The beginning of Wednesday session was on the US dollar’s sales all over the “front”. The climate brought by the announcements of FRS about the intents to maintain the rates at low level for a long period of time was further inducing the pressure upon the American currency. However, up top the end of the trades the GB pound was the only one among the Europeans that has kept its advantages against the “buck”; whereas the euro fixed the losses while giving back all achievements starting from the beginning of the day. Quite probably, the warming-up of the interest to the US dollar was favored with the statements of B. Bernankey as the inflation level would increase if the rates were kept low too long. The sterling’s steadiness was provided with good news as for the economy of Great Britain; while the falling down of optimism concerning the euro – with the strengthened apprehensions regarding the stability of the recovery in the Euro zone. The currency of Japan was traded with the advantages the greater part of the session and completed the day with a little growth as for the US dollar. In this case the influence was made by the statistics that denoted the US economic data of negative nature. The represented data that concern the manufacturing inflation marked the decrease as the producers’ prices index (PPI) in the USA fell down for 0.6 per cent in February since the growth for 1.4 per cent in January. The core index that doesn’t take into account the power resources and food products prices increased for 0.1 per cent in February after the uplift for 0.3 per cent in January. The news set of today is going to represent the data about inflation as well, though the consumer one this time. The total CPI is predicted to demonstrate the raise in February, for 0.1 per cent m/m, 2.3 per cent y/y, while the core one – for 0.1 per cent m/m, 1.4 per cent y/y. if the expectances are justified it will point to the retardation of the price pressure, what is positively enough at the targets of 0.2 per cent. Besides, the employment data will also be published; the preliminary jobless claims are expected with the shortage for 6 thousand. The attention of the market will be paid to the information regarding the settlement account of the payment balance for the 4th quarter, where the enlargement of the deficit to 120 Billion of dollar from 108 Billion of dollar; and the manufacturing index from FRS Philadelphia, which is forecasted with a little curtail in March, to 17.2 after 17.6 before.
EUR
The common European currency has failed to restrict the tension at the market and thereupon the growth against the US dollar and the yen at the beginning of the day reversed itself in a complete circle (180 degree) and completed the session with the losses. Some support for the euro was provided by the situation that defined the raise of hopes for that the debts troubles of Greece has already been over the worst. However, some perspectives of the economic growth in the Euro zone arouse some anxieties as the German government reported about the unwilling to stimulate the economy of the country by means of compensation of the budgeting expenses’ shortening further. Quite possible, the pressure upon the euro was provided by the announcements of A. Merkel about the possible exclusion of the Euro zone, but in his interview to mass media the Head of ECB J.-C. Triche rejects such possibility categorically, but the exact fact of the talks of such kind doesn’t naturally support the stability. There was too little economic news, but even they didn’t afford any reason for optimism– the salaries’ growth in EU in the 4th quarter slowed down sharply; while it was observed +2.0 per cent y/y, after +2.8 per cent in the 3rd one; and also the payroll expenses increased in the last quarter of 2009 for 2.2 per cent y/y, when in the 3rd quarter the indicator denoted +3.0 per cent y/y. The news of this day will represent the January result concerning the foreign economic ties of the Euro zone: the shortage of the trading balance surplus is expected till 5.1 Billion of euro from 7.0 Billion of euro; though the growth of the payment balance totals is going to be till 2.9 Billion of euro after 1.9 Billion of euro. Most likely, this information won’t afford any ground for changing the attitude of the investors to the euro as the political component still stays as the main driver, and it’s far from being on the side of the common currency right now.
GBP
The British currency demonstrated the most positive dynamics against the US dollar and other majors at the trades on Wednesday. The report about the improvement of the affairs in the area of the employment is a kind of “nonsense” under the current circumstances, while in all regions of the world the labor markets face troubles. That’s why, the information in concerns of the downfall of the capacity of jobless claims in Great Britain in February for 32.2 thousand has aroused the great splash of optimism and supported the GB pound; moreover, that turned out to be the most sufficient decrease of this indicator since November 1997. Furthermore, the unemployment level lowered down to 4.9 per cent at the expectances of 5.0 per cent. Besides, the good mood regarding the GB pound was also favored with the information from the minutes of the March meeting of the Committee for the Monetary-Crediting Policy of the Bank of England, which told that the probability of further decrease of the GB pound would provide the inflation growth. This very claim was most likely to be considered as a hint on the probability of the stiffening of the policy in the nearest future at that. The market has obviously got such a checkpoint as the inflation in Great Britain, which is decisive in course solving the trading issues with the sterling’s participation. However, the news of this day may alternate the cheers in concerns of the “cable” as they touch upon the “hot button” of the British economy in general – the state finances. It’s predicted that the state sector’s borrowings grew up in February again, at that for 14.6 Billion of pound after 4.3 before; and the money supply curtailed to 4.3 per cent y/y from 4.9 per cent y/y. However, there’re also hopes to see the increase of the number of approved mortgage loan claims; but in case of negative dynamics concerning the above mentioned indicators this information will never provide any support for the sterling, and the response of the market will be further negative as for the sterling.
JPY
The Japanese currency was traded within the range against the US dollar. The statistics from the United States as for the manufacturing inflation, which demonstrated the decrease supported the yen for some time; though the totals of the day was almost neutral while taking into account its controversy to the US dollar. Yesterday the Bank of Japan maintained the rates without changes; and later on already it has been declared the duplication of the liquidities’ capacities for the banks at the press-briefing of the Head of BoJ M. Sirakawa. The three-month direct crediting program was enlarged to 20 Trillion of yen. Today the business stipulation index for large producers (BSI) was published for Japan. This indicator marked the sufficient decrease as it showed 4.3 per cent alongside to the previous 13.2 per cent and the expectances of 15.3 per cent. Concerning the perspectives for the yen, as it seems, the situation connected to the end of the fiscal year offers the grounds for the expectances of the growth, whereas the mood of the government and also the Bank of Japan claims for taking into account the risks that reason the probability of taking extraordinary measures targeted to its weakening. Obviously, the balancing of such kind may cause the prolongation of the ranging trading against the US dollar in the nearest possible time.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
