USD
USD strengthened versus its major currency competitors on Thursday, although trading activity was pretty slow ahead of significant Fed president Bernanke’s comments and non-farm payroll employment data, scheduled to come in on Friday. US economic calendar covered only few publications. Among them were initial jobless claims, which shrank better than expected last week - by 12K to 367 K, while forecasts predicted -7 K. Continuing jobless claims also decreased, by -130 K, so the total number of unemployed was 3437 K. Labor productivity increased in the forth quarter, but only by 0.7% y/y after the prior 1.9% y/y growth. Salaries increased by 1.2% against -2.1% decline in the third quarter, indicating improving economic recovery process. In the spotlight today will be employment data. Labor report to be released today should cover non-farm employment, anticipated with +125/150 K new jobs. Unemployment rate is expected to remain unchanged, at 8.5%. ISM publishes its non-manufacturing PMI index in the month of January, expected to climb from 52.6 to 53.1. Industrial orders will keep on being within the uptrend, increasing by +1.5% m/m in December, a bit slower than +1.8% m/m earlier. If positive forecasts confirm, the dollar has all chances to gain good strong support on today’s session.
ЕUR
The situation in the market remains rather vague, especially regarding negotiations between Greece and its creditors. Comments, that the euro zone recession will end at the end of 2012 made by Standard & Poor's, haven’t been supportive of the euro either. EU data front covered Producer Price index, which came in with decreasing price pressure in December, for the third consequent month – the index slipped 0.2% m/m, but climbed 4.3% y/y versus November 5.4% y/y, giving reasons to anticipate a decrease in consumer prices, which is a good news for the European Central Bank. Euro zone and German PMI data look to be of most importance today. Forecasts predict German PMI to register 54.5, the euro zone’s - 50.5. Composite PMI is likely to come in unchanged, at 50.4, as well a France’s PMI, posting the same 51.7. Italy’s index is expected to improve from 44.5 to 45.4.
GBP
The pound lost some of its positions and weakened versus the dollar on Thursday as nothing significant was published in the UK and neither fundamental, nor political news weren’t supportive of the sterling. Today investors will focus on the final UK services PMI data. The index is considered to be the leading indicator of British economy and is likely to post 53.3 in January after 54.0 in December, which may upset market sentiment towards the pound. Yet, the pound’s positions are likely to remain neutral until the US employment report comes.
JPY
Japanese yen had been trading within tight ranges on the overnight session as the BoJ intervention fears hindered the yen’s purchases. Japan’s finance minister commented on the yen’s strengthening, saying that he cannot "overlook" speculative moves in the market to push the yen higher, which had been a serious sign of the upcoming measures from the government. However, uncertainty in Europe and other world regions kept investors in safe-haven assets. Japan is absent from the economic calendar today, so the pair will most likely stay within narrow range till the US labor report comes in. Good results may trigger the pair’s growth.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
