Fundamental analysis 1 November 2012 | Inside Forex trading

On Wednesday the beginning of trade was marked by a splash of optimism at the currency market. Maybe investors got a desire to take risks because of the futures of the currency indexes of the USA, which showed the positive opening of American currency markets after a break. Moreover, technical factors could also support profitable currencies by the strong levels of support. In such situation the dollar was weakening against the euro and the pound but strengthening against the yen. Thus, such tendency remained only against the dollar and the yen, and the situation with the unified currency changed and the EUR/USD pair closed the session at the same prices as at the beginning of trading session. It is obvious that the Ministers of Finance of the Eurozone don?t guarantee to Greece the allocation of the next aid tranche in the nearest future, and also weak statistics of the European economy caused a weakening of the unified currency. Concerning the U.S. economic indexes, there were no changes in the market events ? business activity statistics in Chicago improved, but the results turned out to be worsen then in forecasts. In October supply mangers index (PMI) in Chicago was 49.9 against 49,7 in September, but it was estimated the increase to 51,0, rise in the positive direction, over 50,0. Today there will be more important news about the economy, first of all it is the topic of employment, which becomes more important on the threshold of an appearance of the employment statistics ? ADP report about working places in the private sector for October is estimated to increase by 139 thousands after +162 thousands, but the number of initial unemployment allowance appeals didn?t changed, 369 thousands. Attention will be attracted by the information from the Institute of Supply Management about the dynamics of supply managers index (PMI) for industrial sphere, which is expected to decrease by 51.2 in October after 51.5 earlier. Conference board reports about the consumers mood will be also published ? consumer confidence index may increase with confidence by? 73.0 in October against 70.3 in the previous month. Concerning the perspectives, as I?ve already told, the American trading session may be influenced by the results of employments statistics. Results better then in forecasts, which show the signs of labour market recovery may support the dollar.

EUR

The unified European currency strengthened against the dollar at the beginning of trading session on Wednesday in the situation of the increase of the European stock exchange indexes and the decrease of Italian and Spain bonds capacity. Expectations of the positive opening of a stock exchange trading in the USA also contributed to a good mood. However, discrepant results of the Eurozone economy and political situation changed the investors? mood, and the euro turned out to be at the same position against the dollar. Uncertainty in the negotiations between the EU tree and Greece, and in this connection, the European group announcement about the absence of guarantee on the financial aid to Greece became the main reasons of decrease of interest in the unified currency. Disputes about the budget in Greece parliament, where Greece coalition can?t manage to come to Congress caused particular anxiety about a negative solution of the problem in the markets. Concerning the statistics, strong results of retail trade in Germany contributed to the mood improvement at the market ? the results of September showed increase by 1.5% m/m, when the forecast had estimated only +0.4% m/m.? However, the labour market statistics in the European Block brought disappointment and pressed the euro ? the unemployment rate increased by 11.6% in September from 11.5%, when the forecasts hadn?t expected changes. At the same time, Italy also demonstrated the worsening of labour market statistics after France and Germany. And In? Greece and Spain the unemployment rate exceeded 25%. The estimate of consumer prices index (CPI) of the Eurozone in October didn?t fixed changes, it remained at the level 2.5% y/y. Today we don?t expect important statistics of the EU, political situation will be of great interest. It will be marked by the further negotiations between Greece and the EU-tree ?about the financial aid to Greece. In general, the key topic will be about Greece in the end of this week and at the beginning of the next one as it is more likely that on Monday the voting in the Parliament will take place and the question will be solved ? whether Athens is ready to take the reforms, which international creditors demand.

GBP

British pound was the leader at the last trading session and strengthened against its all main opponents. It is obvious that it can be explained by that fact that in such uncertain situation the British pound became the most secure and interesting asset for investment. It can be confirmed by the fact that the news from ?islands? didn?t dispose towards the improvement of British pound popularity ? consumer confidence index in the Great Britain decreased by 30 after 28 according to the investigations of Gfk, and the member of monetary policy of the Bank of England Ch. Bin announced about the necessity to continue buying of state bonds and other assets until the inflation rate approached to 2.0%. It increased the probability of making a decision about the widening of mitigation program by the British governor. Today?s news also don?t contribute to a good mood concerning the pound ? supply managers index (PMI) for the production sphere for October is expected to decrease more, to 48.1from 48.4 earlier. It justified a weak beginning og the 4^th quarter and probable negative economic result according to the results of the last quarter of the year. Moreover, according to the forecasts, the construction sector and service sphere index PMI may also decrease. Taking into account this situation, there is much risk to see changes of the pound, as the position of British currency is not stable enough to resist any additions, which contribute to the risk-off and the pound can turn out to be under pressure in the nearest future.

JPY

Japanese yen was continuing to weaken against the dollar at the trading session on Wednesday. Splash of optimism supported the pressure on the yen. Moreover disappointment concerning the decisions of the Bank of Japanese had dispersed and the EUR/USD pair returned to the position, at which the yen began weakening when this information appeared. Among the news about the Land of the Rising Sun we can underline the regional economic report? for the 3^rd quarter, which showed the decrease of economy in 8 regions out of 11. Today there will be no important economic statistics of Japan. The U.S. economic statistics and a publication of the U.S. labour market statistics, planned for tomorrow, may influence the Japanese currency.

Source: http://blog.forex4you.com/fundamental-analysis-1-november-2012/

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