On Monday at trading session the market decided to increase risk taking. Some optimism was appeared as a result of the fact that the USA is able to avoid so called budget break , as there are announcements about positive mood of the leaders of the Republican and Democratic Parties during the discussion of this question at the meeting in the White House. Optimism was also more likely influenced by investors? expectations of positive solution of Greek questions at today?s meeting of the Ministers of Finance of the Eurozone. The US economic statistics published yesterday showed good results, which resulted in growth of the exchange market and gave rise to risk-taking. As a result the American currency decreased against its European opponents and closed a trading session on neutral position against the yen. Published statistics showed that? home sales increased in October. According to the report of the National Association of Realtors (NAR) it fixed 2.1% m/m and 10.9% y/y, when it had been forecasted ?-0.1% m/m. A report of the National Association of Home Builders (NAHB) also showed positive results ? home market index increased to 46 in November from 41, when it had been expected increase to 42. Such situation gives good arguments to think that home market is recovering steadily. Today?s information may confirm or deny such supposition. Construction statistics, which will be published today, are expected to show decrease of new home building by 4.5% to 833 thousand houses in October after the rise by 15% in September, and a number of planning permission is expected ?to decrease by 3.4% m/m to 860 thousands in the same month. Nevertheless, today?s trading is more influenced by political news ? the market is waiting for the announcements of the Head of the FRS B. Bernanke about economic situation and budget break at the meeting in the Economic Club of New York and also the results of the meeting of the Ministers of Finance of the Eurozone, it is expected that they come to a decision about financial aid to? Greece. Encouraging results of these events may support risk-taking which intensified at the last trading session.
EUR
On Monday the euro rose against the dollar and other majors as a result of hopes to reach a consensus in the USA connected with prevention of automatic tax rise and reduced expenses, which could cause the largest world economy fall back in recession and also expectations of decision about the financial trade to Greece which may come at the today?s meeting of the Ministers of Finance of the Eurozone. At the same time the market actually didn?t pay attention to weak economic statistics of the Eurozone published yesterday. In September the construction production index of the Eurozone fell by 1.4% m/m and 2.6% y/y. Negative trend was confirmed by manufacturing orders index? in Italy, which fixed ?-4.0% m/m in September , when foreign orders decreased by 7.4% m/m, and orders inside the country by 1.4% m/m. Today there will be a few economic statistics of the EU. According to the forecast growth of the producer price index (PPI) of Germany will slow down in October +0.1% m/m, +1.6% y/y after +0.3% m/m, +1.7% y/y in September. The main event of the day is the meeting of the Ministers of Finance of the Eurozone countries. Investors are waiting for the decisions about Greece. On the threshold of the results of this meeting, the euro may be under pressure because of Moody?s information about downgrade of France?s rating to one level ? from ???? to Aa1 with negative forecast.
GBP
On Monday the British currency also rose against the dollar, but it showed the least volatility and fixed a small profit. It is obvious that this situation was caused by lack of information about the economic statistics of the islands. Only the report of Rightmove about home prices in November was published. The price index showed decrease by 2.6% according to monthly statistics and increase to 2.0% according to annual statistics after 3.5% m/m,? 1.5% y/y in the previous period. Today there will be no British economy statistics. The pound will remain under the influence of external information, first of all from Europe, where Greece?s problems are discussed. The sterling pound may be influenced by the announcement of B. Bernanke if it contains information about the perspectives of monetary policy. May be at today?s trading session the pound will be also influenced by the Moody?s decision about France, as there is a risk that the next country which rating may be downgraded will be Great Britain.
JPY
The US dollar stopped its growth against the Japanese yen at the trading session yesterday. It is more likely that the expectations of the Bank of Japan decisions about the perspectives of monetary policy brought out profit fixation, which left the instrument in a narrow range. Moreover, Japanese exporters could take an interest in the yen concerting currency earnings at favorable price levels. Today?s news announced that the Bank of Japan didn?t change its policy ? it didn?t change the rate, which was left in the range under 0.1% and the asset buying program of 91 trillion yens. ?It caused a small strengthening of Japanese currency at the Asian trading session. The announcement of the Bank of Japan that it is going to implement quantitative easing of monetary policy hasn?t impress investors yet . Maybe such mood may influence further trading of the currency pairs which involve the yen. Published economic statistics showed that the activity indexes in all sectors of economy of the Land of the Rising Sun are falling. In September the index decreased by 0.3% m/m after 0.0% m/m in august.
Source: http://blog.forex4you.com/fundamental-analysis-20-november-2012/
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