Currency swings
USD
Yesterday monetary dynamics was mixed, although, in general, all over minor strengthening dollar, despite the fact that by the conclusion of the trading day, investors inflamed interest to risk and resumed buying high-yield instruments. With continued and today: from the very morning of the euro, pound and Swiss show clear signs of growth. Given that the season of the publication of reports on profits only just begun, you can expect that traffic will still be active and mixed in the near future. First we saw yesterday. GOLDMAN SACHS profits exceeded forecasts in the second quarter rose to 4.93 USD per share against 3.65 USD in the previous period. Of course, that these figures are encouraging with regard to the timing of economic recovery, which only confirm the statements of officials, including Minister of Finance of the United States that is a good chance that growth will return in the coming quarters. But reaction to the report turned out to be quite restrained. However, data released later from Intel caused a burst of optimism, because the growth in the second quarter, and forecasts sales to 3 rd quarter exceeded analysts' expectations.
With regard to economic reports, then it could find the share of optimism, though, if you look closely, it soon becomes clear that there is not yet clear, and all records can be described as disappointing. The volume of retail sales grew, surpassing forecasts (0.6% versus 0.5% in May). However, excluding this component, as sales of gasoline and cars, through which an increase rate showed the fourth month of decline. This means that people in a weak labor market in no hurry to increase their costs and, therefore, not so piously believed that the aid program proposed by President Obama will be able to provide substantial support. Also we saw the data on producer prices, which have demonstrated significant growth (1.8% versus 0.2% in May). But the growth is due to price hikes for gasoline, while the moderate consumer spending have forced sellers to increase the discount, so it is likely that inflation still continue to fall. This means that it does not change in Fed monetary policy in the direction of tightening than expected.
Today's calendar is saturated. Continuing the theme of inflation, will be published a report on the consumer price index, and perhaps it would focus attention on the market. In addition, you should not exclude from view the data on the volume of production. Positive indicators may reinforce expectations of the imminent start of economic recovery and, consequently, a new surge in demand for vysokodohodniki that, of course, does not benefit the dollar. In addition, interesting and report on activity in the FRB of New York, which will make assumptions about the overall ISM index in the industrial sector. And, of course, do not forget about the last meeting of protocol FOMC, although it is unlikely to expect surprises, and, consequently, a strong reaction.
EUR
pan-European currency yesterday and was not able to overcome the level of 1.4000, which is probably due to weak data. German investor confidence unexpectedly fell in July (39.5 against 44.8 in the prev. Forecast period and47.8). This suggests that the restoration of the largest economies E16 may be delayed. A bit of optimism has added a report on industrial production. His volume of recovered slightly in May, interrupting a downward trend that began 9 months ago. But this should not cause euphoria, as well as low levels of sentiment indicators in the manufacturing sector and uncertainty surrounding the economic outlook in general and outsourcing in particular, suggests that the sector has not reached bottom, and that following the achievement of this recovery will be weak at first.
Today, attention is drawn to the final data on consumer inflation E16. Let me remind you that the preliminary report showed the possibility of deflation, which is clearly not conducive to the economy, and even more so, in a recession. Therefore, the revision rate upwards can have a Euro short-term support. Although most likely an active response to the report, we do not see.
GBP
British currency yesterday seemed still more confident than their European counterparts. Pound was able to maintain the position, won after good data on the housing market. Prices for housing in the UK fell by 0.1% in May, but year on year decrease of 12.5%. What in general makes it possible to speak of price stabilization. Housing for sale, it becomes less so as the owners do not want to sell in the current economic situation, which may also contributed to price. In addition, the currency gained support from the speech the new member of MPC Pouzena Adam, who said that the pound is likely to be higher than the euro in the medium term. Data released yesterday showed inflation to decline below the medium-term target of the Bank of England 2.0% for the first time in the last 21 months. The consumer price index rose by 0.3% in monthly terms and 1.8% per annum. This means that while the expansion policy of quantitative reduction do not have to wait, which also benefited pound.
most interesting today may be the answer to the labor market, the United Kingdom: Data for unemployment, as well as indicators of income and expenditure on wages in the manufacturing sector. According to forecasts, they may grow at 5.0% versus 4.8% in before. period. But most likely, the data will have no impact on the dynamics and the pound will continue to rise.
JPY
Increased interest in risk has resulted in a slight weakening yen. Yes and the Bank of Japan had not made any impression. The rate remain unchanged. The forecast for the national economy and the inflation rate also did not undergo significant adjustments (reduction of GDP by 3.4% against ozhidaniy3.1%, CPI revised up to -1.3% vs. -1.5% in the previous report). Timing the application of quantitative mitigation policies to help corporate financing has been extended. Terms of programs that were to expire in September, extended to the end of December, and this suggests that capital markets in Japan remained under pressure.
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