The American currency was kept under pressure the whole trading session on Tuesday. The investors’ expectances obviously resolved themselves to the opinion that FRS would pronounce the maintenance of the rates at low levels for a long time still yet; that’s why, the “buck” sales began long before the United States regulator’s decision was reported. The analytics weren’t mistaken in their anticipations as FOMC kept the rates at the previous low recorded levels, and by virtue of the fact that the dull consumption is observed in the economy at the moment, moreover, decreased inflation and inflation expectances don’t cause any anxieties, it has promised to maintain the rates of the Federal Funds at low level for a long period of time. The rest of the political news, for example, the absence of any specifics in the reports of the European Group as for the plans of the Greece’s rescue made an insufficient and impermanent influence upon the investors – the US dollar grew up against the euro but for short, and then it yielded its positions. Most likely, the dull economic statistics’ data contributed to negative concerning the “greenback”, though they stayed within the predicted ranges. As it became known from the news the new houses’ development in the USA curtailed in February, the number of the new developments’ laying decreased for 5.9 per cent m/m and summed up 575 thousand. It has turned out to be the greatest shortage for last 5 months and looked especially disappointing amidst the enlargement of the laying capacity in January, as the latter fixe +6.6 per cent. However, the January value was revised to the side of increase as it had been reported about the growth for 2.8 per cent m/m before. The situation of the developments’ permissions is not better as this very indicator determines the anticipating capacities of the development i.e., give a rough idea of the prospects: the number of the developments’ permission fell down for 1.6 per cent till 612 thousand in February; whereas the forecasts expected the decrease for 3.1 per cent till 603 thousand per annum. The news of this day is going to be represented with the manufacturing inflation data; the producers’ prices indexes (PPI) are expected in February as follows: total should be -0.2 per cent m/m, 4.9 per cent y/y, and also core – 0.1 per cent m/m, 1.0 per cent y/y, in other words, with the increase, but within the targeting levels denoted by FRS – lower than 2.0 per cent y/y (the core one); and that in its turn will obviously never arouse any disturbance of the investors. The political events are worth of special attention as it may integrate sufficient corrections into the market events’ development – it runs about the appearance of B. Bernankey with the participation of P. Walker concerning the issue of the fiscal system’s regulation.

EUR
   The expectations connected to the plan of Greece’s rescue didn’t get precise information again. The Ministers of Finances of the Euro zone countries have discussed the ways of affordance of the financial support to this country, but haven’t represented to the market any detailed aid kit as for this country. That has upset the investors who exposed to some pressure the common currency, but the announcements that the Euro block’s countries let the opportunities of help provision open, and the instrument of rendering the aid would be ready in the moment of necessity, returned favors to this currency, which as a result enforced against the US dollar on Tuesday. The economic data of the Euro zone didn’t afford grounds for clear negative; but at the same time they did not dispose to distinct optimism – the consumer prices grew up with slower tempos in February then in January as the consumer prices index (CPI) increased for 0.3 per cent m/m, and 0.9 per cent y/y, whereas in January the indicator demonstrated a great downfall for 0.8 per cent m/m, and also a raise for 1.0 per cent y/y. The core consumer prices index, which doesn’t take into account energy resources and food products prices and is the main indicator for making decisions concerning the ECB monetary policy increased for 0.4 per cent m/m and 0.8 per cent y/y in February. The Center of the European Economic Research (ZEW) sentiment indexes marked the decrease of the business behavior in the Euro zone – the economic sentiment index in Germany fell down till 44.5 in March against 45.1 in February; and as for the Euro zone in whole – till 37.9 from 40.2 points. That indicates to the retardation of the economic recovery and also the probability of the negative influence upon the GDP results for the 1st quarter. However, the index that demonstrates current economic conditions in Germany increased for 2.9 in March and consisted -51.9 points. Today no EU economic statistics is expected. The common currency will be kept under the influence of new reports about the processes connected to Greece and also information from the other regions of the world.

GBP
   In the beginning of the trades on Tuesday the GB pound was extensively sold as the causes for it turned out to be the anxieties in concerns of the new British budgeting schedule, which will be represented next week. The rumors denoted the information that has instigated the absence of enough firmness that the provided measures would guarantee curtail of the deficit. However, the counter-news was the reports about the results of another poll, which stated that the conservators’ break-off from the laborites’ had grown up to 9-11 per cent and this in its turn gives hopes for more productive composition of the Parliament after the summer elections. The sterling recovered its positions and also lasted its growth adjoining as a support the expectances of the FRS meeting’s results. The DCLG housing prices data demonstrated a steady growth for 2.2 per cent m/m and 6.2 per cent y/y in January; although they haven’t obviously rendered any special aid for the “cable” as the later statistics tells about the probability of the trends’ changes within this area. The data about new mortgage in the “Isles” in the 4th quarter of 2009 loaning encouraged more optimism. The capacities grew up to 41.2 Billion of pound under the conditions of the accommodation prices’ growth and the real estates market’s activity. That turned out to be the most significant quarterly raise for 2009. The news tape, which is going to demonstrate the economic data today, is quite interesting and influential for the market. The information about the employment in Great Britain together with the minutes of the Bank of England’s last meeting will be published. As the analysts presume, the labor market of the country won’t be worsening during next months as the companies keep the number of employees steady, and the unemployment level will be the same. Concerning the minutes the investors will be intrigued to know the details of the forces distribution connected to the destiny of the softening program. It also comes from the announcements of the BoE functionaries that the program should be completed and that it’s too early to speak about the liquidities’ supporting measures’ curtail. If any preferences concerning these issues become clear out of the minutes the British pound will get the adequate response of the market.

JPY
   The Japanese currency was traded within the ranges against the US dollar almost all over the Tuesday session. The FRS information provided a little support for the yen, which completed the day with plus against the “buck” in total. The expectances of further softening of the policy from the side of the Bank of Japan have obviously made a restricting influence upon the market players claiming for caution in the purchases of the Japanese currency. Nevertheless, the event that made an influence upon the market, has already happened as BoJ has pronounce its decision concerning the rates: this instrument was maintained at the former levels, 0.10 per cent as it had been 0.10 per cent before; but the enlargement of the quantitative softening programs hasn’t been announced, still yet anyway. The yen still resides within the narrow ranges. The data about the services in Japan were published alongside to it. The purchasing managers’ index in the services grew up, at that essentially, for 2.9 per cent m/m from -0.9 per cent m/m in December; and that in its turn justify the validity of the raise of the domestic economy evaluation from the side of the state authorities. Concerning the perspectives of the yen, as it seems, it’s reasonable to presuppose both the dull volatility and the residence of the price within the ranges as there’re balancing factors as well. On the one hand, the finish of the fiscal year, which grounds the probability of the profit repatriation and its conversion into the national currency, encourages the expectances of the yen’s enforcement; on the other hand, if to consider from the perspective of the probability for further softening measures’ adoption by the regulator of Japan the possible decrease of the yen turns out to be obvious.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst