The quotations of the European currencies to dollar keep being within the limits of a narrow currency corridor.

On the one hand yesterday the dollar was supported by monthly industrial production data:

Capacity Utilization in December.

Industrial Production in December.

Industrial outputs in the USA rose on 0.6 % in December practically as expected, capacity utilization made up 80.7 % that is in line with growing economy. Growth of industrial production would be even more but for reduction of vehicles production on 2.8 %. Increase of capacity utilization made up 2.7 %, growth in mining sector was 2.5 %. FRS has declared "growth in mining sector was sustained partly by restoration in all sectors connected with energy which have suffered from recent hurricanes". FRS has also noted that the industrial output in processing sector and in manufacture of consumer goods made 0.2 %, manufacture of the industrial equipment went up 0.5 %.

Moreover NY Empire State Index showed growth in January. NY Empire State Index made 20.1 this month against 26.3 in December. Values of the index above 0 indicate growth. Value of the index in January has been above the average value of 15.6 in 2005.

The dollar strengthened a little within the limits of a currency range as the investors’ confidence of positive dynamics of the American economy has a little increased. It is expected that they will show rates of economic growth sufficient to convince FRS to continue monetary toughening.   

However the passions around the oil market keep putting pressure upon the dollar.

EIA has declared that world oil demand will increase on 2.2 % in 2006 in comparison with growth on 1.3 % in 2005 because of the restoration of oil demand in the USA and China.

In its first monthly report this year the Agency informed that though oil demand was traditionally low in the second quarter, the situation in a petroleum industry can offset traditional weakness. First of all it means that the tendency of stock increase as the geopolitical situation becomes more intense in key oil-producing regions, especially in Iran and Nigeria.

Thus, IEA has kept its forecast on the general demand in 2006 at a level 85.1 million barrels a day, but has revised to downturn the real demand in 2005 on 90,000 barrels a day up to 83.3 million barrels a day.

Meanwhile the oil prices have achieved the peaks for the last 3 months. The US February light contracts climbed to $65.40 for barrel by closing of the American session on NYMEX yesterday, earlier they were at  $65.53 - a maximum since October, 3rd, and March Brent futures were on a mark of $64.25 for barrel.

The quotations keep being within the limits of a sideways. 1,2000-1,2185 on euro and 1,7600 1,7750 on pound sterling. Players’ forces on the European currencies and on dollar have been balanced by positive expectations for dollar owing to rates of federal bonds, on the one hand. On the other hand rather serious players’ fears of the oil market falling because of the passions around Iran. Today there are expected results of the summit of the countries-members of the Security Council in London on Iran’s problem.

Besides this week statements of some FRS representatives who can throw light on the further rates prospects are planned. Susan S. Bies, Jeffrey Laker from Richmond FRS and Richard Fisher from Dallas FRS will make speech tomorrow. Also this week we shall hear statements of presidents Atlanta FRS Jack Gainn and San Francisco FRS Janet Yellan. So now risks on FOREX have been balanced.