In any case, result of the session showed that everything returned to its place. The dollar came under the pressure again against the euro and resumed increasing against the pound and the yen again. The euro was supported by good news about euro zone economy, and political problems of Spain and Italy were relegated to the background. So, advantages of American currency against pound and yen were caused by the perspectives for new people in the Central Bank of England and Japan, which promised to be more aggressive while widening quantitative easing program. There were a few US economic data, which did not disappoint the market. The US Non-manufacturing activity index increased in January, though slowly, and it turned out to be better-than-expected – the ISM Purchasing Managers Index (PMI) showed 55.2 after55.7 last month, when it was expected to decrease to 55.0. The IBD/TIPP report presented that the consumer optimism increased in the first month of the year – the index increased to 47.3 in comparison with 46.5, when it was expected to decrease to 46.2. Today the US news package is empty, the dollar will be under the influence of outside information. The Mood on “backs” will unlikely be changed. But it is possible that it would in demand against the euro as a result of existing apprehensions that the results of the ECB meeting, which will be finish tomorrow, would bring hint on interest rate cut .
A single European currency was decreasing at the beginning of the trading session, but in the European session it regained all losses, and as a result it has advantages against the dollar and other majors. The euro was supported by euro zone positive economic data. At the same time disappointing news such as decrease of forecast about the Netherland rating and weak results of the euro zone retail trade in December did not change day trend. The report about euro zone business service sector activity announced about improvement , it means that decrease in business activity was the slowest in the last 10 months – composite Purchasing managers index (PMI) increased to 48.6 in comparison with 47.2 in December. Good mood was supported by good results of the Spanish PMI, which increased to 47.0 after 44.3 in December. It is possible that investors regarded this business activity dynamics as the worse stage of the crisis which is already over. At the same time one of the demand indicator kept decreasing , euro zone retail trade index fell in December by 0.8% m/m and 3.4% y/y after -0.1% m/m, -1.9% y/y a month earlier, it testifies big problems in the EU economy. Today news package will present only data about Germany’s processing industry orders for December, which is expected to increase by 0.7% m/m after -1.8% m/m and decrease per annum, -1.2% y/y after -1.0% y/y. It is possible it would not influence the market. It is more likely that trading activity for the euro will decrease as a result of coming important event, announcement about the ECB decision about perspectives of monetary policy. At the same time it is quite possible that a single currency will come under the pressure again, as apprehensions that European regulator can announce about possibility of additional easing .
On Tuesday in trading session mood on British pound was not stable. Rise of the sterling in the first part of trading session as a result of good economic statistics changed into falling. In the end of the session the currency fell against all opponents. It is possible that the market is afraid of announcement of future head of the Bank of England M. Carney before the C before the Committee of the Ministry of Finance of Great Britain, which will take place on Thursday. He might announce about his intentions to widen quantitative easing program. What is more, in the past the BoE brought surprises several times, that is why investors worry about the results of the British regulator meeting, which will be announced tomorrow. It is obvious that it is more important than economic indexes, which demonstrated better-then-expected results yesterday. Activity index in the leading sector of British economy, that is service sector, increased – the Purchasing Managers Index (PMI) rose to positive zone and showed 51.5 after 48.9 in December. This data reduces the possibility of the next wave of recession in Great Britain, but taking into account the latest events in the market, it does not persuade investors to worry about further quantitative easing. Today there were a few news about British economy, the BRC retail price index, which is already published, decreased to 0.6% y/y from 1.5% y/y in December. It can’t support the pound. Halifax data about home prices for January will be published soon. It will not contribute to good mood, as it is expected to decrease to -0.2% m/m after 1.3% m/m.
Japanese currency was decreasing again on Tuesday and fell to new record low against all main opponents. It is possible that the yen came under the pressure as a result of news about retirement of the head of the Bank of Japan, M. Syrakava in March. It caused apprehension of compliancy of new manager of the Central Bank of Japan concerning quantitative easing program, and also increase profit making capacity of American «treasuries», which lead to increased demand in the yen as funding currency. At the same time for the present the market does not pay attention to the rhetoric of some members of the parliament which show apprehension of the risk of sudden rise in profit making capacity of long-term bonds without economic recovery. There were no important Japanese economic statistics yesterday, today it is the same. It is possible that the yen selling will be observed. But, technical factors might correct trading, as yen resale is obvious, what is more, the currency pairs which involve Japanese currency approached to strong resistance levels.
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