5 January 2010
The American currency appeared to be under the pressure at the very first session of the New Year…
The American currency appeared to be under the pressure at the very first session of the New Year and yielded all its major “opponents” resulting the day. The decrease of the dollar amidst the petrol, gold prices’ hiking together with stock indexes’ increase can be considered as the market’s return to the strategies based upon the risks inclination. As like as not the expectances of the monetary policy’s stiffening from the part of FRS start to be “diluted” with the opinions about the rates’ increase in the USA not earlier than the 2nd biannual and exactly that gets back the investors’ interests to the high profitable currencies. Nevertheless, as it seems the presuppositions concerning there’s a common fixation of the profit at the market have also the right for existence; furthermore quite not bad news from the Europe published on Monday at the European session were “oddly on the point” and enforced the reasons for the “bugs” sales. The economic news from the USA represented on Monday ceased the “greenback” downfall though didn’t change the situation at heart; probably because they’re positive partially only. The affairs in the US manufacturing at the end of the year improved considering the increase of the economic output and production orders; the Institute of Supply Management (ISM) has announced the manufacturing index in December had grown up to 55.9 from 53.6 in November at the expectances of the growth till 54.0 only. At that the prospects’ determining sub indexes have also been exposed to positive alternations – the new orders’ sub index uplifted to 65.5 in December from 60.3 in November; and the employment sub index amounted to 52.0 after 50.8 in a month earlier. However, the data of the development expenses having been published together with the before mentioned caused disappointment – the total capacity of the expenses in the USA fell down for 0.6 per cent m/m and 13.2 per cent y/y in November; while the downfall had been predicted for 0.2 per cent m/m only; moreover, the indicator for November was also revised to the side of decrease. There’s not much news planned to be publicized today as the production orders for November will be represented together with the uncompleted deals at the real estates market in the same month. The growth of the orders for 0.5 per cent is expected alongside to the downfall of the residence purchases’ deals for 2.0 per cent. These data were unlikely to make any difference at the market; though their short-termed influence is quite possible especially if the actual state of affairs differs from the predictions.
EUR
The statistics of the Euro zone economy published yesterday provided just not bad support for the “bulls” concerning the euro. The information of the business behavior activation in the manufacturing was added to the general favorable terms for the high-profitable currency being determined by the prices hike for petrol, gold, and securities. The Provision Managers’ Index (PMI) of this sector of the European economy grew up to its 20-months minimum in December – the PMI index increased to 51.6 against 51.2 in November. The indicator grew up to 52.7 after 52.4 in November and by forecasted 53.1 in the European largest economy – Germany. The business behavior’s increase was also observed in other leading economies of the Europe – the favorable dynamics was observed in France with the enlargement to 54.7 from 54.4 before; in Italy – till 50.8 against 50.1 in November. The endurable growth of this index can be considered as a signal of the possible growth of Euro zone GDP for last quarter of 2009. Against this background the common currency has demonstrated the aggressive enough dynamics against the dollar having enforced itself for more than 100 points. There will be not much news as for the Euro zone economy as the unemployment data for Germany will be published as the previous level of 8.1 per cent is suggested to be seen as forecasted together with the advancing consumer prices index for the Euro zone for December which is presumed with the raise’s continuation for 0.9 per cent y/y after +0.5 per cent in November. The employment data for Germany don’t enjoy the market players’ special confidence by virtue of doubts as for the accountant methods; that’s why any positive won’t trigger a nice reaction, though the inflation’s growth in EU can become a nice prospect for the common currency as one more reason denoting the deflation threaten diminishing will appear.
GBP
The British pound got a support at Monday trading; though it took advantage of it in the first half of the trades only as later at the beginning of the American session the British currency lost its preferences and completed the trading day with a little minus against the dollar evermore. The special interest to the “cable” was reasoned by the positive massages concerning possible mergers and acquisitions and also not bad economic data at the beginning of the session. In accordance with the published statistics the Provision Managers’ Index (PMI) for the Great Britain manufacturing grew up in December till its biennial maximum as the indicator showed the raise till 54.1 from 51.8 in November, though the expectances were confined to increase till 52.1. M4 monetary aggregate in Great Britain which is preferred to be considered as the principal indicator of the broad monetary supplies by BoE grew up in November firstly during the last three months, and the enlargement amounted to 0.9 per cent compared to the previous month after the downfall for 0.6 per cent in October. At that the consumer crediting capacities increased by virtue of mortgage loaning. As it was stated by the Bank of England the net consumer crediting summed 1.083 Billion in November after 508 Million in October at the forecasts expected the level of 500 Million of pound. The capacity of the approved mortgage loans has also increased amounting to 60 518 against 57 718, and it can be considered as a good feature for the housing market’s prospects. The crediting growth means the effect from the accomplishment of the quantitative softening program; but nevertheless, not enough adequately as the input of the households into the money supply growth was very sluggish and appeared to be the least growth tempo from the start of the statistics’ recording. The like tempos of the money supplies’ widening could be estimated as the factor maintaining the high probability of adopting decision by the regulator of Great Britain concerning the further accomplishment of the monetary-crediting policy’s softening at its February meeting. The news set as for the economy of the “Isles” is represented for today with the business behavior data in the development sector, the PMI index for December is expected with the growth to 47.8 from 47.0 in November. The indicator still stays within the negative sector, lower than 50, though the dynamic is encouraging still yet and the latter will bring no negative as for the sterling if certainly the fact confirms the forecasts.
JPY
The Japanese currency neglected some part of its losses against the dollar on Monday trading. Obviously the strong levels of resistance where exactly the pair of USD/JPY resided were considered to be quite not bad price sector for the profit fixation. As like as not the extra reason for “cease-and-blow” of the “bulls” as for the dollar became the expectances of publicizing of the important data going to be represented later on this week – the FOMC minutes and the US Labor Report for December. Moreover, the purchases from the side of the Japanese exporters converting the profit were mentioned. The Japanese currency continues its growth at the current session as against the background of the appeared anxieties as for the rates’ increase by the USA Federal Reserve System in the nearest future; the downfall of the US Treasury’s ten-year fiscal liabilities’ profitability was also observed, and that became the main checkpoint for the currency market at the Asian session. The situation obtains the great part of ambiguity, and as it seems, the market is at the stage of question solution – either the trading tendencies of the previous year will be maintained in the new year or the favorable economic data from the USA and the expectancies of much faster than predicted growth of the rates continue to increase the interest to the dollar. In such situation the yen’s perspectives are also multi-valued; the previous year’s strategies’ maintenance may get back the Japanese currency the status of shelter-currency, whereas the "greenback" growth will fix the significance on its part as for the loan assets for the carry trade.
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
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