Fundamental analysis 21 November 2012 | Inside Forex trading

On Tuesday the market has never received an answer to the questions of whether Greece will get a financial aid. Expectations as usual brought out cautious trade in narrow range, as a result the final price at which dollar traded versus European opponents on the trading day was almost the same as at the beginning of the day. Dollar manages to take advantage of the yen as a result of the Bank of Japan promises to continue with its quantitative easing in the nearest future. Today it became known that the Ministers of Finance of the euro zone couldn?t conclude an agreement about the terms of the next Greek aid tranche and postponed a meeting on the next Monday. It supported the dollar, and at the current trading session the dollar grew against its all opponents. Another important event of Tuesday is speech of the head of the FRS B. Berbabke, which was also ignored by investors, because the head of American Central Bank repeated his previous statements about high unemployment rates, weak housing? recovery and risk coming from the situation in Eurozone, but he didn?t tell about the perspectives of dollar. Bernanke touched upon fiscal problems and called the government to solve the question. According to the US economic statistics which was published yesterday, represented by home construction indexes, was discrepant. In October the number of started dwellings under new construction increased by 3.6% m/m and surpassed forecasts, which had expected its decrease by 4.5% in comparison with September, but the number of construction permissions, which is the indicators of housing perspectives, decreased by 2.7% m/m, this index also surpassed forecasts which expected? the decrease by 2.9% m/m. Today the news will give away the information about weekly employment dynamics, which more likely show reduced number of unemployment insurance appeals. It is expected that its number decreased to 400 thousands from 439 thousands. Moreover, publication of final estimation of the consumer confidence index for November by Michigan University will be of great interest. It is expected that the index decreased to 83.5 from 84.9. Concerning the perspectives disappointment caused by announcements from EU may go on to the end of today?s trading session. However, the market activity will most likely be restrained on the threshold of US holidays, as it may make cause risk aversion.

EUR

The euro was stable during the trading session on Tuesday, trading in a narrow range. The market observed the meeting of the Ministers of Finance of the euro zone on Greek aid tranche. As it brought no results, closing prices on the trading day are the same as at the beginning of the trading session. At the beginning of trading day the unified currency was slightly influenced by the lowered France?s rating and then by the announcement of B.Bernanke. Nevertheless, the euro managed to recover from its losses with the help of hopes for positive decision of Greek aid tranche. There are a few economic statistics of the euro zone. From Germany we get to know about lower producer price pressure ?- the PPI index in October remained the same, 0.0% m/m after +0.3% m/m in September and decreased to 1.5% per annum from 1.7% earlier, when the forecasts expected monthly increase by 0.2%m/m. Today the EU economic statistics is not planned to be published. Euro will remain under the information published today about the fact that the European top management has never come to a decision about Greek aid tranche and postponed negotiations on the next Monday. This news caused pressure on euro. As a result the euro fell against the dollar. The euro may be influenced by this news till the end of today?s trading day.

GBP

As there was no news from Great Britain, the pound was influenced by external events. As a result it was fluctuating against the dollar for a short time. But, final price at which the pound traded against the dollar yesterday was rose, maybe as a result of expectations of publication of the BoE meeting protocol, the meeting was fixed on Wednesday. The protocol may present unanimous opinions of members of the ?monetary committee concerning the quantitative easing program. Today news contains more important information. It includes the protocol of the Bank of England meeting. The market may get to know about the distribution of voices for quantitative easing and public finance of Great Britain. It is assumed that British government decided unanimously to continue with quantitative easing and. And the volume of net government debt reduced in October to 6.0 milliard pounds against 12.8 milliards. Given situation may support the pound. But it is more likely that it will be influenced by the news from Europe about postponement of decision about Greek aid tranche, which put pressure on the pound even on today?s trading session and caused its sharp decrease and risk-seeking.

JPY

Japanese yen decreased against the dollar and the European opponents on trading session on Tuesday. Decision of the Bank of Japan about the same economic stimulus, which was announced yesterday, at first supported Japanese currency, as it didn?t come up to the market?s expectations for quantitative easing. Nevertheless, the pound turned out to be under pressure after the announcement of BoJ that they are going to continue with bond-buying in the nearest future. Today the bank of Japan has already presented the annual report where it stated that the economy remains weak ? consumption reduced, export and production decreased, and inflation rate will stay at zero. Presented external trade statistics of the Land of the Rising Sun confirms the results of the report ? total balance of external trade for October stayed negative ? with 549.0 milliard yens deficit. Today the yen trading may go on, but it will most likely be restrained on the threshold of tomorrow holiday in the USA. And the currency pairs which involve Japanese currency has approached to strong levels of resistance.

Source: http://blog.forex4you.com/fundamental-analysis-21-november-2012/

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