore, the recently represented June data on the consumer prices inflation fixed slowdown as the consumer price index (CPI) grew up for 1.4% y/y thereupon +1.6% y/y in May, while it was +0.1% in a monthly comparison, just like the value of the former month. The comments point to the June decline of the annual inflation in three greatest Euro zone economies – Germany, France, and Italy. That obviously proves the negative dynamics in the market demand. However, the core consumer price index (Core CPI), which discounts the food products and energy resources prices, increased for 0.9% in June, while ECB evidently relies on this indicator exactly in the course of the inflationary analysis. The mass media broke a story, which compelled to presuppose that the Spanish banking sector will become another matter for the great concerns of the market. As stated, the capacity of the financing, which was granted by ECB to the Spanish commercial banks, hit new record high in June, as the financial institutions of this European country currently face even greater troubles while obtaining funds at the international venues. The Spanish banks managed to raised 126.3 Billion of euro in June, that was more than the May value for 48%, even amidst the cut down in the financing of other Euro zone countries’ banks. The ECB Monthly Statistics Report is going to be represented today, but no statistics should be published. That’s why the Euro will incur influence of the exterior information.

   The British Sterling stood to the most gain to the US Dollar at the yesterday session thanks to the good data on the British employment, which favored the arouse of interest in the GB Pound. In accordance with the represented data, the number of the jobless curtailed for 20.8 thousand, whereas the former month’s shortage of the jobless claims’ capacity was for 31.1 thousand in accordance with the recent upgrading revision of the May value, while the unemployment rate amounted 4.6%. The jobless’ indicator, which was calculated regarding the methods and standards of the International Labor Organization (ILO), also demonstrated decline for -34.0 thousand, and the unemployment rate was 7.8% after 7.9% in May. Of course, the encouraging totals of such parameter as unemployment, which is a “hot button” all around the world, added to the positive market mood and upraised the “cable” till the two-month maximum. The today news from the “Isles” will be quite meager and seems to provide negative for the GB Pound, because the forecasts for the outstanding mortgage loans predict the minus result, -3.1 Billion of pound. Moreover, the member of the Monetary Policy Committee of the Bank of England D. Miles who is famous for his “dovish” views on the policy’s perspectives of the British regulator is going to speak, and his statements may suppress the Sterling.

   The currency of Japan gained to the US Dollar reasonably great at the previous session and that offers taking pessimistically the current layout of the stock markets and also the current state of affairs of the risky assets. The Yen’s strengthening confirms that the investors don’t intend to depart out of a currency shelter, which means the slack basis of the current market optimism and also the existence of the reasons for change of the market climate at a moment’s notice. Nevertheless, the Japanese currency incurred pressure in the opening of the trades amidst the positive American corporative statements, though it managed to neglect the former losses just after the publicizing of the disenchanting data on the US economy. The Bank of Japan’s decision concerning the interest rate has already been pronounced today: the regulator has kept the interest rates unchangeable and also noticed the expectances of slowdown in the economic growth next year. Though, the forecast of growth for the present fiscal year, which is to finish in March 2011, was upgraded to 2.6% from formerly pronounced in April 1.8%. The anticipations of the GDP for the following year were cut down to 1.9% from 2.0%. The Yen’s perspectives still remain amorphous – the recently changed political environment might cause clampdown of the Parliament on the Central Bank demanding to take measures for inflation’s ceasing. The situation of the kind raises strengthens the probable comeback of the Japanese currency under pressure, as the anti-deflationary measures presuppose more easing in the monetary-crediting policy.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst