The range trading continues and the US currency strengthened on Thursday. The dollar rose against the euro and the yen, yet kept its neutral position against the pound amid the technical factors including strong resistance/support levels and positive data on the U.S. economy. U.S. GDP for the 4th quarter was revised and increased by 0.1% q/q after -0.1% q/q previously. Chicago PMI rose to 56.8 in February vs. 55.6 in January, when waiting for a decline to 54.0. Unemployment Claims decreased by 22 k last week and came out at 344 k, when waiting to reduce by only 5 k. The news from the regions was rather disappointing. Kansas Fed reported that the Composite index for the Manufacturing sector fell to -10 in February from -2 in January. Today the personal income and expenses analyses (US) is expected to see the world. Personal Income is expected to come out at -2.5% after +2.6%. Personal Consumption Expenditures is also expected to come out at +0.2% vs. +0.2%. University of Michigan Consumer Sentiment Index is expected to remain at 76.3 in February. The U.S. Manufacturing ISM Report is expected to come out in February. The PMI is expected to slow down and drop to 52.5 in February after 53.1 in January. This statistic is unlikely to cause any changes in the market. The investors are waiting for the reports on US budget because from today the costs may reduce by 85 billion dollars. The reaction on reducing the costs is calm but further information can be released during the day.
Euro weakened on Thursday session amid the problems in Italy, which were overshadowed by the successful Italian bond auction held on Wednesday but then returned and highlighted uncertainty that threatens to escalate the Eurozone debt crisis. The data on European economy was not negative, yet the increased concern about the single currency could be considered as negative. The seasonally adjusted number of unemployed in Germany fell by 3 k in February when waiting for a decrease by -5, after -14 k in January. The unemployment rate remained at 6.9%, as January’s rate was revised and increased to 6.8%. Annual inflation in EU’s largest economy slowed in February. German CPI fell to 1.5% y/y vs. 1.7% y/y in January, which supports the opinion about the conditions for cutting interest rates by the ECB. The final evaluation of Manufacturing PMI for February is expected to come out at 50.1 in Germany after 49.8 in January. The Final PMI in the Eurozone is expected to decrease to 47.8 from 47.9 in January. The unemployment rate in the euro area is expected to increase to 11.8% in January from 11.7%.
The British pound remained in a very narrow range on Thursday and closed a sluggish session at the opening price against the dollar. Obviously, this was caused by the lack of news defining the policy and strong technical levels limiting the risks. Today’s news set covers the Purchasing Managers Index (PMI) for February, which is expected to increase to 51.0 from 50.8 in January. The Bank of England’s data on lending is expected to show decline in consumer loans and net mortgage lending in January. The news on the UK economy published today showed an increase in house prices in February. The Nationwide house price report of +0.2% m/m, 0.0% y/y 0.5% m/m, 0.0% y/y, when forecasts expected 0.2% m/m, -0.2% y/y. The news will have no influence on the market and the pound is expected to move sideways until the news from the U.S.
The news that the new head of the Bank of Japan is already chosen did not cause an active trade in USD/JPY. The U.S. currency slightly fastened its positions on Thursday. Obviously, the market decided to wait for the first speech of a new head of BoJ. The news released today showed mixed trends in Japanese economy. Household Spending rose by 2.4% y/y in January after -0.7% y/y. The Consumer Price Index showed deflation deepening and came out at -0.3 % y/y in January vs. -0.1% y/y. Core CPI came out at -0.7% y/y vs. -0.6% y/y. The Unemployment rate fell to 4.2% in January from 4.3%, yet the Capital Expenditure (in the 4th quarter of 2012) declined by 8.7% q/q vs. +2.2% q/q previously. However, this information did not have any influence on the market and the yen remains inactive until new information about easing monetary policy in Japan or the news on U.S. budget is released.