The political component of the first day at the current week was distinctly ranged with the US dollar. The appearance of the Prime-Minister of China W. Jiabao, which brought the decisive denial to make concessions as for the current monetary-crediting policy of the “Heavenly Empire” and also the declaration that the international pressure upon China aimed to enforce the yuan was non-productive as the investors’ willing to risk had greatly decrease and so reasoned the “buck” enforcement from the very beginning of the trades. Besides, the uncertainty in the Euro zone has also provided the lowering down of the appetite to risk as the untrue information concerning the EU readiness to render a great aid to Greece was discovered again. Also, the departure from risk was also encouraged by the dull statistics from Great Britain together with the report of the Moody’s Rating Agency with the warning about the crediting ratings of the USA, Great Britain, France, and Germany. The US dollar has grown up against this background against the majors, except for the yen, but the losses against the latter were insufficient. The publication of the economic data made almost non influence upon the development of the market events. The statement of the US long-termed T-Bonds’ net purchases by the foreign investors demonstrated much less satisfactory result in January than expected as the purchases summed up to 19.1 Billion of dollar after 63.3 Billion of dollar in December, alongside to the forecast of 50.0. The February manufacturing data showed the growth for 0.1 per cent as it was generally expected by the forecasts; however, the processing sector curtailed its production in February for 0.2 per cent m/m; whereas the raise for 0.9 per cent m/m was fixed. The productive capacities’ workload in this branch grew up to 88.2 per cent from 86.4 per cent. The Business Environment Tasks (BET) decrease a little in March in the territory of jurisdiction of FRS New York, the current terms index for the manufacturing decreased to 22.9 from 24.9 in February, but the indicators that denote prospects increased as the new orders’ index amounted to 25.4 after 8.8 in a month before, the supplies’ index rose to 28.6 from 15.1, and finally, the employment grew up to 12.4 from 5.6 in February. Though, the main portion of disappointment was provided by the data from the National Associations of the House Builders of the USA (NAHB). Both the snowfalls and the cheap secondary market accommodation due to the pledged property redemption’s forfeit greatly decreased the US residence developers’ mood in March. The housing market index fell down till 15 points in March after 17 in February; whereas it was forecasted that the index would be maintained at 17. The today statistics will be mainly represented with results of the development branch in February as the decrease of the new houses’ laying capacity is expected to 570 thousand from 591 thousand together with the shortage of the development permissions to 610 thousand from 621 thousand. However, the main focus of the market’s attention and expectances will be concentrated at the pronouncement of the FOMC decision concerning the rates and the commentaries that determine the positions of FRS as for the issues of the monetary-crediting policy. The investors anchor their hopes to catch the hints on the rapid beginning of the stiffening; and if it takes its place the US dollar will get the support and continue its enforcement.
EUR
Its quite possible, that one of the reason of the euro decrease at Monday session was the investors’ willing to fix the profit after the growth on Friday; but as it seems, this reason was far from being the main one. The main factors of pressure upon the European currency became the harsh statement of the Prime Minister of China, which was accepted as the event that might instigate the trading either the financial war between the USA and China, and the information connected to the aid for Greece. Mass media reports that the assistance would be rendered to Greece at the rate of 25 Billion of euro, were refuted at first by Germany and then by the representatives of the Euro Commission. The announcement of the spokesman of the Euro Commission resolved itself to the readiness to enter into negotiations, and also discussion of technical moments took place, but no decisions were adopted, and all the conversations were nothing but mere profiteering. It was enough to drop the common currency till the levels where since the growth of the euro had been started on Friday and even lower a bit. In other words, the common currency has returned all achieved earlier to the US dollar. Concerning the fundamental news the data about the changes of the payrolls in the Euro zone for the 4th quarter of 2009 were represented only. The employment in the Euro zone fell down for 347 thousand i.e., for 0.2 per cent in comparison with the 3rd quarter when the decrease was for 0.5 per cent q/q. The EU economic news tape of today will represent the data from ZEW Institute. According to the official line of this very Institute the economic sentiment index is expected in Germany in March to demonstrate the decrease again as it’s predicted to see 43.5 after 45.1 in the previous month; moreover, this indicator will fall down in the Euro zone as a whole. The current conditions evaluation’s index is likely to increase till -52.0 from 54.8 vice versa. Nevertheless, the main checkpoint for the investors will be the reports about the solution of the question concerning rendering the assistance for Greece, and also about the FRS decision afterwards.
GBP
The tunes in concerning of the GB pound turned out to be minor again. The pressure upon the British pound was initiated by the report of the Rightmove Company as it stated that according to the official line of the company the housing prices had slightly changed in March compared to February. The homes prices index demonstrated +0.1 per cent m/m after +3.2 per cent m/m in the former month. In the annual comparison the dynamics was as follows: +5.3 per cent y/y in March and 6.1 per cent y/y in February. The commentaries to the report declared the increase of the sellers’ capacity in March by one third against March last year and for 17.5 per cent compared to February. It has certainly disappointed the investors as it was far from being the first warning about the completeness of the wildcat rush at the real estates market in the “Isles”; moreover, the recent RICS report has also warned about this lately. Furthermore, the pressure upon the GB pound was also provided the warnings of the Moody’s concerning the crediting ratings of the country, and finally, the total tunes of the market as it got a sound causes for the curtailing of optimism amidst the information both from China and the Continent concerning the Greek issues. The apprehensions connected to the parliamentary elections, when the Parliament may get a balance, are always taken into account by the market recently and making pressure upon the sterling relatively. The news set for today is meager enough and represented with the data of another market researcher, DCLG. As the forecasts presuppose the housing prices index for January will show the growth from 2.9 per cent to 3.6 per cent by reckoning of DCLG. It’s unlikely to make any influence upon the investors and support the GB pound anyway. The British currency will obviously be dependent upon the exterior information and most likely traded within ranges until the publicizing of the breaking news – the FOMC decision concerning the rates and also the commentaries as for the monetary-crediting policy’s prospects.
JPY
The currency of Japan completed Monday trades with a little advantage against the US dollar. The investors’ unwilling to risk as usual made popular a shelter-currency, which is the yen stays further. Probably, some optimism concerning the yen has also “filtered its way” to the market amidst the increase of the economic evaluation from the side of the Japanese state authorities in March for the first time for last eight months and also the growth of the consumer confidence index in Japan higher than predicted. The consumer sentiment index that is usually calculated by the Cabinet of Ministers of the “Land of the Rising Sun” grew up to 39.8 in February against 39.0 in January. The components of the report have demonstrated a nice dynamics as the labor market consumers’ opinion subindex rose for 1.1 point till 34.2 point in February, and the revenues prospects’ opinion subindex enlarged for 0.9 point till 38.8 point. Meanwhile, the state authorities’ commentaries concerning the deflation that reflects itself negatively at the economic recovery made a restrictive influence upon the investors as they encouraged the apprehensions that the Bank of Japan would already have to adopt the decision about the increasing of the liquidities extensions special program at the meeting which would finish tomorrow. There’re also some anxieties that BoJ may enlarge twice the crediting provision’s capacity. The volume of the program is still 10 Trillion of yen just now, and the loan extension rate is recorded low, at 0.1 per cent. No news about the economy of Japan either has already been published or is going to be today. That’s why the yen is going to be traded at the expectances of the FRS decision concerning the rates and the political prospects as well.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst