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Overview of the main economical events of the current day - 31/03/2014

Main Events of the Coming Week

On Friday March, 28 the US dollar was traded mixed amid reduction of the US Consumer Confidence. The US dollar decreased vs. the pound sterling and the euro, but increased vs. the yen and major commodity currencies, having added about 0.1% to the dollar index. Commodity currencies were corrected downwards after considerable growth of the previous days. Consumer Confidence data appeared to be worse than it was expected.

UoM Consumer Sentiment dropped in March to 80 p. comparing with 81.6 p. of the previous month, but appeared to be slightly higher than preliminary estimations of 79.9 p. At the same time, final data was predicted at the level of 80.5 p. The index dropped in March to the lowest reading for over 4 months. Consumer Expectations reading decreased for the nearest 6 months. FOMC Member Charles Evans announced on Friday that interest rates will stay near zero level during considerable part of 2015.

On Friday the pound sterling continued strengthening its positions amid growth of the UK Consumer Confidence in March to the highest rate for more than 6 years. Country’s services sector in January demonstrated the highest annualized growth for almost 6 years since February, 2008. The yen weakened its positions before the finish of the financial year in Japan in the end of March and impositions of sales tax since April, 1 amid positive dynamics of stock markets. Citigroup expects that Bank of Japan will increase monetary stimulation program till July, due to this fact USDJPY may increase to 108-110 till summer.

The euro sharply dropped on Friday to 4-weeks low vs. the US dollar after release of weak Spanish inflation rate data, but then it gained back all the losses amid growth of Euro-zone Economic Sentiment. Euro-zone Economic Sentiment Indicator increased in March to 102.4 p. (the highest level since July, 2011) from 101.2 p. in February, having exceeded the expectations. The indicator grows for the 11th month in a row already. All confidence indices increased, which speak for the Euro-zone economy recovery continuation in the nearest future.

Preliminary March CPI in Spain, the fourth Euro-zone economy, fixed the first case of deflation of consumer price index since 2009 (-0.2% y/y). German Inflation Rate data also demonstrated slowdown of inflation rate growth. Preliminary Consumer Price Index (y/y) increased in March by 1% against 1.2% in February and expectations of growth at the level of 1.1%. March Inflation data of the whole Euro-zone will be released on Monday March, 31. Weak Inflation data strengthened the expectations of further stimulation measures on the part of ECB.

According to the results of the previous week the US dollar demonstrated multidirectional dynamics, having added 0.1% to the dollar index. The US dollar decreased vs. major commodity currencies (more than 1%) and the pound sterling, but increased vs. the yen, the Swiss franc and the euro. According to the results of almost finished month, the US dollar increased vs. the yen, the Swiss franc, the pound sterling, and the euro – but decreased vs. AUD and NZD (more than 3%) having added 0.7% to the dollar index.

The main event of the week will be the release of key Non-Farm Payrolls on Friday in the USA, preliminary ADP data which will be released on Wednesday. In the USA on Monday Chicago PMI will be released, on Tuesday – ISM Manufacturing PMI and Construction Spending; on Wednesday – Factory Orders ж and on Thursday – ISM Non-Manufacturing PMI and Trade Balance. On Monday Fed’s Chair Janet Yellen is due to speak at the National Interagency Community Reinvestment Conference in Chicago.

The main event in the Euro-zone will be the Meeting of the European Central Bank on Thursday. Inflation decrease may provoke ECB to realize additional measures of stimulation. Recently many representatives of the ECB actively commented the possibility of interest rate decrease or even assets purchase. On Tuesday Final Manufacturing PMI and Final Services PMI will be released on Thursday; on Tuesday – Euro-zone Unemployment Change; on Wednesday – Producer Price Index; and on Thursday – Retail Sales. In Germany on Monday Retail Sales data will be released, on Tuesday – Labor Market data, and on Friday – Factory Orders.

On Monday in the UK Mortgage Approvals will be released, and since Tuesday till Thursday Manufacturing PMI, Services PMI, and Construction PMI will be released as well. On Monday Head of BOE Mark Carney is due to speak after Financial Stability Board Plenary Meeting press briefing. In Japan on Monday Industrial production data will be released, and on Tuesday – the Bank of Japan’s Tankan Quarterly Survey of Enterprises in Japan.

Meeting of the Australian Reserve Bank will be held on Tuesday, and no policy changes are expected. On Thursday retail Sales and Trade Balance data will be released, and speech of RBA’s Governor Glenn Stevens. On Monday in New Zealand ANZ Business Confidence will be released. Australia and New Zealand will revert to standard time on April, 6. On Monday in Canada GDP data will be released, on Thursday – Trade Balance data, and on Friday – Labor Market data. In China official Manufacturing PMI will be released on Tuesday, and on Thursday – Non-Manufacturing PMI.

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Overview of the main economical events of the current day - 01/04/2014

The US Labor Market Is Still Weak

On Monday March, 31 the US dollar moderately decreased vs. most major currencies, having lost 0.1% to the dollar index – amid Janet Yellen’s speech, during which she announced the necessity of monetary policy easing continuation, referring to the weakness of the labor market. Chicago PMI dropped in March to semiannual low.

Performing at the Chicago Conference Fed Chair Janet Yellen announced that the Central Bank should continue soft monetary policy for some period of time due to considerable weakness of the US labor market. In some ways the situation at the labor market is more complicated than during the recession period, she added, referring to the large amount of long-term unemployed, fractional persons, and low growth rate of salaries.
Chicago Business Barometer dropped in March to semiannual low. Chicago PMI dropped to 55.9 p. against 59.8 p. in February and expectations at the level of 58.5 p. Employment and New Orders considerably decreased in comparison with March.

The euro compensated all the losses at weak Eurozone Inflation rate, which appeared to be the lowest since October, 2009. According to preliminary data, annual inflation growth rate of the Euro-zone decreased in March to 0.5% against 0.7% in February and forecast at the level of 0.6%. Inflation in Italy also decreased to 0.4% y/y from 0.5% in the previous month.

The data intensifies pressure for the ECB in terms of new measures directed for overcoming of low inflation. Retail Sales (m/m) in Germany appeared to be positive, the reading increased in February by 1.3% against the expectations of decrease. ECB’s Nowotny announced that the Euro-zone recession is over, and there will be economy growth in the region this year.

The pound sterling continued its growth for the fifth day in a row amid general weakness of the US dollar. According to the Bank of England, Mortgage Approvals decreased in February from the highest reading of more than 6 years, but it is still at considerably high level. Mortgage Approvals decreased to 70 300 against 76 800 in January, and expectations at the level of 75 000; but consumer credit increased in whole, which speaks for further recovery of Housing Market.

Then yen weakened its positions vs. all major currencies amid Russia and the USA tendency to find diplomatic solution of the Ukrainian crisis, which decreased demand for save haven currencies. On the weekend during the meeting of heads of foreign affairs of Russia and the USA confirmed the aspiration to regulate the crisis in a political way. Industrial production in Japan in February dropped at the highest pace for 8 months. The Bank of Japan’s Tankan Quarterly Survey of Enterprises in Japan demonstrated that the companies wait for deterioration а business conditions in the next quarter, which may increase expectations of further monetary policy easing by the Bank of Japan.

The Canadian dollar inconsiderably strengthened its positions after release of the Canadian economy growth data, which appeared to be better than expected. GDP in January increased by 0.5% comparing with December reading, and against the forecast of growth by 0.4% - these are the highest growth rates for over the last 6 months.

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Overview of the main economical events of the current day - 02/04/2014

The Australian Dollar Dropped After RBA Decision

On Tuesday April, 1 the US dollar was traded mixed amid controversial statistic data in the USA. Manufacturing Activity growth in the USA reached 3-month high; still the data appeared to be worse than expected. The euro strengthened its positions amid positive German and Euro-zone labor market data. The pound sterling dropped after release of the weak UK Manufacturing PMI report, which demonstrated the lowest reading for over 8 months.

The US dollar increased vs. the yen, the pound sterling, the Australian dollar, and the New Zealand dollar, but decreased vs. the euro, and the Canadian dollar, having almost no changes to the dollar index. ISM Manufacturing PMI increased in March to 53.7 p. Against 53.2 p. In February, but appeared to be lower than expected 54 p. The PMI grows for the second month in a row. The growth in March provided considerable growth of manufacturing index. Final Final Markit Manufacturing PMI stayed in March without changes and composed 55.5 p.

The euro strengthened its positions amid positive German and Euro-zone Labor Market data. German Unemployment Change decreased in March by 10,000. Unemployment Change composed 6.7% having no changes in comparison with February, reading of which was downwardly revised from 6.8%. Euro-zone Unemployment Change remained in February without changes in comparison with the January reading of 11.9%, which was reduced from 12%. The same time, Italian Unemployment Change increased in February to 13% from 12.9% in January, whereas no changes were expected.

The euro was also supported by the Euro-zone Manufacturing Activity data, which exceeded the expectations in Spain, Italy, and France, but appeared to be weaker than forecasted in German. The Euro-zone data coincided with the expectations – Final Manufacturing PMI in March composed 53 p., having decreased from the February reading at the level of 53.2 p. ECB’s Board member Vitor Constancio announced on Tuesday that ECB doesn’t see further prospects of the Euro-zone deflation, and he expects that March reading will be revised.

The pound sterling dropped after weak UK Manufacturing Activity report, which demonstrated the lowest reading for over 8 months. Manufacturing PMI decreased in March to 55.3 p. From downwardly revised 56.2 p. In February, and appeared to be lower than forecasted 56.7 p. PMI decreased for the 4th month in a row.

The Australian dollar decreased after RBA Meeting, during which the rate was left without changes at record low 2.5%. But final RBA Rate Statement was more pessimistic in comparison with the previous ones. RBA noticed that AUD is high according to historical standards, and its recent strengthening creates potential risk for economy recovery, and also aggravates exporters’ situations. Final March HSBC Manufacturing PMI in China was downwardly revised to 48 p. against initial estimation of 48.1 p. and the February reading of 48.5 p.

The Canadian dollar strengthened its positions on Tuesday amid Raw Materials Price Index growth, which demonstrated the highest monthly growth rate for over almost three years, which was mainly due to energy prices growth. Raw Materials Price Index (m/m) increased in February by 5.7%, having twice exceeded the expectations. The index increases for the third month in a row.

The yen continued its weakening on Tuesday for the 4th day in a row amid start of the new financial year in Japan and positive dynamics at stock markets. The reduction of the yen was due to the Bank of Japan’s Tankan Survey of Enterprises, which demonstrated deterioration of Business Climate prospects in Japan due to sales tax initiation.

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Overview of the main economical events of the current day - 015/04/2014

The Euro Dropped amid Draghi’s Speech

On Monday 14 April the US dollar increased vs. the euro and the yen, having added 0.33% to the dollar index amid positive Retail Sales data in the USA, which were growing in March at maximum rate for over a year and a half. The euro dropped after ECB’s Mario Draghi’s speech. The pound sterling had almost no changes according to the results of the day amid Housing Market data in the UK.

Retail Sales in the USA increased in March by 1.1% comparing to the previous month, having exceeded the expectations of growth by 0.8% m/m – the rise appeared to be the highest since September, 2012. February data was upwardly revised. Retail Sales Ex Auto rose by 0.7% against the forecast of growth by 0.5%. The leading factor of growth became the increase of auto sales, which rocketed in March by 3.1% after the increase by 2.5% in February. Sales of 10 out of 13 main categories of retail goods increased in March.

The euro dropped during the first day of the week after ECB Mario Draghi’s speech on Saturday during which he pointed the danger of excessive strengthening of the euro. Strengthening of the European currency course may provoke ECB to taking additional measures of monetary policy easing, Draghi announced. Lately the strong euro bears pressure on the inflation. The course of the euro becomes more important factor in terms of estimation of price tendencies on the part of the ECB, Draghi added.

ECB's Christian Noyer also stated on Monday that the more intensely the euro grows the more soft the monetary policy should be. The strength of the euro is in obstacle on the way to achieving price stability. The growth of the euro which was observed last year, is unacceptable. At ECB’s disposal there is a series of policy instruments: assets purchase, interest rates decrease, and additional guide marks of monetary policy – Noyer announced.

According to the results of the day the pound sterling had almost no changes – the support is still rendered by the Housing Market data in the UK. The UK Rightmove House Prices reached in April new record high for the second month in a row. House Price Index increased in April by 2.6% - average price of the house put up for sale reached record £262,600. The growth composed 7.3% annual rate of increase in asking prices and became the highest since October, 2007. The prices grow due to lack of houses and mortgage availability.

The Australian dollar decrease after the Tuesday release of the last RBA Meeting Minutes. Reserve Bank of Australia pointed the period of interest rates stability. But the course of the Australian dollar still stays high according to historical standards. Its recent recovery doesn’t promote economy growth – and decrease of the AUD course still helps to return back to the balanced economy growth.

Reserve Bank of Australian noted that strong growth of investments to Housing Market is expected. However, the drop of investment to mining sphere and weak government expenditures will limit the growth. Labor Market indicators improved but more should be done for Unemployment Rate reduction. The New Zealand dollar was downwardly traded – Global Dairy Trade auction which will take place on Wednesday is among the risks for NZD. During the late auction milk prices reached the lowest level for over 13 months.

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Overview of the main economical events of the current day - 017/04/2014

The UK Unemployment Dropped to the 5-Years Low

On Wednesday April, 16 the US dollar was traded mixed, having almost no changes to the dollar index amid controversial statistic data in the USA. The US Industrial Output appeared to be better than expected, whereas Labor Market data appeared to be worse than expected. The pound sterling increased amid strong Labor Market data in the UK. The New Zealand dollar dropped after the release of weak Inflation Rate data.

The US dollar decreased vs. the pound sterling and the Australian dollar, but increased vs. the yen, the Canadian dollar, and the New Zealand dollar, having almost no changes vs. the euro. The US Industrial Output growth in March exceeded the expectations. Industrial Production increased in March by 0.7% m/m against the forecast of growth by 0.5%. The February growth of Industrial Production was revised from 0.6% m/m to 1.2%, which became the highest rise since May, 2010. Capacity utilization rate increased by 0.8% to 79.2% (it is the highest rate for over 15 months). Industrial Production increased for the second month in a row, and this fact is indicative of sector’s recovery after the winter recession.

At the same time Housing Market data didn’t reach the predictions. Building Permits dropped I March by 2.4% to 990,000, whereas decrease by 0.4% was expected. Housing Starts increase previous month only by 2.8% to 946,000 against the forecast of growth by 7%. New Housing Construction volume continued growing in March, but recovery is still unsteady and irregular due to mortgage loan rates increase and weak wages hike.

Fed’s Chair Janet Yellen announced on Wednesday that decisions regarding monetary policy will depend on three main factors: labor underutilization, low inflation, and possible disincentives for recovery. Yellen emphasized the weakness of Labor Market, its complicated dynamics and slow recovery, as well as the risk of low inflation. Economy prospects are not defined; Fed will watch the terms while policy formation.

On Wednesday the pound sterling almost exceeded the highs of 2009 after the release of strong Labor Market report in the UK, which demonstrated the decrease of Unemployment Rate to the lowest rate for over 5 years. ILO Unemployment Rate dropped in February to 6.9% from 7.2% in January. Decrease lower than 7% happened for the first time since 2009. Claimant Count Change reduced in March by 30,400 having coincided with the expectations – and reached the lowest rate since November, 2008.

The euro had almost no changes according to the results of the day. Final Inflation Rate data in the Euro-zone in March coincided with the initial estimations – Consumer Price Index growth decelerated in March to 0.5% y/y comparing to increase by 0.7% in February. Annual growth rate of Core Inflation Ex Energy and Food decreased to 0.7% from 1% in February, having slightly exceeded the forecast (+0.8% y/y).

The yen weakened its positions on Wednesday amid growth of Japanese stock market – Nikkei 225 rocketed by 3% after the most considerable weekly fall for over 3 years. BOJ’s Kuroda announced that the Central Bank will make every effort to achieve 2% target inflation rate.

The Canadian dollar decreased after the BOC decision to leave the key interest rate without changes. The Central Bank pointed downward risks for inflation and decreased the GDP growth forecast for 2014 due to deceleration of export and capital investment rate. BOC Poloz expressed neutral position in terms of interest rate, but he announced that on this very stage it is impossible to eliminate the possibility of its decrease.

The Australian dollar strengthened its positions amid Chinese economy growth data, which appeared to be better than it was expected. Chinese GDP growth rate in the first quarter decelerated to 7.4% y/y from 7.7% in the 4th quarter of 201, but appeared to be better than expected growth by 7.3%. At the same time, Industrial Output and Fixed Asset Investment in March appeared to be worse than expected. The New Zealand dollar dropped after the release of weak Inflation Rate data, but then it negated almost all the losses. Inflation increased in the 1st quarter only by 0.3% q/q against the forecast of +0.5%.

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Overview of the main economical events of the current day - 18/04/2014

Philadelphia Fed Manufacturing Index Rose to 7-Month High

On Thursday 17th April the US dollar strengthened its positions vs. most major currencies amid Philadelphia Fed Manufacturing Index growth to the highest level for over 7 months. The US Labor Market data also appeared to be better than expected.

The US dollar increased vs. the Australian dollar, the New Zealand dollar, the yen, and the Swiss franc, but had almost no changes vs. the euro, the pound sterling, and the Canadian dollar. The US dollar gained back the losses of the first half of the day after release of positive statistic data in the USA. Philadelphia Fed Manufacturing Index increased in April to 16.6 p. comparing to 9 p. in March, having considerably exceeded the expectations at the level of 10 p. New Orders, Shipments, and Employment considerably increase as well.

Initial Unemployment Claims appeared to be better than expected and still stay at low rates since May, 2007. Initial Unemployment Claims in the USA increased last week by just 2,000 to 304,000, whereas growth by 13,000 to 315,000 was predicted. Four-Week Moving Average of Initial Claims continued its reduction, having dropped by 4,750 from 316,750 to 312,000, which became the lowest reading since October, 2007.

On Thursday the pound sterling reached the highest rate vs. the US dollar since November, 2009, but then it decreased. The euro also had almost no changes according to the results of the day amid decrease of Producer Price Index in Germany, which dropped more than it was expected. Producer Prices decreased by 0.3% to the previous month, whereas no changes were expected. In an annual rate Producer Price Index dropped by 0.9% against expectations of decrease by 0.7% y/y.

The yen continued its weakening amid positive dynamics of stock markets and weakening of geopolitical tension after the start of negotiations about Ukraine in Geneva. The Japanese Government reduced the estimation of economy situation for the first time since November, 2012 due to the fact that consumers reduced spending after recent sales tax increase in the country. Consumer Confidence in Japan dropped in March to the lowest rate for over 2.5 years.

On Thursday AUD and NZD decrease most of all. The Australian dollar was traded downwards amid drop of Business Confidence in Australia and decrease of Chinese Actual Foreign Direct Investment. NAB Business Confidence decreased in the 1st quarter to 6 p. from 3-years high at the level of 8 p. in the previous quarter. New Motor Vehicle Sales dropped in Australia in March by 0.3% m/m after decrease by 0.1% in February. Actual Foreign Direct Investment in China in March reduced by 1.5% y/y against the expectations of growth.

The Canadian dollar had almost no changes according to the results of the day amid Consumer Price Index increase in Canada. Inflation annual growth rate accelerated in March to 1.5% from 1.1% in February, having exceeded the expectations of growth by 1.4% y/y. Core inflation increased by 1.3% comparing with the growth by 1.2% in the previous month, which coincided with the forecast. Canadian Inflation Rate data reduced the probability of taking measures for monetary policy easing.


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Overview of the main economical events of the current day - 22/04/2014

The Yen Dropped after the Release of Trade Balance in Japan

On Monday 21 April the US dollar was traded mixed amid Easter holidays in majority of developed countries and absence of any significant macro statistics. The yen dropped after the release of weak Trade Balance data in Japan.

The US dollar strengthened its positions vs. the euro and the yen, but had almost no changes vs. the pound sterling and major commodity currencies – having added 0.14$ to the dollar index. Chicago Fed National Activity Index considerably decreased in March, but February data was upwardly revised. CB Leading Indicator increased in March more than it was expected.

Chicago Fed National Activity Index dropped in March to 0.20 p. from 0.53 p., but not to 0.14 p. as it was forecasted earlier. The index’s three-month moving average (CFNAI-MA3) increased to a neutral reading in March from –0.14 in February. The index still marks the growth of the activity, though its deceleration was pointed. The biggest contribution was made by industrial indicators and Sales.

CB Leading Indicator increased in March by 0.8% after its strengthening by 0.5% in February; it has exceeded the expectations of growth by 0.7%. The index grows for the third month in a row. After the winter break the economy growth recovers. Steady growth of Employment, rise of Consumer Confidence, and Demand promote increase of household spending. Five out of ten readings of the index improved in March, but decrease of Building Permits didn’t let the indicator demonstrate a more significant growth.

The yen dropped to the lowest rate vs. the US dollar for over two weeks after the release of weak Trade Balance data in Japan. Trade Balance deficit in Japan expanded in March to 1.45 trillions of yen in comparison with the deficit of 0.80 trillions of yen in the previous month, having considerably exceeded the predictions at the level of 1.07 trillions of yen.

Increase of Trade Balance deficit in Japan was caused by weakening of export from Japan, which increased by 1.8% y/y against the expectations of growth by 6.3%. Import increased to 18.1% y/y having exceeded the forecasts of growth by 16.2%. Trade Balance deficit in Japan is fixed for the 21th month in a row – it is the longest period since 1979.

The euro dropped at the American session lower than the reading of $1.38 after several days of trading that was higher than this rate. Market volatility decreases: weekly range of the EURUSD pair last week appeared to be the lowest throughout the trading history of the common European currency – just 75 p.

German Ministry of Finance announced on Monday that there are no visible deflation tendencies in the country – German economy enjoys a boom which will expand in 2014. German GDP growth will be weaker in the 2nd quarter in comparison with strong rise in the 1st quarter on which the mild weather affected.

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Overview of the main economical events of the current day - 23/04/2014

The Australian Dollar Sharply Dropped Amid Inflation Rate Data

On Tuesday 22 April the US dollar was traded slightly downwards vs. most major currencies amid persisting fall of Existing Home Sales in the USA. The euro and the pound sterling were traded upwards. The Australian dollar sharply dropped after the release of weak Inflation Rate report in Australia.

The US dollar decreased vs. the euro, the pound sterling, the Australian dollar, and the New Zealand dollar; increased vs. the Canadian dollar ad had almost no changes vs. the yen and the Swiss franc. The US dollar gained back part of the losses against the euro after the release of Housing Market data, which appeared to be better than expected.

Existing Home Sales in the USA decreased in March by 0.2% in comparison with the previous month – to 4.59 m of houses, whereas decrease by 0.9% m/m was expected. Sales stayed at the lowest level since July 2012 as it was in the previous month – and they decrease for seven months in a row from the last eight months. Persistent fall of Existing Home Sales points that the recovery of Housing Market will be slower than it was expected earlier.

FHFA House Price Index increased in February by 0.6% m/m which coincided with the expectations. Richmond Manufacturing Index appeared to be better than forecasted – it increased to 7 p. in April against -7 p. in March, whereas growth only to 0 p. was expected. The Richmond Fed's regional manufacturing activity recovers after the reduction in February and March.

On Tuesday the euro was traded upwardly amid increase of Consumer Sentiment in the Euro-zone, the pound sterling also strengthened its positions. Preliminary Consumer Confidence in the Euro-zone increased in April to -8.7 p. against -9.3 p. in March, having exceeded the expectations of growth to -9.1 p. The reading became the best since October 2007 before the financial crisis. Consumers of the Euro-zone started evaluating their prospects in a more optimistic way; improvement of the Labor Market situation promotes increase of confidence supporting the economy recovery.

Construction volume in the Euro-zone increased in February by 0.1% m/m after the growth by 1.6% in January. Increase of Construction decelerated in February, though it continues for the third month in a row. ECB’s Benoit Coeure announced on Tuesday that ECB follows the euro’s course in order to evaluate the influence of persistent power of the European currency for the strong inflation rate in the Euro-zone. Citigroup estimates more than 50% possibility of ECB’s asset purchase this year.

The Australian dollar strengthened its positions on Tuesday before the key Inflation Rate report in Australia. CB Leading Index increased in February by 0.3% m/m, the growth continues for the sixth month in a row. However Inflation data appeared to be worse than expected, and AUD sharply dropped. Consumer Price Index increased in the 1st quarter by 0.6% q/q, whereas growth by 0.8% was predicted. Preliminary HSBC Manufacturing PMI also increased in April less than expected (48.4 p.) – to 48.3 p.

The Canadian dollar slightly decreased after the release of the US data, which appeared to be better than expected. CAD had almost no reaction for Wholesale Sales data in Canada, which exceeded the expectations. Wholesales Sales increased in February by 1.1% m/m against the expectations of growth by 0.7%. The growth rate appeared to be the highest for over seven months.

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Overview of the main economical events of the current day - 29/04/2014

The Pound Sterling Hits the Year Highs

On Monday 28 April the US dollar was traded mixed amid the US Pending Home Sales data which appeared to be better than expected. The pound sterling and the euro increased before the start of two-days FOMC Meeting on Tuesday, the results of which will be announced on Wednesday.

The US dollar increased vs. the New Zealand dollar, the Australian dollar, and the yen, but decreased vs. the euro, the pound sterling, and the Canadian dollar, having lost slightly less than 0.1% to the dollar index. The US dollar was decreasing in the first half of the day vs. the European currencies, but gained back almost all the losses to DX after the release of the US Pending Home Sales data, which increased for the first time after 8-month reduction.

NAR Pending Home Sales increased in March by 3.4% m/m after the decrease by 0.5% in February – whereas growth by only 1% was expected in March. Monthly growth rate became the highest since January, 2012. Pending Home Sales Index increased in March to 97.4 from upwardly revised 94.2 in February, which was the lowest reading of the index since autumn 2011.

The March growth of Pending Home Sales is the sign of stabilization possibilities and quit of sector out of the weakness period. Dallas Fed Manufacturing Activity also appeared to be better than expected and increased to 7-months high. The index increased in April to 11.7 against 4.9 in March, having exceeded the forecasts of growth to 6. At that Production and New Orders strengthened their positions to 4-years high, and Employment – to 2-years high.

The euro was in requisition during the European session on Monday and strengthened its positions to 2-week high vs. the US dollar. According to analysts of CitiFX China, which diversified its foreign exchange reserves, stood for purchase of the euro and the pound sterling. Growth of the Italian Consumer Confidence to the highest rate for over more than 4 years supported the strengthening of the euro. Italian Consumer Confidence jumped in April to 105.4 p. in comparison with 101.9 p. in March, whereas the decrease of the index was expected.

ECB’s President Mario Draghi announced on Monday that he doesn’t expect any deflation continuity for the Euro-zone in the economy of which he sees positive signs – but the growth of the economy is still weak. Draghi expects for the continuation of the problem of low inflation, but QE is far from being realized. QE is still a possible variant of monetary policy, but it is considerably relative. ECB’s Noyer also eliminated the risk of deflation in the Euro-zone, but he marked that the high course of the euro pressurizes the prices and promotes inflation slowdown.

The pound sterling refreshed the high of the year and reached new 4.5 year high vs. the US dollar before the release of GDP growth data on Tuesday. The UK Hometrack House Prices continued its growth for the 15th month in a row due to the fact the impulse at the Housing Market expanded beyond London. House Prices growth is driven by low interest rates of the Bank of England, real estate deficit for sales and economy strengthening, which creates new working places.

Economic growth continued to gather pace in April, alongside predictions of even stronger growth in the next quarter, according to the latest CBI Growth Indicator. Growth strengthened across the retail and service sectors, while manufacturing output growth remained solid. The outlook for the next three months points extremely strong broad-based growth.

On Monday the New Zealand dollar was traded downwards and reached the lowest rate vs. the US dollar for over almost a month before the release of New Zealand Trade Balance data. The released data almost coincided with the expectations – Trade Balance proficit increased in March to 920 m of New Zealand dollars against the forecast of 937 m. the yen weakened its positions amid positive dynamics of stock markets and absence of signs of aggravation of situation around Ukraine, which led to decrease of demand for save heaven currency.

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Overview of the main economical events of the current day - 06/05/2014

The US Non-Manufacturing PMI Still Grows

On Monday 5 May the US dollar was traded with a slight decrease vs. most major currencies, having almost o changes to the dollar index amid Non-Manufacturing Growth in the USA.

Released data of Non-Manufacturing PMI growth to 8-month high didn’t have impact to trades which passed on Monday at thin volume with low activity. Market participants still evaluate Non-Farm Payrolls released at the end of the last week, the data considerably exceeded the forecasts – speech of Fed’s Chair Janet Yellen with possible comments to the recent data is also expected on Wednesday.

US Non-Manufacturing PMI continued in April for the second month in a row and exceeded the expectations. ISM Non-Manufacturing PMI increased in April to 55.2 p. in comparison with 53.1 p. in March, whereas growth only to 54.1 p. was expected. Production, Inventories, New Orders, and Import demonstrated the largest growth, whereas Employment demonstrated decrease after considerable growth of the previous month. The data indicates resuming of the US economy acceleration.

At the same time Markit demonstrated decrease of Services PMI in the USA in April. Final Markit Services PMI decreased in April to 55 p. from 55.3 p. in March, though it exceeded the initial estimations of 54.2 p. The Conference Board Employment Trends Index continued its growth in April for the sixth month in a row and strengthened its positions to 118 p. against the upwardly revised 117.77 p. in March. Five out of ten index components increased in April.

The euro inconsiderably increased on Monday amid release of quarterly EU Economic Forecasts. European Commission forecasts gradual recovery of the region’s economy till the end of 2015, but it also warns that low inflation and strain in relations with Russia may prevent the region’s overcoming the crisis.

European Commission decreased the forecasts of the Euro-zone economy for 2015, and also decreased the forecasts of inflation and unemployment for the nearest two years. GDP growth forecast for 2015 is reduced to 1.7% from 1.8% (the forecast for the current year is left without changes). Inflation forecasts are decreased for 2014 to 0.8% from 1% and forecasts for 2015 – to 1.2% from 1.3%. Unemployment in 2014-2015 is expected at the level of 11.8% and 11.4% respectively against the previous forecast of 12% and 11.7%.

Sentix Investor Confidence sharply decreased in May after 4 months of growth. The index dropped to 12.8 p. in comparison with 14.1 p. in April against the expectations of growth. In March Euro-zone Producer Price Index continued reduction for the third month in a row, having decreased by 0.2% m/m which added concerns of low inflation which may prevent region’s economy recovery. Producer Price Index dropped in March by 1.6% in an annual rate after the decrease by 1.7% in February which was the largest decrease since December 2009. At the same time ECB’s Mersch announced that ECB doesn’t see inflation or deflation risks in mid-term.

On Monday the Australian dollar appeared to be under pressure after release of weak Chinese data and Australian Labor Market, but till the end of the day it gained back all the decrease. HSBC Final Manufacturing PMI strengthened its positions in April only to 48.1 p. from 48 p. in March, whereas it was conveyed about the growth to 48.3 p. The index increased after 5 months of reduction when it dropped to 8-month low.

Building Approvals in Australia dropped in March by 3.5% m/m after the reduction by 5.4% in February, whereas growth of the reading was expected. The New Zealand dollar was traded upwards on Monday continuing the tendency of growth of the last week. The Canadian dollar also rose amid general weakness of the US dollar.

By MasterForex Company