Fundamental analysis 30 October 2012 | Inside Forex trading

Monday session was marked by a weak volatility again. This time a nature took part amended the market events. Hurricane Sandy, threatening the East coast of the USA, became the reason of closing some sectors of financial market, and it caused an absence of activity at the currency markets. In these conditions investors preferred the dollar as a shelter- currency, which had strengthened a little against its all main opponents. Beside this, fear of the situations in Spain and Greece supported the dollar, and also representatives of the Bank of England, which by their hints increased the expectations of mitigation from BoE supported the dollar. The USD/JPY pair was trading in a narrow corridor with the expectations of the Bank of Japan decisions about the volume of economic stimulation, and it also caused strengthening of the dollar. The US economy statistics published yesterday showed good results, and it more likely made the American currency more popular. Consumer expenses increased by 0.8% m/m in September,? and incomes increased by 0.4% m/m, but forecasts had estimated increase only by 0.6% m/m and 0.4% m/m correspondingly. ?The information from regions showed improvement of business activity in the industry sphere of Texas. According to the report of the FRS of Dallas, the total index of business activity increased by 1.8 in October from -0.9 in September. But the index components which refer to the perspectives, showed negative results? ? new orders index fell to -4.5 from 5.3, and employment index decreased to 5.2from 5.9. Today there will be a little important news ? house price index from S&P/Case-Shiller in 20 US megalopolises is estimated to increase by 2.0% y/y in? August after? +1.2% y/y in July, consumer confidence index from Conference board is estimated to improve to 72.4 against 70.3 earlier.

EUR

Spain situation and the expectations of decisions in Greece are continuing to influence the unified currency causing decrease of interest in it. The rise of incomes from assets of outlying countries of the Eurozone and bad index of Spain economy caused the weakening of the euro at the fisrt session this week. Information, demonstrated by Madrid, showed the fall of retail trade in September, the index fixed -10.9% y/y in comparison with August ? only 2% y/y. There is still uncertainty concerning the aid to Greece, as Athens and international creditors are not agreed. The top-manager of Germany stated that the idea of Greek debt restructuring at the expense of government?s means will not be considered , and that the program of its bay-back can attract the attention, but it can cause the printing-press turn on in the Eurozone and it naturally increase the euro trading. Except Spain statistics, German inflation statistics was published ? here price pressure I October remained at the same level ?- preliminary consumer 0prices index showed? 0.0% m/m, 2.0% y/y. Today there are much more news. First, market?s attention will focus on German employment statistics. It is estimated the increase of number of unemployment allowance appeals by 10 thousands and increase of the level by 6.9% from 6.8% in September. Beside this, the report of the European committee for October about the mood in business will be of great interest. This information may cause the decrease of business conditions index by -1.40 from -1.34, decrease of economic expectations index to 84.2 after 85.0 earlier, decrease of the confidence index in industry sector to -17.0 after -16.1 in September. Consumer confidence index is expected to be at the level -25.6. It is natural that such dynamics of results don?t support the unified currency and the pressure on the euro may continue.

GBP

British pound also fell against the dollar at Monday trading, and its weakening was more noticeable than the euro weakening. Maybe investor?s pound trading was caused by the announcement of the representative of the Bank of England, which strengthened the fear concerning a volume increase of the program of mitigation from ???, which has decreased after the announcement of the Head of this institute M. King last week and good GDP index of ?islands? for the 3^rd quarter. Yesterday the member of Monetary and Credit Policy Committee? of the Bank Of England S. Deil announced that British economy will more likely slow down suddenly in the last quarter of the year, and inflation will more likely increase by 2.5% in the nearest months. Such situation is not good for the British regulator, as on the one hand stimulus is needed, but such action may bring negative results in the conditions of high inflation. Home market statistics published yesterday also didn?t support the pound ? Hometrack report announced house price index in October didn?t have positive results, the index fixed -0.1%m?/m, -0.4% y/y after -0.1% m/m,-0.4% y/y? earlier. Information of the Bank of England about crediting was positive ?- the total consumer crediting increased by 1.7 milliard pounds in September, this index beat summer 2008 maximum, forecasts had estimated worse results ? only +0.2 milliard pounds. Nevertheless, non-financial companies debts continued to decrease, it testifies a business unconfidence and may influence the dynamics of money supply., which had decreased in September -? M4 aggregate showed? -4.0% y/y from ?-3.5% y/y in August. Today there are a little news about ?islands? economy, retail trade index from the Confederation of British Manufacturers (CBI) is expected to increase to +7 ? +6 for October. It is scarcely probable that it has changed a market mood. It is more likely that the pound will be under a little pressure or will be in trade on the current session.

JPY

The expectations of the Bank of Japan decision on the monetary policy caused the fluctuations of the Japanese currency in narrow corridors against all main opponents on Monday session. Today this long-awaited decision is made and its announcement disappointed the market ? the yen strengthened on all fronts. The Bank of Japan decided to increase the program of assets buying by 11 trillion yens, it coincided with the forecast, but it didn?t come up to the investors? expectations of more aggressive stimulation. The Land of the Rising Sun economy statistics demonstrated today shows that the situation in Japanese economy worsens ?- households expenses decreased in September by -0.9% y/y after 1.8% y/y, but it was expected ?0.8% y/y, the level of unemployment remained at the same level ?4.2%, and the preliminary estimation of the volume of industry production in September fixed bigger decrease than it was in the previous month and then the forecasts expected,? -4.1% m/m, -8.1% y/y after -1.6% m/m,? -4.6% y/y, it was expected -3.1% m/m, -7.1% y/y.? Concerning the nearest perspectives of the yen, its pressure may weaken as the bank of Japan may mitigate more ?- the manager of the Bank of Japan M. Sirakova has already announced that? widening of the stimulation program will continue.

Source: http://blog.forex4you.com/fundamental-analysis-30-october-2012/

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