Less neutral and successful scenario for the dollar
  • Less neutral and successful scenario for the dollar

    Arkady Nagiyev
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    The first part of the session was calm as on Monday, but from the beginning of American session the dollar came under slight pressure. Splash of “back” selling was observed in the period of publication of the US economic statistics, which showed negative dynamics and gave rise to doubts that preliminary US DGP growth data for the 4th quarter, which will be released on Wednesday, would show the results expected by forecasts. The Conference Board Consumer Confidence Survey disappointed the market, it was weak and it testifies to bad perspectives for the main economic indicator, as consumer demand forms the lion’s share of this indicator. In the end of the day American currency decreased against all majors. In this case it was unusual to see the pound rising, it stopped falling. And it is more likely that it was supported by technical conditions. The Conference Board Consumer Confidence Survey announced that the IS consumer confidence fell to record 2011 low, the index dropped to 58.6 after 66.7 in December, when 64.3 was expected. House prices also dropped in November – house price index from S&P/Case-Shiller fixed -0.2% m/m for 10 megapolisis and -0.1% m/m for 20 megapolisis. Today’s news package of the USA can be called “effective” as it contains a lot of important information which may influence the market. First of all, it is publication of the GDP growth data for the 4th quarter, which is expected to rise by 1.3% q/q after 3.1% q/q earlier and announcement of the results of the FOMC meeting on interest rate. Taking into account important information which contains news package, the next one is ADP report about increased number of work places in private sector, it is expected to increase by 165/170 thousands after +215 thousands in December. Departure from the economic statistics might influence the dollar, but it would take place in the first part of American trading session. A final chord would be results of FRS meeting. Policy changes are not expected, but rhetoric changes are possible, as personnel of the FOMC was renewed at the beginning of the current year and this meeting might clear up the situation and show how hawks and pigeons raw changed.

    EUR

    On Tuesday In European trading session Euro came under pressure against the dollar for a short time, maybe because of bad economic statistics on Spain and news about rise of loan index of some outlying countries. But, in the American trading session the euro leveled its losses and increased against the “green back” because of weak US economic reports. There were a few EU economic statistics. It is worth to remember only publication of Gfk group research, which presented Germany’s Consumer Confidence index for February, which increased to 5.8 In comparison with 5.7 for January review to increase. It mostly didn’t influence investors. Today’s news package is more interesting. It will show the report of the European Commission about the euro zone’s economic mood in January. It is expected to improve. And it might support a single currency for a short – economic mood index is expected to increase to 88.5 after 87.0 earlier, industry confidence index would more likely increase to -13.5 from -14.4, business climate index might improve to -1.01 after -1.12, and consumer confidence index is expected to fix -23.9 after -26.3 in December. Nevertheless, this information unlikely influence the market in today’s trading session, as the main factor of influence is news from the USA.

    GBP

    British pound changed the traditions of the last days and increased slightly against the dollar. It is obvious that the main reason of the sterling stability was technical conditions defined by strong support levels, which caused fixation of profit and correction of positions on the threshold of important events in the USA. As a result the sterling fixed profit against the dollar. Maybe the pound was supported by the announcement of the member of the Bank of England, well-known “pigeon” D. Mills about UK economic growth expected this year. It is worth to note that the next announcement of the representative of the Fitch that Great Britain might lose its rating «ААА», as economic situation on the country worsened, didn’t influence the market and didn’t make the pound come under the pressure. Yesterday there were no UK economic statistics. Today news release about crediting of the Bank of England will be presented. It is expected to show rise of consumer lending , increased mortgage lending and its approved claims. But, as usual this data didn’t influence the market . The main factor of influence in today’s trading session is the US indictor and the FRS decision on the perspectives on monetary policy.

    JPY

    In yesterday’s trading session the dollar/ yen currency pair was trading in narrow ranges and ended trading day close to starting prices with advantages of the yen. Weak US economic statistics was actually ignored, as news about Japanese government which approved record 92.6 trillion yens draft budget 2013, it means that government intends to preserve economic stimulation, but not cut deficit of the country. At the same a half of budget , 42.9 trillion yens, will be financed by issuance of new bonds, which will increase country’s debt load, reached high volumes, almost 1 quadrillion yen. Economic statistics of the land of the Rising Sun, published today, showed thet retail trade for December increased according to monthly statistics, by 0.1% m/m after -0.1% m/m, and decreased per annum 0.4% y/y after 1.2% y/y earlier. Concerning the perspectives on the currency pair dollar/yen, everything will depend on the news from the USA. Harder announcement of the FRS top manager would give rise to further Japanese currency selling as more positive data about the US GDP.

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