MasterForex Broker – Trend analysis of currency pairs and Comments (Updated daily)

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Overview of the main economical events of the current day - 25/02/2014

Commodity Currencies Were Leaders on Monday

On Monday February, 24 the US dollar was traded slightly downwards Vs. most major currencies amid weak statistic data in the USA. The pound sterling strengthened its positions Vs. the US dollar amid growth of Sentiment in the UK Services sector. Commodity currencies increased amid staple prices growth.

The US dollar dropped VS. the pound and major commodity currencies, and had almost no changes Vs. the euro and the yen – having lost about 0.1% to the dollar index. One more series of weak data was released in the USA, though it was not so important. Markit US Flash Services PMI dropped in February to 52.7 p. (4-month low) against 56.7 p. in January, whereas growth was predicted.

Dallas Fed Manufacturing Activity dropped in February to 9-month low at the level of 0.3 p. against 3.8p. in January, having considerably exceeded the expectations of decrease to 3 p. Chicago Fed National Activity Index decreased in January to 6-month low at the level of -0.39, comparing with -0.03 in December (revised from +0.16) – decrease to -0.20 was predicted.

The euro increased to year highs after the release of IFO Business Survey in Germany, which are still at its highs since the middle of 2011, but then it decreased after the release of Inflation data. German Business Climate increased in February to 111.3 p. from 110.6 p. in January, whereas no changes were predicted. Assessment of Business Situation considerably exceeded the expectations, whereas Business Expectations decreased.

Though annual Eurozone Inflation Rate in January composed 0.8% having no changes in comparison with December, and having exceeded preliminary estimations at the level of +0.7% - at monthly rate Inflation dropped in January by 1.1% m/m, which appeared to be the highest decrease rate since 2001, when its current practice account began.

The speech of ECB’s Mario Draghi negatively influenced the euro – after G20 Draghi announced that he is ready to act, if the price forecast will become worse, though he doesn’t notice signs of the Eurozone deflation. ECB will have full set of information necessary for decision making – till the meeting of March, 6 – he added. ECB’s Visco also announced the possibility of interfering negative deposit stake will be discussed at the March meeting of the ECB.

The pound sterling strengthened its positions on Monday amid the growth sentiment in the UK Services Sector. The last CBI survey demonstrated that the climate among the UK companies improved to very high level over the recent 3 months. The comments of BOE’s Marc Carney supported the pound sterling as well – he noted that the Central Bank will support the UK economy recovery, which is close to the moment of interest rate increase.

Commodity currencies increased amid risk appetite increase and staple prices growth. The biggest increase Vs. the Us dollar was demonstrated by the Australian dollar. S&P 500 on Monday reached intraday historical high. Oil refreshed 4-month high amid demand increase in the USA, which is connected with weather conditions, and Supplies risks. Gold prices on Monday considerably increased, having reached the level of the end of October 2013.

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Overview of the main economical events of the current day - 27/02/2014

US New Home Sales Reached More Than 5-Year High

On Wednesday February, 26 the US dollar increased Vs. almost all major currencies amid US New Home Sales Increase to 5.5 years high. The US dollar demonstrated the highest growth for almost a month, having strengthened its position to the dollar index by more than 0.3% - before the speech of Fed Chair Janet Yellen on the Semiannual Monetary Policy Report before the Senate Banking Committee, which will take place on Thursday.

The US New Home Sales in January suddenly rose by 9.6% m/m – to 468 000 of houses comparing with upwards revised December reading of 427 000. Decrease of sales to 400 000 was predicted. New Home Sales overcame the peak at the level of 452 000, and increased to the highest rate since July, 2008. Nonetheless, previously released indicators pointed the weakness of the House Market. So, Existing Home Sales, where there are the majority of deals – dropped in January to the lowest rate foe over the last 18 months.

FOMC Member Fisher announced on Wednesday that there are no delays predicted for the QE3 – and it will continue even at considerable Stock Market correction. At the same time FOMC Member Eric Rosengren pointed that QE3 may be corrected according to economy growth situation.

The euro dropped on Wednesday to almost 2-week low Vs. the US dollar after not being able to overcome yearly high Vs. the US dollar a bit lower than $1.38. Negative influence to the euro was caused by renewed speculation on the case of possible interest rate decrease in the face of forthcoming ECB Meeting, and situation of strain in Ukraine.

German Consumer Confidence is still at high levels of the middle of 2007; however, this data had no significant influence. GfK Leading Consumer Confidence Index rose in March to 8.5 p. Against 8.3 p. in February having exceeded the expectations.

The pound sterling insignificantly decreased after 2-day growth amid revised UK GDP data for the 4th quarter. The UK economy growth in the 4th quarter composed 0.7% comparing with the previous quarter, which coincided both with preliminary data, and expectations.

However, annual growth rate of the UK economy for the 4th quarter were reduced to 2.7%, whereas according to preliminary estimations they composed 2.8%. BOE’s Spenser Dale announced on Wednesday that the Central Bank doesn't plan to increase interest rates in the nearest future, in spite the recent improvement of the British economy situation.

The Australian dollar dropped amid ironstone prices decrease to almost 8-month low. Ironstone is the most important Australian export item. The prices may continue to decrease further, because its world resources are at a high level, and steel prices have dropped.

House building data in Australia also appeared to be worse than expected – Construction Work Done for the 4th quarter dropped by 1% comparing with the 3rd quarter, whereas increase by 0.4% was predicted. It adds concerns of possible weak country’s GDP in the 4th quarter of 2013. The Australian data will be released on March, 5.

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Overview of the main economical events of the current day - 28/02/2014

US Dollar Drops on Janet Yellen’s Testimony

On Thursday February, 27 the US dollar decrease Vs. most major currencies, having lost slightly less than 0.2% to the dollar index. The US dollar was strengthening its positions in the first half of the day, but dropped during FOMC Chair Janet Yellen’s speech in the Senate Banking Committee. The New Zealand dollar strengthened its positions most of all Vs. the US dollar – amid positive New Zealand Trade Balance data.

The report of FOMC Chair Janet Yellen in the US Senate distinguished itself from the previous report in the US House of Representatives two weeks ago, but this report seemed to be gentler. Yellen announced that in case of considerable change of economy prospects, FOMC may revise QE3 tapering. She also does not see necessity in Fedreserve balance reduction for policy tightening. Yellen admitted the influence of severe weather to recently released economic data, which point out weaker consumer spending.

Released US data appeared to be different, and did not cause much attention – Durable Goods Orders appeared to be better than it was expected, whereas Unemployment Claims increased. Durable Goods Orders decreased in January by 1%, which appeared to be less than expected decrease by 1.7% .The decrease was mainly caused by aircraft orders reduction. Durable Goods Orders Ex Transportation increased by 1.1% against the expectations of decrease and demonstrated the highest growth since May, 2013.

The US Initial Claims increased last week by 14 000 to 348 000 from downwards revised 334 000, which appeared to be worse than expected 335 000. Unemployment Claims appeared to be the highest for the last 4 weeks. Four-Week Moving Average of Initial Claims remained flat – 338 250. Poor weather conditions in the USA weakened the recovery process of Labor Market and Housing Market, which will probably slow down economy growth rate during the first month of this year.

The yen and the Swiss franc were in demand on Thursday as save heaven currencies amid aggravation of tension in Ukraine, which also lead to the euro sales. The Swiss franc increased Vs. The euro to the highest rate since April, 2013; it ignored weak GDP and Employment Level data in Switzerland. Swiss economy growth in the 4th quarter slowed down to 0.2% q/q from 0.5% in the previous quarter, against the expectations of growth by 0.4%, which was caused by export decrease by 1.7% q/q. Employment rate dropped in the 4th quarter to 4.19 million from 4.20 million in the 3rd quarter, whereas growth to 4.22 million was predicted.

The euro decreased in the first half of the day amid controversial statistics, but then it increased. German Inflation data appeared to be worse than expected, which especially essential before the Eurozone Inflation data release on Friday. Annual inflation rate in Germany slowed down in February to 1.2% from 1.3% in January, whereas no changes were predicted. Consumer Confidence in France decreased as well.

At the same time, German Labor Market and Eurozone Economic Confidence data appeared to be better than expected. Unemployment Change in Germany decreased in February by 10 000. German Unemployment Change stays at 6.8% level, which is close to 2 decades low, for the third month in a row. Eurozone Economic Sentiment Indicator increased in February to 101.2 p. (the highest rate since July, 2011) from 101 p. in January, against the decrease expectations. Confidence indices, except Consumer Confidence Index, increased.

The New Zealand dollar strengthened its positions amid positive Trade Balance data in New Zealand. Trade Balance proficit in January increased to 306 million of New Zealand dollars, which appeared to be better that the predicted 230 million. Fonterra, the largest world milk products exporter, stated the increase of payments to farmers-shareholders, and this fact also supported NZD growth.

The Australian dollar dropped on Thursday after weak Investment data in Australia, but then it gained all the losses. Private Capital Expenditure in Australia reduced in the 4th quarter by 5.2% q/q, whereas decrease by only 1% was predicted. The drop was the most considerable for almost 5 years.

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Overview of the main economical events of the current day - 04/03/2014

The US Dollar and the Yen Strengthened Its Positions on Monday


On Monday March, 3 the US dollar was traded upwards Vs. most major currencies amid ISM Manufacturing PMI growth in the USA. Markit PMI, Personal Income, and Personal Spending data appeared to be better than expected. The yen strengthened its positions due to the demand for save heaven currencies amid heightening of tension in Ukraine.

Personal Income increased in January by 0.3% comparing with the previous month, having exceeded the expectations of growth by 0.2% - whereas personal Spending strengthened its position by 0.4% m/m, which appeared to be more than forecasted +0.1%. Report confirms the last data pointing that Americans start overcoming the results of severe winter. ISM Manufacturing PMI in February increased to 53.2 p. from 51.3 p. in January, having considerably exceeded the expectations of growth to 52 p.

ISM Manufacturing PMI in the USA

Final Markit Manufacturing PMI also appeared to be better in February, and increased to 57.1 p. comparing with preliminary estimations at the level of 56.7 p. and January reading of 53.7 p. According to Markit, PMI signaled the most significant improvement of doing business terms for over 45 months.

The yen increased to its monthly high Vs. the US dollar due to the demand for save heaven currencies – amid escalation of tension in Ukraine on the weekend, when the President of Russia Putin got obtained admittance from the Parliament to use military forces in this country. Interference of Russia into Ukrainian events sparked concern about the big international conflict. On Monday gold prices increased to its high for over the last 4 months. Light Sweet Crude Oil (WTI) futures increased to the highest rate for more than 5 months.

The euro dropped on Monday from 2-month highs Vs. the dollar amid heightening tension in Ukraine – though ECB’s Draghi announced than economic influence of Ukraine to the Eurozone is limited, and commercial relations are not significant. Final Eurozone Manufacturing PMI decreased in February to 53.2 p., comparing with 54 p. in January, though it appeared to be better than preliminary estimations at the level of 53 p. German and Italian PMI decreased, whereas French and Spanish increased.

The pound sterling also decreased, having almost no reaction to the British data of manufacturing sectors, which appeared to be slightly better than expected. Manufacturing PMI increased in February to 56.9 p. comparing with 56.6 p. in January, whereas reduction was expected. According to Bank of England, Mortgage Approvals increased in January to its high for over more than 6 years – 76 900 against the expectations of growth to 73 500, but lending volume goes on reducing.

The Australian dollar gained back all the losses of the beginning of the day amid Non-Manufacturing PMI in China to 3-month high. Official Chinese Non-Manufacturing PMI increased in February to 55 p. comparing with 53.4 p. in January. Other data was also not so bad. ANZ Job Advertisements in February demonstrated the highest growth rate for over 2 years. AIG Manufacturing Index increased in February to 4-month high. The New Zealand dollar also negated part of losses amid Terms of Trade Index in New Zealand in the 4th quarter by 2.3% q/q to 40-years high.

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Overview of the main economical events of the current day - 06/03/2014

The US Non-Manufacturing Activity Dropped to 4-Year Low

On Wednesday March, 5 the US dollar decreased Vs. most major currencies after the release of weak US Non-Manufacturing Activity, but the reduction was moderate. ADP Employment Change also appeared to be worse than expected. The Canadian dollar strengthened its positions amid Bank of Canada Meeting. The Australian dollar increased amid strong Australian GDP data.

ISM Non-Manufacturing PMI suddenly dropped in February to its low since February 2010 at the level of 51.6 from 54 in January – whereas just slight decrease to 53.5 was expected. The largest decrease was demonstrated by Employment Index, which dropped in February to 47.5 from 56.4, having fallen lower than 50 for the first time for over 2 years - which is especially jittery before the release of Non-Farm Payrolls in the USA on Friday.

According to Automatic Data Processing (ADP), the US Non-Farm Employment Change increased in February by only 139 000, which appeared to be considerably worse than expected 160 000. Employment growth in January was also considerably revised downwards - to 127 000 from initial reading of 175 000. ADP data precede Non-Farm Payrolls key report of the US Department of Labor, which will be released on Friday, and it is frequently considered to be preliminary.

The US ADP Employment Change and Non-Farm Payrolls

The euro had almost no changes according to the results of the day before the ECB Meeting on Thursday – the euro had almost no reaction to Retail Sales growth and Services PMI of the Eurozone. ECB’s inflation forecast for the nearest years will attract attention on Thursday, as well as the press-conference of ECB’s Draghi. The markets wait for the ECB to take some actions to monetary policy easing. Barclays wait for interest rate reduction, whereas others believe that we may observe some liquidity injection.

Final Services PMI of the Eurozone increased in February to 52.6 p. comparing with 51.6 p., having exceeded preliminary estimations. Flash Manufacturing PMI and Services PMI rose in February to 53.3 p. from 52.9 p. in January, against the expectations of decrease – the highest rates since June, 2011 are still left. The Eurozone Retail Sales increased in January by .6% after decrease by 1.3% in December, having twice exceeded the expectations of growth.

The pound sterling strengthened its positions before the Bank of England meeting on Thursday, at which no policy changes are predicted. Services PMI decreased in February slightly less than it was expected – to 58.2 p. from 58.3 p. in January, which appeared to be better than predicted decrease to 58 p. Though it is the lowest rate since June, 2013, Services PMI activity growth for more than a year, Employment Change growth also accelerated.

The Australian dollar increased to its weekly high Vs. the US dollar amid strong country’s GDP data. Quarterly Economic Growth Rate in Australian in the 4th quarter composed 0.8%, having exceeded the expectations of growth by 0.7% q/q. Annualized GDP of the 4th quarter increased by 2.8% against growth by 2.4% in the previous quarter – having exceeded the expectations of growth by 2.5%. GDP growth acceleration happened mainly due to Export growth, which in 2013 increased by 6.5%, which was mainly promoted by AUD weakening.

The Canadian dollar strengthened it positions to 2-weeks high Vs. the US dollar amid Bank of Canada Meeting, where the policy was left unchanged, and it was also announced that inflation goes on strengthening its positions, but downward risks are still considerable. Time limits and course of further interest rate change depend on the influence of the new risk balance information - the Central Bank noted.

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Overview of the main economical events of the current day - 07/03/2014

The US Dollar Dropped In Expectation of Non-Farm Payrolls

On Thursday March, 6 the US dollar dropped Vs. most major currencies in anticipation of weak Non-Farm Payrolls, which is going to be released on Friday. US Factory Orders also appeared to be worse than expected. The euro increased after ECB’s Meeting Minutes release, at which new measures of monetary policy easing were not announced.

The US dollar lost 0.5% to the dollar index, having dropped to the lowest rate since October, 2013 according to DX – before the release of Non-Farm Payrolls on Friday. The data appear to be weaker than expected at the level of 150 000 working places – this is implied by the growth of average weekly Unemployment Claims during February. The largest growth Vs. the US dollar was demonstrated by the Australian dollar, which strengthened its positions amid positive statistics in Australia.

The US Initial Claims last week decreased by 26 000 to 3-month low at the level of 323 000, from 349 000 of the previous week - it appeared to be better than expected 336 000. 4 weeks average Initial Claims was decreasing for the second week in a row to 336 500 - from 338 500 last week. However, in February average weekly Initial Claims increased by 3 500 comparing with January, when it was created only 113 000 working places.

The US Factory Orders also appeared to be worse than expected – orders dropped in January by 0.7% against the expectations of decrease by 0.4%. This is one more mark of recent Manufacturing Index in the USA. Previous month’s data was also revised downwards – decrease of Factory Orders in December composed 2% m/m, but not 1.5% as it was reported earlier.

The euro sharply rose and opened above $1.38 to the dollar for the first time since October, 2013 – after the ECB left interest rates unchanged despite the Eurozone bottom inflation. New measures of monetary policy easing were not announced. According to Draghi’s comments, aggressive measures are excepted in the nearest future. ECB increased the Eurozone economy growth predictions in 2014 to 1.2% from December 1.1% - but decreased Inflation estimation from 1.1% to 1%. In 2015 the Eurozone GDP will increase by 1.5%, and inflation rate will accelerate to 1.3%, as it was expected in December. In 2016 GDP growth will compose 1.8%, and inflation rate – 1.5%.

The pound sterling slightly strengthened its positions amid Bank of England decision to leave the key interest rate and the stake purchase program without changes. Housing Market data supported the pound sterling – according to Halifax, House Prices in the UK increased in February by 2.4% having demonstrated the highest growth rate for over 5 years. But the prices are still 10% lower than the peak of August 2007. Housing Price acceleration takes place amid country's economy recovery which supports demand for real estate.

The yen dropped to 5-week low Vs. the US dollar after Japanese Advisory Group announced on Thursday that the largest Government Pension Investment Fund GPIF has no need to focus investments to local bonds taking into consideration country’s inflations rate acceleration. GPIF should look for investment possibilities which may bring large profit. Increase of investments to foreign holdings may lead to further weakening of the yen.

The Australian dollar increased on Thursday to the highest rate Vs. the US dollar for almost three months - after positive statistic release in Australia. Retail Sales in January increased by 1.2% m/m, having exceeded the expectations of growth by 0.5%, and having demonstrated the highest monthly growth rate for almost a year. Trade Balance proficit increased in January to 1.43B AUD from 0.59B in December against the expectations of decrease. The proficit increases for the third month in a row, and appeared to be the highest for over 2.5 years.

The Canadian dollar strengthened its positions amid Ivey PMI growth to 4-month high. Building permits growth rate in Canada also exceeded the expectations and appeared to be the highest for over half a year.

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Overview of the main economical events of the current day - 11/03/2014

The Australian Dollar Dropped Amid Weak Chinese Data

On Monday March, 10 the US dollar increased vs. the pound sterling, the Australian dollar, and the Canadian dollar, having almost no changes vs. other major currencies amid absence of any significant macro statistics in the USA. The pound sterling decreased before Inflation Report Hearings, which will take place on Tuesday. The Australian dollar dropped amid weak data in China. The Canadian dollar got under the pressure amid fall of commodity prices.

The Australian dollar dropped amid weak data in China released last weekend and on Monday. Chinese Trade Balance deficit in February composed $23B, whereas balance proficit was expected at the level of $14.5B. At that the export dropped by 18.1% comparing with the similar period of the previous year (the highest decrease since 2009), against the expectations of growth by 5% y/y – at that import has almost no changes. Export from China is considered to be the gauge of global commodities demand. At the same time the data might be wrenched due to more early celebration of the Lunar New Year this year.

Annual growth rate of Consumer Price Index in China decreased in February to 13-month low at the level of 2% from 2.5% in January, against the expectations of decrease to 2.1% - which increased concerns about slow down of economy growth rate of PRC. New Loans in China in February decreased more than it was predicted and dropped more than twice comparing with January. New Yuan Loans reduced to 645B from 1320B in January – whereas decrease only to 730B yuans was predicted.

The yen increased at the beginning of the day amid weak Japanese data and decrease of Japanese stock market, but then negate the whole increase. According to final data, Japanese GDP annualized growth rate in the 4th quarter was decreased to 0.7%, against preliminary estimation of 1% and growth by 1.1% in the 3rd quarter. Current account deficit in Japan in January reached record high 1.589 trillion yuans. Import increased in January by 30.3% comparing with similar period of the previous year, due to energy source import price growth, entailed by falling in price yen.

According to the results of the two-day Meeting of the Bank of Japan, monetary policy was left without changes, as well as general economy assessment. It is a sign of confidence of the Central Bank that the economy is able to survive the forthcoming increase in sales tax in April. Bank of Japan decreased the estimation of export, but increased the estimation of capital investment and industrial production.

The euro had almost no changes according to the results of the day. Industrial Production in France appeared to be worse than it was expected, whereas in Italy it appeared to be better. Eurozone Sentix Investor Confidence in March appeared to grow slightly worse than expected, to 13.9 from 13.3 in February, and it still stays at 3-years highs. Bank of France left the estimation of country’s GDP growth for the 1st quarter without changes at the level of 0.2%. ECB’s Christian Noyer announced on Tuesday that he is not satisfied with the euro’s strength. ECB is open for all types of instruments and is ready to act if risks are revealed. ECB’s Sabine Lautenschlager also announced that ECB is open to the idea of negative rates and stake in purchase if necessary.

The pound sterling dropped on Monday before Inflation Report Hearings which will be held on Tuesday, and during which the Head of the British Central Bank Marc Carney will testify. BOE Deputy Governor Charles Bean announced that further pound’s growth may harm country’s export and economy overbalance from internal expenditures to foreign trading. Another negative factor according to Citigroup is investor quit of long positions of pound sterling, which previously were opened relying on growth connected with deal between Vodafone and Verizon, which finished in the end of February.


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Overview of the main economical events of the current day - 13/03/2014

Reserve Bank of New Zealand Was the First among Major Central Banks to Increase the Key Interest Rate

On Wednesday March, 12 the US dollar decreased vs. most major currencies before the release of Retail Sales report on Thursday. The New Zealand dollar increased vs. the American currency most of all – after the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) by 0.25%.

The New Zealand dollar sharply increased and refreshed the highs of the year vs. the US dollar after the RBNZ increased Official Cash Rate (OCR) by 0.25% to 2.75% as it was expected. But the tone of the announcement was stricter, and the rate forecast was higher. RBNZ’s Wheeler noted the impulse of the economy growth in New Zealand and strengthening of inflation pressure on the part of high prices and Housing market boom.

Further increase of OCR will depend on data and inflation. Thought RBNZ announced that the course of New Zealand dollar is overcharged, he didn’t point that OCR growth rate will be changed due to this fact. Wheeler expects that interest rates will increase by 1.00-1.25% this year, and by 2.00% during next two years. RBNZ was the first bank among the Central Banks of developed countries, which settled down the course of interest rates increase. The rate was not increased almost four years, and was at the level of 2.50% for three years, when in March, 2011 RBNZ decreased the rate due to the earthquake in New Zealand.
The sales of the US dollar were resumed on Wednesday at the American session amid absence of significant macro statistics in the USA. According to the results of Wednesday the US dollar index lost a bit more than 0.2%. The euro increased again above the mark of $1.39 vs. the US dollar, which he was reaching in the end of the last week.
The euro had almost no reaction to the Eurozone Industrial production data, which suddenly dropped in January. Industrial production decreased in January by 0.2% m/m against the expectations of growth by 0.2%. Data of the previous month was revised upwards. At the same time annualized data appeared to be better – industrial production increased by 2.1% y/y, having exceeded the expectations of growth by 1.9%.

The euro was given support by the testimony of ECB’s Coeure, who announced that there is no deflation in the Eurozone, and stimulation measures of additional liquidity inflow to the banking system are not necessary. German Finance Minister Wolfgang Schaeuble also noted on Wednesday that interest rates in the Eurozone are too low in mid-term, and he doesn’t notice deflation in the Eurozone.
The Australian dollar on Wednesday interrupted its three-day growth and increased before the Australian Labor Market report – thought it decreased in the first half of Wednesday after the release of weak Australian Consumer Sentiment which dropped to 10-month low. Home Loans and Investment Lending also appeared to be worse than predicted. The Australian dollar sharply increased to 4-day high vs. the US dollar – after the release of Australian Labor Market report on Thursday. Employment in Australia in February increased by 47 300 and thrice exceeded the expectations of growth by 15 000.

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Overview of the main economical events of the current day - 17/03/2014

Main Events of the Coming Week

On Friday March, 14 the US dollar decreased vs. the yen. The euro, and the pound sterling, but slightly increased vs. major commodity currencies having lost 0.2% to the dollar index amid the US Consumer Confidence decrease to 4-months low. The US Producer Price Index data appeared to be worse than expected.
Preliminary U. of Michigan Consumer Sentiment in March sharply dropped to 79.9 p. comparing with Revised U. of Michigan Consumer Sentiment in February at the level of 81.6 p., whereas the increase was not expected. Consumers’ concerns were related with economy prospects. Current Assessment in March slightly rose, whereas Expectations dropped to the lowest level since November.

Producer Price Index decreased in February by 0.1%m/m against the expectations of growth by 0.2%. Core Producer Price Index Ex Food and Energy Supplies dropped by 0.2% comparing with the previous month, whereas growth by 0.2% was expected.
On Friday the euro gained back all the losses of Thursday, when the European currency dropped after ECB Draghi’s testimony. The pound sterling appeared to be slightly worse amid extension of the UK Trade Balance deficit in January to 4-month low. The yen continued its growth amid concerns about weak economy data in China and aggravation of tension in Ukraine. AUD and NZD corrected downwards after considerable growth of the previous days.

According to the results of the previous week the US dollar lost 0.36% to the dollar index having continued the decrease to DX for the third week in a row. The US dollar demonstrated multidirectional dynamics vs. major currencies – it decreased vs. the yen, the New Zealand dollar, the Swiss franc, and the euro – but increased vs. the pound sterling, the Australian dollar, and the Canadian dollar. The yen increased vs. the US dollar most of all, and the US dollar demonstrated the largest growth vs. the pound and the Australian dollar.
The main event of the coming week will be Fed’s 18-19 March Meeting, during which QE3 Tapering is expected to reduce by another $10B. Meeting Minutes will be announced on Wednesday, and FOMC Press Conference will take place; FOMC Economic Projections will be released as well.
On Monday in the USA Industrial Production, Capital Inflow, Empire Manufacturing PMI, and NAHB Housing Prices data will be released; on Tuesday – Building Permits, New House Starts and Consumer Price Index; on Wednesday – Current Account; on Thursday – Existing Home Sales, Philadelphia Fed Manufacturing Index, and Bank Stress Test Results.
On Monday in the Eurozone Final Inflation data will be released; on Tuesday – Trade Balance; on Friday – Current Account and Preliminary Consumer Confidence. On Tuesday German ZEW Economic Sentiment will be released; and on Thursday – Producer Price Index. The Swiss National Bank Interest Rate Decision will be announced on Thursday.
On Wednesday in the UK Bank of England last Meeting Minutes and Labor Market data will be released; on Thursday - CBI Industrial Order Expectations; and on Friday – Public Sector Net Borrowing. BOE Governor Mark Carney is due to speak at the Annual Mais Lecture at CASS Business School in London. On Wednesday Chancellor of the Exchequer George Osborne will perform Annual Budget Release.
On Wednesday in Japan Trade Balance will be released. Bank of Japan Governor Kuroda is due to speak at the International Financial Symposium and on Thursday he is due to speak at the Japan Chamber of Commerce and Industry in Tokyo. On Tuesday in Australia Reserve Bank of Australian last Meeting Minutes will be released.
On Monday in New Zealand Westpac Consumer Sentiment is going to be released; on Wednesday – Trade Balance; on Thursday – 4th Quarter GDP data. On Tuesday in Canada Manufacturing Sales will be released, and on Friday – Inflation and Retail Sales. BOC Governor Stephen Poloz is due to speak at the Chamber of Commerce in Halifax.

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Overview of the main economical events of the current day - 25/03/2014

The US Dollar Dropped after Fed’s John Williams Speech

On Monday March, 24 the US dollar dropped vs. most major currencies after Fed’s John Williams speech, where he announced that the rates will stay low for quite a long period of time. The largest growth vs. the US dollar was demonstrated by the Australian dollar, which increased amid hopes for stimulation in China, despite weak data of Manufacturing Index data in China.

The US dollar tried to increase amid weak data in the Eurozone, but it dropped after Fed’s John Williams speech, which decreased the hopes for earlier start of increase of base interest rates in the USA. Williams announced that Fed’s policy did not change deep down – he expects that rates will stay low for quite a long period of time. Rates will be increased not earlier than in the second half of 2015. Monetary policy may approach to normalization till the end of 2016, but even then the rate will stay much lower than 4%.

The US data released on Monday appeared to be mixed and had almost no influence to trading course. Chicago Fed National Activity Index increased in February after two-month decrease to 0.14 from -0.45 in January. At the same time, Markit Preliminary Manufacturing PMI decreased in March to 55.5 p. against the February reading of 57.1 p., which appeared to be the highest since May, 2010.

The euro was traded downwards in the first half of the day after the release of the Eurozone Composite PMI, which dropped in March to 2-month low. The Eurozone data appeared to be worse than expected – PMI in France increased having exceeded the reading of 50 – whereas in Germany the PMI dropped. Manufacturing Index in Germany decreased to 4-month low, Services PMI – to 2-month low. The Eurozone Flash Composite PMI decreased in March to 53.2 p. from 53.3 p. in February, whereas no changes were expected. The February reading was the highest since June, 2011.

In March in the monthly report Bundesbank announced that the German economy growth in the first quarter of the year should be strong, but in the second quarter it will slow down. ECB’s Liikanen announced that ECB will keep to soft monetary policy for economy stimulation, and is ready to take further decisive actions if necessary.

The Australian dollar refreshed the year high despite the fact that Manufacturing Activity in China decreased to 8-month low. Preliminary HSBC Manufacturing PMI in March continued its reduction for the 5th month in a row. PMI dropped to 48.1 p. from 48.5 p. in February against the expectations of growth. China is the main trade partner of Australia.

However, weak Chinese data strengthened expectations of economy stimulation on the part of Chinese authorities. The main Chinese economist HSBC announced that the situation of Chinese economy goes down amid ongoing weakening of domestic demand, and Beijing is expected to take a series of actions for growth stabilization. In the nearest future mainstreaming of economy growth is expected due to planned reforms, economic liberalization, and increase of expenses for infrastructure projects.

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