Uncertainty continues to decrease activity in the stock market

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Uncertainty continuesOn Wednesday trading session most of the main currency pairs were in narrow ranges, except British sterling, which fell against all opponents after information from the Bank of England was released. It is more likely that investors are waiting for new factors of influence again, as announcements about mood in G7 concerning currency policy were in the nature of conflict. And now attention is concentrated on this topic and how it will be discussed at the summit G 20, which will take place in the end of this week. There were a few US economic statistics and they demonstrated good dynamics – retail trade increased in January by 0.1% m/m and 4.4% y/y, these results were expected by forecasts, it is rather positive factor, as there were apprehensions concerning decreased demand in view of the fact that raised taxes. Goods and material resources increased in December by 0.1% in comparison with November as a result of increased trade by 0.3% m/m, it is also promising results. Today’s news package, as the previous ones, is marked by wealth of important information, only weekly data about employment dynamics will be released – a number of unemployment insurance initial claims is expected to decrease to 360 thousands for the previous week from 366 thousands, and a number of unemployment insurance claims for the second time decreased by 20 thousands. Economic news from the Continental Europe can set the tone in today’s trading session, as economic data of the European countries is expected to be released.

EUR

Euro was trading in narrow side corridors during the last trading session, and it ended the day on starting prices against the dollar. Uncertainty of news didn’t allow a single currency to continue rising, which started in the first part of trading day after rather good data about the results of industrial production in euro zone. According to the statistics, industrial production in euro zone increased by 0.7% m/m in December after it fell by 0.7% m/m a month earlier. Per annum It improved to -2.4% y/y, after -4.0% y/y a month earlier. But, rumors from anonymous resources about the ECB and that it worries about high exchange rate of the euro,which is bad for the export and solution of euro zone debt crisis, made the market tom be careful. And now there is apprehension of economic stimulation which might be implemented by European regulator. Today news contains very important information which might influence market events. The first estimate of the GDP growth of the leading EU countries and euro zone for the 4th quarter will be published. Bad results are expected – France GDP more likely decreased by 0.2% q/q and 0.2% y/y after +0.1% q/q, 0.0% y/y, Germany’s GDP is expected to show -0.5% q/q , +0.5% y/y in comparison with +0.2% q/q, +0.9% y/y, Italy GDP -0.6% q/q, -2.3% y/y after -0.2% q/q, -2.4% y/y earlier, Euro zone GDP is expected to fix -0.4% q/q, -0.7% y/y after -0.1% q/q, -0.6% y/y in the 3rd quarter. Of course, such trend would not give rise to optimism in the market. And if weaker results are observed, the euro will come under serious pressure.

GBP

British pound turned out to be in the wave of selling against all majors again. On Wednesday trading session the sterling decreased after the release of the Bank of England report about inflation. This release, which noted expectations of price pressure did not give rise to negative mood on the pound, it could even support the pound, but an announcement of the head of the ВоЕ, M. King, about the readiness of the Monetary Policy Committee to implement further measures in order to stimulate the economy and weaken the current, made the pound to come under the pressure. There was no economic news from the “islands”. Today there will be also no information. It is more likely that negative mood on the pound will be preserved, and its selling will continue. But, in this case, British currency might be supported by technical factors, which are represented by very strong support levels for the pound/dollar currency pair.

JPY

In trading session the Japanese yen/dollar currency pair was marked by directed activity. It is obvious that the market didn’t understand what the G7 was going to do concerning the policy of Japanese government. So, the market preferred to wait for new factors of influence, which might appear after the meeting of G20. Activity rise was also prevented by expectations of the results of the Bank of Japan meeting on the interest rate, which will take place on Thursday. A decision of Japanese regulator is already known –The leaders of the Central Bank left the size of the bond-buying program unchanged unanimously at the level of 101trillion yens and key interest rate in the range from 0.0% to 0.1%. Preliminary estimate of the japan GDP for the 4th quarter, published today, was worse-then-expected. The main economic indicator was fixed in negative zone -0.1% q/q, 0.3% y/y after -1.0% q/q, 0.4% y/y earlier, and it was expected to rise by 0.1% q/q. In today’s trading session the yen is decreasing against the dollar again, as a result of disappointing positions of the BoJ. But, as it seems, rise in activity of Japanese currency is scarcely probable, as it is more likely that the market will be waiting for information about G 20 mood.

Image source walt.foreignpolicy.com

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