FOREX: weekly review.[M]

One more week has come to the end and again the USD has remained with nothing: on Friday the dollar index has failed to lows not seen since October, 1997 against other currencies. On results it drop on 2.2 % against the Japanese yen that occurs 4-th week successively. Fifth week the rate suffers losses against eurocurrency.
Proceeding sales occurred in a view of some events which, theoretically, should support a rate. For example, the Federal reserve has given optimistic enough accompanying application on consideration of the financial markets, and data on trading balance which has appeared better expectations.
The basic event took place on Wednesday. On results of FOMC meeting the basic rate has been raised on 25 items up to 5 %(Federal Funds 25 years диаграмма Federal Funds 50 years диаграмма). And though FED representatives have declared, that states economy grow fluently, they have marked, that the further actions of the central bank will depend more closely on proceeding statistics.
The report published on Friday has shown reduction of deficiency of Trading balance(US Total Trade Balance ) up to $62 billion in March while analysts predicted growth of deficiency up to $67 bln. after $65.7 bln. in February and $68.6 (record) in January. However it has rendered only time support to a rate. In opinion of many observers, structural problems can return to focus of the market Especially in a view of that the theme of rates can recede into the background in the near future as the pause in a cycle of increase of cost of credits in the USA is expected. Structural problems are a principal cause of USD drop in 2004. In 2005 situation has a little changed - the dollar has grown almost on 14 % against EUR owing to a continuous FED's increase politics.
Traders have continued to put offers after tentative estimations of consumer sentiment in the USA in May from University Michigan(Michigan sent. Index диаграмма) shows decrease the second month successively. The index has fallen by 79.00 against 87.4 in April. In the meantime, it is possible to allocate two principal causes of which traders used as a cause of offers. First, the theme of rates continues to play against dollar. Despite of the application of the Federal reserve, the market of all on 40 % assumes, that FOMC in June will risk to raise the benchmark rate up to 5.25 %. At the same time, ECB if to considering market sentiment, next month can raise the discount rate from a current level in 2.5 % at once on 50 base item.
The Bank of Japan next week can hint on when there will be first since 2001 an increase of rates. The Bank of England too does not lag behind. It is expected, that up to the end of current year interest rates in Britain also will grow.
In the second, after session of G7 participants of the market have raised the interest to deficiency of balance of operations under current accounts which makes almost 7 % from GDP. Important became the report by G7 which market has regarded as stimulus for sales of USD for settlement world disbalance.
Support of EUR was rendered, meanwhile, with performances of official representatives of the Europe. So, representative of ECB Nout Wellink has on the eve declared, that interest rates are at a very low level. It also has hinted, that June meeting can support the offer on increase of the rate at once on 50 items up to 3 %. Other representative of ECB - Jose Manuel Gonzalez-Paramo today has told, that it is necessary to take measures for avoidance of display of secondary effects from a rise in price of oil in 2007. Management ECB repeatedly marked, that will take preventive measures to prevent occurrence of secondary effects of the inflation, capable to lead to growth of inflationary expectations. ECB considers as secondary effect of inflation influence the rise in prices on energy carriers and on requirements concerning wages.
Besides the report published on Friday has shown acceleration of inflation in the largest economy - Germany. The CPI in the country has grown on 2 % y/y in April after +1.8 % y/y in March. Last week the sterling has updated annual peaks against USD and has reached a 2-month's maximum against EUR. Support to a rate was rendered with a number of strong economic data.
Industrial production in March has exceeded forecasts in +0.2 % and has shown growth on 0.7 % while in February the indicator has decreased on 0.2 %. Besides growth has shown index PPI (+0.6 % in April against +0.3 %).
The JPY has grown owing to verbal interventions from authorities of Japan. Sothe head of Bank of Japan Toshihico Fukui has declared, that the bank can raise interest rates as in the country attributes of "long" economic growth are observed. Within 2006 the Japanese currency has grown on 5.5 % against dollar after in the country has been noted the longest for last five years period of economic extend.
" In focus of investors again the idea concerning fast increase of interest rates in Japan, than also speaks demand for yen, speaks Antje Praefcke the currency strategist of Frankfurt representation Commerzbank AG. Japan now is " on a way of steady economic restoration ", has declared Fukui on May, 7th at a meeting of heads of the central banks in Basel. " We are completely ready to make a following step (concerning interest rates), however we have no plan how to do it properly.