Last might be divided into two parts – the course of event in the first half was tinted with “bullish” for the US dollar, whereas the second one was distinctly “bearish”. The American currency was enforcing itself against the Europeans amidst the maintained apprehensions concerning the Euro zone countries’ budgeting troubles together with the political-economic problems of Great Britain. The increase in the volume of the “greenback” purchases was also provided with the announcements of the rating agencies repelling the investors’ inclination to risk due to their warnings of possible rating decrease of both Portugal and the British banks this time. The “buck” showed the lack of termination to the yen as usual during the market’s departure out of risk, but the enforcement against the latter since the change of mood had occurred. Moreover, the final month of the fiscal year has also become a factor that provided the interest boost to the Japanese currency. The US dollar’s purchases have been instigated by the release of tension in the EU, since the Greek Prime-Minister made an almost round-the-world trip and brought about understanding both in the Europe and the USA. It’s also not inconceivable that the extra pressure upon the “greenback” was provided by the information about the intention of B. Obama to recommend the candidate of the President of the Federal Reserve Bank of San Francisco D. Yellen for the post of the Vice-Chairman of FRS USA, because the Head of FRB San Francisco is considered to be among the most ardent supporters of the velvet monetary-crediting policy. As a result, the US dollar has completed the week with losses as for the Europeans and also with a slight increase against the yen. Meanwhile, it should also be mentioned the US economic data of the former weekly session were remarkable for the positive dynamics as the wholesales commodities lowered down in January in the forefront of the rapid increase of sales, and that in its turn “threatens” with the orders’ growth and certainly with raise of GDP. The trading deficit curtailed to 37.3 Billion of dollar in January from -40.2 Billion of dollar alongside to the forecasts of its enlargement. The consumer crediting grew up in January, and that became the first case for last year. The retailing data also encouraged in February as they were denoted with growth for 0.3 per cent instead of expected downfall for 0.1 per cent. However, the disappointing data were certainly in all this as the Michigan consumer sentiment decreased, and the budgeting deficit fixed its record in February, 221 Billion of dollar; whereas during the current fiscal year in general, which began in October in the United States, the deficit reached 651.6 Billion of dollar. Although, the positive was also marked out at the publication of this information, while for the first time in recent 2 years the budgeting revenues were higher in the annual comparison. There’s going to be quite much significant news from the USA; though the key event for the market will become the meeting of the Federal Open Market Committee (FOMC), which may afford the checkpoints in concerns of the heading for the US regulator’s monetary-crediting policy. Besides, the precise attention will be put to the February manufacturing data, where the growth is expected; also to the development sector’s affairs, whereof the less encouraging information may appear; and finally, to the inflation processes’ dynamics as in the manufacturing, so in the consumption. At that the prices of both PPI and CPI promise to demonstrate the increase.
EUR
The common European currency has started this week with the decrease, but completed with a confident growth, that’s why it was worth to be supposed the leader of the raise against the US dollar resulting the session. The pains of the Greek Prime Minister and the announcements that both Germany and France were ready to undertake the leading part in rendering aid for Greece, afforded grounds for some optimism among the investors. It was indicated that the German and French governments jointly arranged the Greek rescue schedule, which is variously estimated (better to say hearings) form 30 to 55 Billion of euro for the financial support, which consists of crediting guarantees and T-Bonds relief up to the end of the current year. Besides, the idea to establish their own i.e., European, MIF gets a shot in the arm; this very idea was accepted graciously among all countries of the Euro block, excepting Germany. The situation of such kind encourages the presumptions that the own “skeleton in the closet” i.e., the risks of budgeting problems’ escalation has each and every EU countries, except for Germany, and that grounds such loyalty to this issue from their part. There was not much economic news as for the Euro zone, and they were represented by the data from Germany overwhelmingly. The trading balance of the EU largest economy demonstrated a surplus’ shortage; on the plus side the manufacturing showed a confident growth for 0.6 per cent m/m, 2.2 per cent y/y; as admittedly for the Euro zone in general, where it was 1.7 per cent m/m, 1.4 per cent y/y. The consumer prices of Germany increased as it was fixed 0.4 per cent m/m, 0.6 per cent y/y in February. By and large, it influenced upon the market, the sales of the euro were noticeable after the announcement of the German export’s downfall for 6.3 per cent monthly and the purchases within more optimistic manufacturing. The EU news assortment will be represented this week by the ZEW economic sentiment and confidences indexes in March; as the report of this research institute is expected to demonstrate more pessimism, and the indicators will demonstrate the falling down. The shortage of the foreign trading surplus of the Euro zone is also forecasts, and that is enough expectable, thereupon both France and Germany demonstrated the export decrease and the growth of import. Besides, the final data as for the February consumer prices inflation in the Euro zone will be represented, which will probably denote the decrease. The producers’ prices index (PPI) of Germany for January is also expected with the retardation of the monthly growing tempos in comparison with December. As seen, EU economic fundamental news is far from promising any support to the euro as for the increasing endurance, and that makes more significant the political factor. In other words, the common currency will greatly depend on the news about the budgeting troubles, and any announcement of negative character in this purpose, inclusive of the rating agencies, are able to cease the raise of the common currency.
GBP
The GB pound was decreasing during the first three days of the former week. The British economic data got back the high level of negative, which lowered down a bit till the end of the week that preceded the former one as for the sterling. The foundation to those negative trends was laid by the housing prices data, which have seemingly retarded, at that greatly, the wildcat increase in the “Isles” that renovated last year. The statements of the rating agencies concerning the threatens to the sovereign rating of Great Britain and also the rating of some British banks added “oil into flames” and strengthened the sales of the sterling. Furthermore, the pressure upon the GB pound was also provided by the foreign trading data as the British trading balance’s deficit has risen to its maximum since 2008; finally, the export default was for 6.9 per cent. The last news that enhanced the pressure upon the “cable” concerned the manufacturing in the “Isles” and also its processing area. Those data have demonstrated the downfall, whereas the monthly growth was expected. Nevertheless, the weekly totals were on the “profit” of the British currency against the US dollar, though a little one. The lost of almost 250 points by the sterling grounded the attractiveness of the profit fixation for the sales transactions, and that in its turn laid a foot on the beginning of the lost positions’ redemption. Furthermore, the support for the “cable” was also provided by the announcements of the representatives of the Bank of England that the quantitative softening programs had been completed. The optimistic splash during the final day of the weekly trades granted the possibility for the British currency to neglect its losses against the “buck” completely and finished the session with growth. The news set concerning Great Britain scheduled for this week will include enough significant information as the minutes from the recent meeting of the Bank of England will be publicized, whereof the market will try to get the confirmation for the absence of the intents from the side of the British regulator to continue the implementation of the securities retirement program. Besides, the February unemployment data will be published, where a slight diminishing of the jobless claims’ quantity together with the maintenance of the level without any changes is expected to be seen. However, the information about the state finances for February will turn out to be in the focus of attention, which is expected to represent less significant borrowing amounts in the annual comparison, while the money supply – with a growth in February but a shortage per annum. The absence of the explicit negative in the economic data may permit the sterling to continue it already started increase. However, the misgivings are caused by the political component of the weekly news background as it’s connected to the appearances of the BoE top-management, where another announcements determining the raise of the negative attitude to the sterling; all the more so the Governor of the Bank of England M. King emphasized numerously that it’s too early to speak about the accomplishment of the quantitative softening.
JPY
The currency of Japan completed the weekly trades with a little decrease against the US dollar, but with great losses in course of its controversy to both the euro and GB pound. The yen’s steadiness against the rest of majors was observed during the first days of the session only when there was no inclination to risk in fact, and the Japanese currency was purchased as a shelter-currency. The support for the yen was probably provided from the side of the profit’s repatriation by the Japanese companies due to the beginning of the final month in the fiscal year. The release of tension in concerns of the Europeans budgeting deficits has afforded grounds for the investors’ enthusiasm and the enlargement of the risky transactions with the participation of the yen as a foundering currency. The yen’s derogation was also caused by the announcements of the Japanese state authorities about their willing to see the domestic currency weaker; that in its turn instigated the anxieties’ raise concerning the probability of the interventions. The statistics from the “Land of the Rising Sun” fixed in January the downfall of the machinery orders for 3.7 per cent m/m, the producers’ transfer prices’ increase per month, but the maintenance of the minus per annum; also the curtail of the banking crediting and a slight growth of the payment balance’s surplus in January. The data stating the runup of the Japanese GDP in the 4th quarter made good impressions as the uplift made 0.9 per cent: generally speaking it turned out to be the best achievement among other mature economies. However, there’re causes for doubts here as well as it’s enough to remember that the indicators for the 3rd quarter have been revised to worse side and by all ends turned out to be much weaker than the advancing evaluation. The same may happen with the data for the 4th quarter. There’s going to be not much news as for the economy of Japan this week. First of all the householders’ confidence index for February will be published; here the increase is expected from 39.0 to 40.0. Besides, the interest will be also warmed up by purchasing managers’ index for the services for January, while the forecasts are looking forward for the growth in this branch for 1.3 per cent after -0.9 per cent before. However, the most important weekly event will be the pronouncement of the decisions concerning the rates by the Bank of Japan. Most likely, the rates won’t be changed, but the market is apprehensive about the CB of Japan will go the length of further softening of the monetary-crediting policy and adopt the decision about the widening of measures aimed to the advances of funds. This information will be represented on Wednesday just after the two-days meeting of the Japanese regulator. The prospects of this kind afford quite good grounds for the presumptions about the yen’s decrease. However, much will also depend upon what expectances of the market will be connected to the FRS news that is also going to be publicized on Wednesday.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
