ECB and the ??? brought no surprises | Inside Forex trading

On Thursday Dollar ended trading session falling against European currencies. Information about the perspectives of monetary and credit policy from the ECB and the ??? brought no surprises. Everything was expected, but market?s reaction to this information may be regarded as unexpected ? American currency turned out to be under huge pressure against European majors. It is obvious that investors like the announcement of M. Draghi which told that the decision about unchanged interest rate was carried unanimously, as it was established together with the situation on the meeting which was held last month, when some members of the ECB stood up for decreasing of monetary instrument. In short, it is more likely that market got confirmation of the fact that there is no need to worry about quantitative easing in the nearest future, and there is a ground to increase appetite for risk. ?The backs? hold leadership against the yen as a result of the same expectations of radical measures of quantitative easing at the nearest meeting of the BoJ, which will be held in the end of this month. The announcements of members of the FRS ?Esther L. George ? the president of the FRS of Kansas City and D. Bullard ? the president of the FRS of Louisiana, which are so called ?hawks?, and which told about the risks of excessive quantitative easing, didn?t support ?the backs? together with economic data which showed various results. Number of unemployment insurance initial claims in the USA increased by 4 thousands last week, so it increased to 371 thousands, when decrease to 363 thousands was expected, and goods and material resources in wholesale trade increased by 0.6% in comparison with October, it may be regarded as positive sign as it took place when sales increased by 2.3% m/m in November. Today the market will get the US foreign trade data for November and Federal budget data for December. According to forecasts trade balance is expected to decrease to 41.2 milliard dollars from -42.2 milliards earlier and budget deficit is expected to decrease to 17.5 milliards in comparison with -86.0 milliard dollars in December 201. If this dynamics come true, it may help American currency to level some losses sustained in trading session the previous day.

EUR

The main event of Thursday is the ECB decision about interest rate was not surprising as European regulator left key interest rate unchanged. This decision caused demand in euro, but a single European currency was mostly supported by the press-conference of the head of the ECB Draghi, after his announcement about unanimousness between the members of the Council during decision making. A single currency rose against the dollar and ended trading session on Thursday increasing with confidence. It is more likely that appeared signs of confidence in economic growth in euro zone, marked by rise of interest in the Central Bank of outlying countries, outweighed fears concerning record unemployment rate in the EU, and also the facts that leading euro zone countries demonstrates signals of slowing of economic growth. At the same time the market didn?t pay attention to the announcement of Draghi, which told that he expected a decrease in the rate of inflation in 2013 below the target level, so below 2.0%, it means that the door is open for decreasing of interest rates. A single European currency was supported by the results of Spanish bond auction as confirmation of increased trust. There were a few economic data from the euro zone. Manufacturing in France increased more than expected, by 0.5% m/m, when only +0.1% m/m was expected, this information might also support the euro. Today there will be no important news from the euro zone, the euro will remain under the influence of external data, and the market will comprehend yesterday?s events. It is not excluded that emotions of the previous trading session may be regarded as excessive, and profit may be taken from euro.

GBP

Yesterday the Bank of England also announced that it would not change its monetary and credit policy ? key interest rate will remain unchanged, at the level of 0.5%, and bond buying program will amount 375 milliard pounds. It is obvious that fears concerning high and stable inflation rate took preference over the signs of renewed slowing of economic growth. This information slightly strengthened the pound. But, according to the result of the sterling/dollar trading yesterday, British pound rose, as the euro, after the announcement of the head of the ECB Draghi.? Economic data from ?the islands? was not published yesterday. But today manufacturing statistics for November will be released. Processing sector is expected to rise by 0.5% m/m and -1.3% y/y after -1.3% m/m,? -2.1% y/y earlier, and manufacturing is expected to increase by 1.3 m/m and -1.5% y/y in comparison with -0.8% m/m, -3.0% y/y in October. It may support the pound but only for a short time. It is more likely that? the mood, caused by appeared signs of slowing of the UK economic growth in the last quarter of 2012 ???? and increased threat of the next recession, will return in the market, and the sterling will be decreasing in the nearest future. .

JPY

The events which took place yesterday influenced the yen. Japanese currency fell against the pound, the euro and the dollar, but less actively this time. It is most likely that increased risk-seeking caused demand in the yen as the funding currency. What is more, news from the Land of the Rising Sun didn?t prevent the situation weakening, when Japanese currency was given preference. On Thursday the representative of the Ministry of Finance announced that bond issuing would take place in February, as filling of state budget for this year would be implemented. Todays? news package showed that Japanese economic situation didn?t improve as the results of external economic relations demonstrated negative trends. Current account balance decreased to 225.9 milliard yens in November from 414.1 milliards, and trade balance deficit increased to -832.0 milliards in the same month from -450.3 milliard yens. It is natural that it is somber results for export-oriented economy, that is why yen will continue to decrease in today?s trading session. It is obvious that such results of foreign trade confirmed market?s expectations that Japanese government would implement aggressive easing in the nearest future.

Source: http://blog.forex4you.com/ecb-and-the-%D0%B2%D0%BE%D0%B5-brought-no-surprises/

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