Results from the last session are insignificant: the dollar remained neutral against the euro and fell against the yen. The beginning of yesterday’s trading showed an increased risk appetite, caused by the growth of Asian stock indices. News from Australia, on the contrary, calmed down the market moods: optimism vanished, when inflation growth didn’t meet the market’s expectations, so it is now more pessimistic – Australian Reserve Bank is about to increase interest rates. Economic data from the US were no good either – Durable goods orders decreased in June, as it was in May. This tendency can be considered as a slowdown in industrial activity, which is damaging to economic recovery. Data shows a 1.0% decrease in durable goods orders and totaled 190.5 billion dollars, making economic instability in the US more obvious. Today there’s not so much news from America. Initial jobless claims are expected to show a slight decrease by 7-8 thousand. In other words, the upcoming statistics is not strong enough to put dollar under pressure, so range trading is likely to persist, unless some interesting statistics from other regions comes up and change the market’s mind.
EUR
Bullish attempts to push the euro to the new maximums were of no effect. The European currency retraced back to the initial Wednesday’s prices and closed the session around this price range. There was not much news on the Eurozone economy. Germany’s Consumer Price Index for July increased by 0.2% m/m ? ?? 1.1% y/y. Summer sales and seasonal price movements might have caused the pressure on prices, which remained below the expected by the European Central Bank 2% level. ECB has prepared a report for July. It says that European banks have suddenly changed their crediting standards to more severe due to the debt crisis and funding constraints. As a matter of fact, the market is getting suspicious about the European banking sector. Even though the stress tests had been successful enough, Fitch rating agency quarterly survey showed that the European investors were anxious about banks' refinancing challenges. There is a nice bit of news from the Eurozone today either. Unemployment in Germany is in the spotlight – it decreased by 0.1% to 7.6%. Sentiment Indices (Business Confidence, Industry Confidence, Services Confidence etc.) by the Euro Commission is also of a big interest. These indicators are expected to show a positive growth, which will support the euro, but only for a short period of time – banking sector problems, mentioned above are still the issue.
GBP
The pound kept its positions and the prices remained as they had been at the opening of the session. Today’s economic news will cover data on Britain’s credit financing in June, where we expect a decrease in activity. The volume of provided loans will probably be less then for the previous periods. Such dynamics will be observed all over – in consumer crediting and mortgage lending, and will probably have a negative impact on M4 money supply as well. Today sterling is likely to fall under pressure. All the more, the British Housing Market Index showed a decrease.
JPY
The Japanese currency opened Wednesday’s trading session with a fall against the dollar. Later on, the situation changed because poor economic data from the United States and a stock market fall brought the yen the status if an anchor currency back. Today’s economic data gives reasons to think, that economic recovery in Japan keeps on. Retail sales raised in June, total sales volume increased by 3.2% in comparison with the last year. Despite the fact, that Consumer Sentiment in Japan growth gradually from month to month, the yen is still influenced by the news from abroad. Today’s news didn’t bring about any optimism, so the yen will probably continue its growth.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
