New reference point may appear after meeting of the leading European Central banks on interest rates. And, for the present, market is forming side correction. On Tuesday American currency rose and leveled all losses, which it sustained against European currencies in trading session the previous day. Beginning of trading session on Tuesday was marked by a slight plash of optimism and transient selling of American currency after the announcement of Japanese Prime Minister about their plan to buy the European stability Mechanism bonds (ESM). But, during the second part of trading session “the backs” was strengthening as European economic statistics released yesterday was mostly disappointing. What is more, protocols of the FRS meeting on discount rate released yesterday presented some optimism concerning economic rise during the last months in the previous year. US economic statistics was also not bad. Its results were better-then-expected. IBD/TIPP research showed that economic optimism index rose to 46.5 in January from 45.1 in December, when 46.3 was expected, and optimism index researched by the National Federation of Small Business (NFIB) rose to 88.0 after 87.5 earlier, when 87.2 was expected. Today there are almost no news from the USA, and news package from another regions are also empty, that is why such situation leads to weak trading in narrow corridors.
Tuesday trading session was not successful for such currency pairs as euro/dollar and euro/yen. In Asian trading session a Single European currency rose slightly as a results of the announcement of the Minister of Finance T. Aco about their plan to buy the European Stability Mechanism bonds. It improved investors’ attitude to the risk but only for a short time as appeared some rumours which told about probable France’s credit rating cut. Then, lack of confidence in euro was supported by the European Union economic statistics, most part of which confirmed weakness of important indicators. Unemployment rates in the European Union rose to new record high. According to Eurostat statistics, number of unemployed in euro zone amounts 18.82 million people, and unemployment rate rose to 11.8% from 11.7% in October. Last year, in 2011, unemployment rate was 10.6%. Germany’s economic statistics was also unpromising - foreign trade surplus decreased to 14.6 milliard euros in December from 14.8 milliards in October, when 15.1milliards euro were expected, and current account surplus amounted 15.3 milliards euro in the same month when 16.0 milliards euros were expected. Germany’s manufacturing orders also decreased more than it was expected, it is disappointing result. The index fixed -1.8% m/m after + 3.8% m/m, when only -1.4% m/m was expected. According to the report, Retail trade in euro zone increased by 0.1 % m/m in November after it decreased by -0.7% m/m a month earlier. It didn’t influence market, may be because +0.3% m/m was expected. Monthly report of European Committee about mood in the region presented positive changes in December – the Business Confidence Index rose to -1.12 from -1.17, mood indexes in service sector and manufacturing sector were better than the previous ones, and the consumer confidence index rose to -26.5 from -26.9. But it also didn’t support the euro. Today’s news will be interesting only by Germany’s manufacturing statistics for November, it is expected to rise by 1.0% m/m after it fell to -2.6% m/m in October. It is more likely that Euro zone GDP growth statistics for the 3rd quarter didn’t changed and it is expected to show -0.1% q/q. It will be not important for market if it is not surprising. Market will continue to wait for results of the ECB meeting, and euro will trade in narrow corridor.
British pound remained under the influence of common mood in yesterday’s trading session and also decreased against the dollar to initial position, from which it started to rise on Monday. There was no important news from islands. It is worth to remember the announcement of the minister of Finance of Great Britain D. Osborn which called the leaders of EU countries to reform banking sector and differentiate risky financial activity, making retail banking into a separate group. Today’s news will tell about UK foreign trade, it is expected to decrease to 9.0 milliards pounds in November in comparison with -9.5 milliards in the previous month. According to the research of British Retail Consortium (BRC), information about retail prices is already published, the report for December presented price pressure stability – the index remained unchanged, at the level of 1.5% y/y when 1.7% y/y was expected. It is more likely that pound/sterling currency pair trading will be not active today, as Central Bank of Great Britain is also going to announce its decision about the perspectives of monetary policy tomorrow. Changes are not expected, but well-known ability of ВоЕ to bring surprises and dissentions between the members of monetary committee, which is often observed in their announcements, call the market to be careful.
Japanese currency strengthened against the dollar second successive trading session. Pressure on the yen continued to decrease, maybe as a result of the same technical factors and mood caused by the article of WSJ, which quoted announcements of the representatives of Japanese government, which told about some anxiety concerning too fast and too strong weakening of the yen, which is also bad for the economy. Announcement of the Minister of Finance about their plan to buy the European Stability Mechanism bonds which caused demand in euro only for a short time, as this deal is planned to be realized at the expense of foreign exchange reserves, and it is more likely that it will not result in Japanese currency buying. What is more, demand in yen might result in renewed rise of bonds in the USA, which caused increases of its buying at the time of making deals concerning differences in interest rate. Today there were no news from Japan, maybe because pressure on the yen was renewed as further quantitative easing in the land of the Rising Sun is still expected. It also stirred up by expectations of decision on increase of bond buying program at the BoJ meeting on the 21-22 of January.