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 - 12/05/2014

Main Events of the Coming Week

On Friday 9 May the US dollar increased vs. all major currencies, having added 0.56% to the dollar index amid large-scale growth of the American currency against the euro and European currencies. The euro and the pound sterling continued its reduction on Friday. The Canadian dollar dropped after the release of Employment Change in Canada.

The euro continued its decrease on Friday, having dropped to monthly low vs. the US dollar – after on Friday ECB’s Mario Draghi signaled that ECB is ready to soften monetary policy during the next Meeting in June. German Trade Balance and Industrial Output in Italy also appeared to be worse than expected. German Trade Balance proficit decreased in March to 10-month low at the level of €14.8 m from €15.8 m in February against the expectations of growth. German Export reduced in March for the second month in a row. Industrial production in Italy dropped in March by 0.5% m/m against the expectations of growth by 0.3%.

The pound sterling decreased after the release of the UK March Industrial Output, which dropped by 0.1% m/m, whereas no changes were expected. Manufacturing Output increased by 0.5% m/m, having exceeded the forecasts by 0.3% - for the 1st quarter of this year the manufacturing growth became the highest for over 15 years (+1.4% q/q). The pound sterling rallied after the release of NIESR GDP Estimate, according to which the growth of the British economy accelerated. The UK GDP growth for three month till April composed 1% (against +0.8 in the previous month), which is the highest growth since June 2010.

The Canadian dollar sharply dropped after release of the Canadian Employment Change. Employment rate dropped in April by 28,900 against the expectations of growth by 12,000 which became the worst result for over 4 months. Unemployment had no changes at the level of 6.9% as it was forecasted. The Australian dollar slightly decreased on Friday and had almost no reaction for the release of quarterly RBA monetary policy report in which the forecasts of inflation growth for this year were slightly decreased, whereas forecasts of GDP growth were increased.

According to the results of the week the US dollar demonstrated mixed dynamics vs. major currencies, having added 0.46% to the dollar index (the highest growth for 7 weeks). The US dollar increased vs. The Swiss franc, the euro, the pound sterling, and NZD, but decreased vs. AUD, CAD, and the yen. The most considerable growth to the dollar index was accounted for the last two days of the week after Mario Draghi’s announcement of possible softening measures in June.

On Monday in the USA Federal Budget Balance will be released; on Tuesday – Retail Sales and Import Prices; on Wednesday – Producer Price Index; on Thursday – Philadelphia Fed Manufacturing Index, NAHB Housing Market Index, Consumer Price Index, Treasury International Capital (TIC) Flows, and Industrial Output; and on Friday – Building Permits, Housing Starts, and Preliminary U. of Michigan Consumer Sentiment. On Friday Fed Chair Janet Yellen is due to speak at the US Chamber of Commerce and US Small Business Administration as part of National Small Business Week, in Washington DC.

The main event of the week in the Euro-zone will be the Thursday release of preliminary GDP of France, Germany, Italy, and the whole Euro-zone for the 1st quarter to 0.4% q/q against 0.3% in the previous quarter. On Wednesday the Euro-zone Industrial Output will be released; on Thursday – Final Inflation Rate and monthly ECB’s report; and on Friday the Euro-zone Trade Balance will be also released. On Tuesday German ZEW Economic Sentiment is going to be released; and on Wednesday – Final Inflation Rate. On Tuesday Inflation Rate data will be released in Italy as well, and on Wednesday it will be released in France and Spain.

The most important day for pound sterling will be Wednesday when the UK Labor Market will be released – and Quarterly BOE Inflation report will be released with new forecasts about Unemployment, GDP, and Inflation Rate; after that BOE’s Governor will have a report. On Thursday in Japan Preliminary GDP for the 1st quarter will be released. On Tuesday in China Industrial Output, Retail Sales, and Fixed Asset Investment will be released.

On Monday in Australia NAB Business Confidence will be released; on Tuesday – House Price Index and Home Loans; and on Thursday – New Motor Vehicle Sales. On Tuesday Annual Budget Release will be performed in Australia. On Wednesday in New Zealand quarterly Retail Sales report and semiannual RBNZ Financial Stability Report will be released; and RBNZ Wheeler’s press-conference will also take place. On Thursday Annual Budget Release of New Zealand will be performed as well.

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Overview of the main economical events of the current day - 15/05/2014

Pound Sterling Dropped After Double Impact

On Wednesday 14 May the US dollar was traded downwards vs. most major currencies, having lost slightly less than 0.1% to the dollar index amid the US Producer Price Index. The pound sterling dropped after the release of the UK Labor Market and BOE Inflation Reports.

On Wednesday the index dollar stopped its 5-day growth despite released Producer Price Index which appeared to be better than expected. The US dollar was pressed by 10-year US Treasury Yield till the lowest rate since October.

Producer Price Index increased in April by 0.6% in comparison with the previous month having thrice exceeded the expectations. PPI increased in April by 2.1% in an annual rate, having exceeded the forecasts by 1.7%. Annual PPI Growth Rate appeared to be the highest for over two years. Core Consumer Price Index ex Food and Energy increased in April by 1.9% against the expectations of growth by 1.4%.

The euro stopped the decrease and slightly increased amid Industrial Production. Euro-zone Industrial Production decreased in March by 0.3% m/m which coincided with expectations. Industrial Production reduced by 0.1% in an annual rate, whereas growth by 0.9% y/y was predicted. ECB’s Praet announced that ECB is preparing whole range of measures of fighting with inflation deceleration. Among the measures Praet mentioned decrease of core interest rate, introduction of negative deposit rate, and new round of loan program. He also mentioned that asset purchase new program launch similar to FOMC’s program should not be expected from ECB.

The pound sterling dropped to 4-week low vs. the US dollar after release of the UK Labor Market. Unemployment decreased in accordance with the expectations; however decrease of unemployed and increase of average earnings index appeared to be worse than expected. The UK Unemployment Rate dropped by 0.1% in the 1st quarter to 6.8% - this is the lowest rate for over 5 years. Claimant Count Change reduced in April by 25,100 and didn’t manage to reach the forecasted 30,000. Average Earnings Index increased in the 1st quarter by 1.7% against the expectations of growth by 2.1%.

Additional pressure for the pound sterling was brought by the report of BOE which spoke for tendency of soft policy. BOE left the GDP and Inflation Rate forecasts without changes. The report market further improvement of economy and Labor Market, but all in all it saved its mild tune. Capacity Utilization Rate had almost no changes since February, having composed 1%-1.5% despite recent improvement of Labor Market and increase of economy growth forecasts. The report dispelled hopes for earlier increase of interest rate pointing the fact that it will be increased in the end of the 1st quarter or in the beginning of the 2nd quarter of 2015. Many market participants expected it in the end of the current year.

The Australian dollar increased to monthly high vs. the US dollar after the Tuesday release of Budget Execution Review of Australia for the next financial year, which was positively accepted by the investors. Australia switches to policy of tax increase and reduction of spending for the fight with deficit budget. New Zealand dollar also strengthened its positions after the release of RBNZ Financial Stability Report. RBNZ’s Wheeler announced that financial system of New Zealand will stay strong despite the risks.

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Overview of the main economical events of the current day - 19/05/2014

Main Events of the Coming Week

On Friday 16 May the US dollar was traded mixed, having almost no changes to the dollar index amid controversial US data. Housing Market exceeded the expectations, whereas the US Consumer Confidence dropped.

On Friday the US dollar was traded with a slight change vs. major currencies, having strengthened its positions vs. the Swiss franc, the New Zealand dollar, and the euro, but having decreased vs. the Canadian dollar and the pound sterling. Building permits and Housing Starts increased last month which appears to be the sign of recovery after unfavorable winter.

Building Permits increased in April by 8% to 1.08 m of houses – this is the highest rate for over 6 years since June 2008. Housing Starts increased last month by 13.2% to 1.07 m of houses (5-month high). Building Permits increase by 1% and Housing Starts increased by 3.6% were predicted.

Consumer Confidence decreased in May from the highest rate of 10 months, which was reached in April despite the expectations of growth. Preliminary UoM Consumer Sentiment dropped in May to 81.8 p. in comparison with Final April reading of 84.1 p., whereas in May the growth to 84.5 p. was expected. Both Present Situation and Expectations decreased. Energy, petrol, and Food prices growth negatively influenced Consumer Sentiment.

The euro was traded with a slight decrease amid the Euro-zone Trade Balance. Euro-zone Trade Balance proficit with seasonal adjustment increased in March less than it was expected – to €15.2 B from €15.0 B in February, whereas growth to €17.3 B was predicted. At that export and import dropped for the first time since late 2013. The New Zealand dollar slightly decrease amid the speech of the Minister of Finance of New Zealand who announced that NZD course is still high, which makes economy rebalancing complicated.

According to the results of the week the US dollar demonstrated multidirectional dynamics vs. Major currencies, having added 0.24% to the dollar index and having strengthened its positions to DX for the second week in a row. The US dollar increased vs. the European currencies, but fell vs. the yen and commodity currencies, having no changes vs. AUD. The US dollar demonstrated the largest growth vs. the Swiss franc and the euro, and the most considerable fall vs. the yen and the Canadian dollar.

On Wednesday in the USA Last FOMC Meeting Minutes will be released; on Thursday – Existing Home Sales, Flash Markit Manufacturing PMI, Chicago Fed National Activity Index, and CB Leading Index; and on Friday – New Home Sales. On Wednesday Fed’s Chair Janet Yellen is due to deliver opening remarks at the New York University Graduates Commencement Ceremony.

On Monday in the Euro-zone Construction Output will be released; on Wednesday – Current Account and Preliminary Consumer Sentiment; on Thursday – Flash Manufacturing PMI and Flash Services PMI for France, Germany, and the whole Euro-zone (a slight decrease of the indices is predicted). From Thursday till Saturday European Parliamentary Elections will take place. On Tuesday in Germany Producer Price Index will be released, and on Friday – German IFO Business Survey, and Final GDP for the 1st quarter.

On Tuesday in the UK Inflation Rate data will be released; on Wednesday – Last Bank of England Meeting Minutes and Retail Sales; and on Thursday – second estimation of GDP for the 1st quarter, government finance, and Core Machinery Orders, and on Wednesday – Trade Balance. The results of two-days Bank of Japan Meeting will be announced on Wednesday. On Thursday in Flash HSBC Manufacturing PMI will be released.

On Tuesday in Australia Last Meeting Minutes of the Reserve Bank of Australia and CB Leading Index will be released; and on Wednesday – Westpac Consumer Confidence, and Wage Price Index. On Monday in New Zealand quarterly Producer Price Index will be released, and on Thursday – Inflation Expectations. On Wednesday in Canada Wholesale Sales will be released; on Thursday - Retail Sales, and on Friday – Inflation Rate.

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Overview of the main economical events of the current day - 20/05/2014

Bundesbank Waits For German Economy Slow Down

On Monday 19 May the US dollar was traded downwards vs. most major currencies, having lost 0.05% to the dollar index amid absence of any significant macro statistics in the USA and the Euro-zone. The euro was traded upwards, whereas the pound sterling and the yen had almost no changes according to the results of the day.

The US dollar slightly decreased vs. the euro, but increased vs. the Australian dollar and the Canadian dollar, having almost no changes vs. other major currencies. The US dollar gained back almost all the losses of the beginning of the day during the American session. Decrease of US Treasury Yield negatively affected the US dollar in the first half of the day. 10-Year US Treasury Yield dropped on Monday to 2.50 – the lowest rate since July 2013.

On Monday the euro was traded upwardly vs. the US dollar, but lost part of the losses after the speech of ECB’s Yves Mersch who announced that possibility of taking measures of monetary policy easing at ECB’s June Meeting considerably increased. ECB has all the tools for further policy easing, and all the members of the Governing Council are of the same mind about using it in order to fight with risks of low inflation.

Euro-zone Construction reduced in March by 0.6% in comparison with February after 4 months of growth. Especially tense decrease in the construction sector was noticed in Germany – the largest Euro-zone economy. According to Bundesbank monthly report released on Monday German economy growth deceleration is expected in the second quarter. Increased risks in developing countries and geopolitical uncertainty in Eastern Europe also complicate the situation for the country’s economy.

The pound sterling had almost no changes according еще у results of the day before the release of Tuesday Inflation Rate data in the UK. Acceleration of annual inflation growth rate to 1.8% in comparison with 1.6% in March is expected. Rightmove House Price in the UK continued its growth for the fifth month in a row. Rightmove House Price Index increased in May by 3.6% m/m which appeared to be the highest monthly growth rate since April 2002.

The yen increased to its high vs. the US dollar for over 3.5 months amid decrease of stock markets, but then negated almost the whole growth gained during the day. Core Machinery Orders in Japan increased in March by 19.1% in relation to the previous month, having trice exceeded the forecast. Strong data decrease the possibility of new stimulation measures on the part of Bank of Japan which is positive for the yen. On Tuesday two-day BOJ Meeting will begin, the results of the meeting will be announced on Wednesday.

The New Zealand dollar was upwardly traded in the first half of the day amid positive Producer Price Index and Services PMI in New Zealand, but then it lost the whole growth. PPI Input increased in the 1st quarter by 1% q/q, having twice exceeded the expectations. PPI Output also exceeded the expectations of growth by 0.4% q/q having strengthened its positions by 0.9%.

Performance Services Index increased in April by 0.4 p. to 58.9 p. – the highest reading for over more than 6 years since November 2007. Acceleration of Services Activity is one more sign of continuing economy growth in the country. Market participants wait for the results of milk auction GlobalDairyTrade. Dairy production is one of the most important spheres in the country’s economy – about 25% falls on New Zealand’s export. Since February milk prices dropped by 20% approximately. The Australian dollar was traded downwards on Monday before the Tuesday release of the last RBA Meeting Minutes.

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Overview of the main economical events of the current day - 21/05/2014

The Australian Dollar Was a Leader of Decrease

On Tuesday 20 May the YS dollar was traded mixed, having almost no changes to the dollar index amid absence of any significant macro statistic in the USA. The pound sterling strengthened its positions amid Consumer Price Index in the UK. The Australian dollar dropped after the release of the last RBA Meeting Minutes.

The US dollar decreased vs. the yen and the pound sterling, but increased vs. commodity currencies, having slightly changed vs. other major currencies. FOMC Member William Dudley announced on Tuesday that interest rates growth will be relatively slow; however, it will depend on economy situation. There will be a considerable period of time between asset purchase initiated by FOMC in autumn and the first increase of interest rate.

The euro was traded with a slight decrease amid weak Producer Price Index in Germany. PPI decreased in April by 0.1% in comparison with the previous month, whereas no changes were expected. PPI reduced by 0.9% at an annual rate against the expectations of decrease by 0.8% - the fall of the index lasts for the 9th month in a row.

Industrial Orders also increased in March less than expected (+1.4%m/m) – by 1.3%. ECB's Erkki Liikanen announced that if it is necessary measures of policy softening may be taken in the course of the next meeting – for example large-scale asset purchase program.

The pound sterling strengthened amid Consumer Price Index in the UK, which exceeded the expectations. Annual growth rate of Consumer Price Index accelerated in April to 1.8% in comparison with 1.6% in March, whereas growth only by 1.7% was expected – the growth occurred for the first time for over a year. The highest price index since April 2009 was fixed in March. Core Consumer Price Index Ex Food and Energy increased in April by 2% against the forecast of growth by 1.8%. The growth of prices was mainly entailed by transport expenditure increase by 2% due to conveyance and transport rate increase.

At the same time Retail Price Index and Housing Price Index in the UK appeared to be worse than expected. Retail Prices increased in April by 2.5% y/y which appeared to be less than it was predicted. PPI Output increased in April by 0.6% y/y against the expectations of growth by 0.7%. ONS Housing Price Index in the UK increased in March by 8% y/y, whereas growth by 10.7% was predicted.

The Australian dollar was a leader of the fall on Tuesday after the release of the last RBA Meeting Minutes. RBA predicts deceleration of country’s economy growth rate due to reduction of investments to mining industry, export deceleration, and budget reduction. GDP growth will be lower than the trend of the nearest quarters. RBA’s Assistant Governor Guy Debelle announced that he expects for decrease of capital inflow in relation with 10-year investment boom finish in mining industry which gave support to the Australian currency. Further decrease of AUD will help to achieve balanced economy growth.

Additional pressure for AUD was brought by the release in one of the main financial editions of the country about the fact that S&P may revise Australian “AAA” credit score during next two years if the country will not reduce the budget deficit. Later S&P clarified that in short-term Australian rating is not under threat. Besides iron ore prices dropped on Tuesday to the lowest rate for over 20 months.

The Canadian dollar was traded downwards amid weak Wholesales Sales in Canada. Wholesales sales dropped by 0.4% in relation to the previous months against the expectations of growth. Decrease of Retail Sales happened for the first time for over 2 months. On Thursday Canadian Retail Sales data will be released. The yen strengthened its positions amid decrease of stock markets which increased demand for save heaven currency. Futures at Nikkei 225 dropped on Tuesday by 1%, having decreased lower than 14000.

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Overview of the main economical events of the current day - 22/05/2014

The US Dollar Dropped After the Release of FOMC Meeting Minutes

On Wednesday 21 May the US dollar was traded volatile, having almost no changes to the dollar index amid release of the last FOMC Meeting Minutes. The pound sterling strengthened its positions amid positive UK Retail Sales.

The US dollar was traded upwards vs. most major currencies almost the whole day, and it strengthened its positions to the dollar index by more than 0.3% - but then it lost almost all the growth after the release of the last FOMC Meeting Minutes. Altogether April Meeting Minutes had no considerable changes in comparison with the March Meeting. FOMC Members discussed the strategy of stimulation program tapering and spoke up for further testing of instruments of monetary policy. However, there were no allusions to probable data of the first rate increase or the possible growth ratio.

The euro refreshed 3-month low vs. the US dollar after the release of Euro-Zone Current Account, the proficit of which dropped to the lowest rate for over 6 months due to the reduction of visible trade of balance. Seasonal adjusted Current Account proficit of the Euro-Zone reduced in March to €18.8B from €21.8B in February against the expectations of growth.

At the same time Euro-Zone Consumer Confidence continued to grow in May for the third month in a row, having reached the highest rate since October 2007 despite reserved tense situation between the EU and Russia. Preliminary Euro-Zone Consumer Confidence strengthened its positions to -7.1 against -8.6 in April, having considerably exceeded the expectations. The euro gained back part of the losses after the release of FOMC Meeting Minutes.

The pound sterling continued its growth for the fifth day in a row amid positive UK Retail Sales. Retail Sales increased in April by 1.3% in relation to the previous month, having almost trice exceeded the expectations. Retail Sales annual rate increased by 6.9% which appeared to be the highest growth for over 10 years since May 2004. About 5.7% of GDP fall s to the share of Retail Sales.

Last Bank of England Meeting Minutes demonstrated that there are first signs of disputes among MPC Members, and there are different opinions in terms of the right course of monetary policy. According to the Meeting Minutes some MPC Members consider that policy stiffening should be started earlier in order the Central Bank might start gradual interest rate increase if the economy growth stays intense. Gradual rate increase may speak for the necessity of earlier policy stiffening.

The yen strengthened its positions after the announce of the results of two-day Bank of Japan Meeting, but then it negated the whole growth amid stock markets strengthening during the American session. BOJ left monetary policy without changes by solid voice and announced that current easing program has the desirable effect. BOJ signaled the growth of confidence in economy recovery and increased the estimation of capital investments.

BOJ’s Governor Kuroda announced on Wednesday that there are no reasons for the yen’s strengthening – however, BOJ will not try to affect foreign exchange courses by means of monetary policy and follow the example of other Central Banks. Japanese Merchandise Trade Balance Total appeared to be worse than expected due to considerable impost growth. Trade Balance deficit reduced in April to 0.81 trillion а нуты from 1.45 trillion of yen in March; however a more considerable reduction of the deficit to 0.65 trillion was predicted.

The Australian dollar decreased on Wednesday to the lows of early May vs. the US dollar after the release of weak Australian Consumer Confidence, but till the end of the day it negated the whole growth. Westpac Consumer Sentiment sharply dropped in May by 6.8% in comparison with April – to the lowest rate for over almost three years since August 2011. AUD was also pressed by the fall of iron ore prices to its 20-month low. The New Zealand dollar was negatively affected by decrease of dairy products prices which dropped on Wednesday during GlobalDairyTrade auction by 1.8% in comparison with the previous auction.

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Overview of the main economical events of the current day - 23/05/2014

Euro-Zone Manufacturing Activity Dropped to 6-Month Low

On Thursday 22 May the US dollar was traded upwards vs. most major currencies, having added 0.2% to the dollar index amid controversial US data. The euro was traded downwards amid weak German and Euro-Zone Manufacturing Activity. The pound sterling dropped after the release of the UK GDP.

The US Markit Flash Manufacturing PMI rose in May to three months high at the level of 56.2 p. in comparison with 55.4 p. in April, having considerably exceeded the expectations. CB Leading Index increased in April by 0.4% m/m, having exceeded the expectations of growth by 0.3% - the index strengthens its positions for the third month in a row due to improvement of Housing Market and financial sector terms. Kansas Fed Manufacturing Activity strengthened its positions to 10 p. in comparison with 7 p. in April, whereas no changes were expected.

The US Existing Home Sales increased last month for the first time this year, which may point acceleration of Housing Market recovery. Sales increased in April by 1.3% m/m to three-month high at the level of 4.65 m of houses in comparison with 4.59 m in March, though a slightly more growth by 2.2% m/m was expected. The decrease of requirements for mortgages, decrease of employment, and record low mortgage rate helped to calm the situation of Housing Market in anticipation of spring period of active sales which will be crucial for the US Housing Market.

The US Labor Market appeared to be worse than expected – the number of Initial Unemployment Claims increased from 7-years low after two weeks of decrease. The US Initial Unemployment Claims last week increased by 28,000 to 326,000, whereas growth only to 310,000 was expected. Four-Week Moving Average of Initial Claims decreased by 1,000 – from 323,500 to 322,500. Total number of unemployed reached the lowest rate since the recession period, and this fact points general of the US Labor Market situation.

Chicago Fed National Activity Index sharply dropped in April lower than the zero level which corresponds with the growth of the trend. The index decreased in April to -0.32 from +0.34 in March, whereas decrease only to zero level was expected.

The euro was traded downwards amid weak German and Euro-Zone Manufacturing Activity which dropped to 6-month low. French Activity dropped lower than 50 p. which dropped above 50 indicates industry expansion, below indicates contraction.

Euro-Zone Flash Composite PMI decreased in May from 3-years high at the level of 54 p. to 53.9 p. which coincided with the expectations. At the same time German and Euro-Zone Services PMI increased to 35-month high having exceeded the expectations. ECB’s Weidmann announced that ECB is ready to use unconventional measures of fighting with risks of Euro-Zone low inflation.

The pound sterling dropped after the release of the second estimation of the UK GDP growth which was confirmed at the level of +0.8% q/q, +3.1% y/y, however many components were revised. Exports, Gross Fixed Capital Formation, and Industrial Production were decreased – whereas Private Consumption, Government Spending, and Construction were upwardly revised. Industrial Orders appeared to be worse than expected – CBI Industrial Order Expectations increased from -1 in April to 0 in May against the expectations of growth to 4.

The Australian dollar rocketed after the release of Chinese Manufacturing PMI which appeared to increase to 5-month high, however then it dropped amid US dollar’s strengthening. Chinese HSBC Flash Manufacturing PMI sharply increased in May to 49.7 p. in comparison with 48.1 p. in April, having considerably exceeded the expectations. Chinese data led to growth of Asian stock markets and weakening of the yen to weekly low vs. the US dollar. The Canadian dollar increased on Thursday before the Friday release of Inflation rate, having ignored weak Canadian Retail Sales report, which demonstrated the drop of sales in March by 0.1% m/m against the expectations of growth – but previous month data was revised upwards.

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Overview of the main economical events of the current day - 27/05/2014

German Consumer Confidence Is Still Persistently High

On Monday 26 May the US dollar was traded slightly downwards vs. most major currencies amid absence of any significant macro statistics in most countries and weekend in the USA and the UK. The euro slightly strengthened its positions amid stable German Consumer Confidence.

The euro dropped in the beginning of the day vs. the US dollar in comparison with the lows of the previous week amid the results of the European Parliament elections, where far-right and European skeptics achieved high results, whereas traditional parties sustained considerable losses. This may complicate further work of the Parliament and put ECB’s efforts of further economy stimulation under threat.

The euro slightly strengthened its positions after the release of German Consumer Confidence, which continues to stay at the highest rate for over 7 years for the 4th month in a row – and it didn’t decrease in contrast to previously released ZEW and IFO indices. According to Gfk German Consumer Confidence Leading Index stayed in June at the level of 8.5 p. as it was expected. Persistent tension in Ukraine has not sufficiently influence German Consumer Sentiment, and strong Labor Market promoted strengthening of optimism in terms of economy situation development.

On Monday at ECB’s Conference in Portugal ECB’s President Mario Draghi marked low inflation rate in the Euro-Zone and announced that ECB will not allow its preservation for a long time. “Besides traditional tools associated with the change of interest rate, ECB has opportunity of long-term lending banks and purchase of asset covered bonds, as well as large-scale asset purchase. The choice of time is essential in this case” – Draghi said.

This statement became another sign of the fact that during the next Meeting, which will take place next Thursday, ECB may take new measures of monetary policy easing. Bloomberg survey, which was held last week, demonstrated that 90% of economists wait for monetary policy easing at ECB’s Meeting on 5 June. According to another survey 29 from 47 economists wait for ECB Interest Rate and Deposit Facility Rate decrease at the same time. JPMorgan believes that decrease of both rates is taken into account in the pair of EUR/USD.

The New Zealand dollar got under pressure in the beginning of the day after the release of New Zealand Trade Balance, which appeared to be worse than expected in April - but then it negated almost the whole decrease amid some weakness of the US dollar. New Zealand export dropped in April by 11% m/m. Trade Balance proficit decreased last month to 534 m of New Zealand dollars in comparison with 920 m in March, whereas decrease only to 667 m was forecasted. Balance proficit is fixed for the 6th month in a row.

The yen had almost no reaction for the release of Bank of Japan 30 April Meeting Minutes and speech of BOE Deputy Governor Kikuo Iwata. BOE Meeting Minutes brought no surprise. Kikuo Iwata announced that BOE get more and more positive reaction for current easing program and persistently approaches the target inflation rate of 2%.

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Overview of the main economical events of the current day - 28/05/2014

The US Durable Goods Orders Grow For The Third Month In A Row

On Tuesday 27 May the US dollar strengthened its positions vs. most major currencies, having added less than 0.1% to the dollar index amid macro statistics in the USA. The pound sterling dropped after the release of BBA Mortgage Approvals.

Durable Goods Orders, Housing Market, and Business Activity appeared to be better than expected. Durable Goods Orders in the USA, Leading Index, and Investment Activity increased in April by 0.8% m/m against the expectations of decrease by 0.7%. Previous month data was revised upwards.

However, the growth of Orders in April was mainly due to the increase of military orders, which rocketed by 39.3%. Durable Goods Orders Ex Defense dropped by 0.8%. Durable Goods Orders Ex Transportation increased by 0.1% m/m, whereas no changes were expected. Key indicator of future business investments – Nondefense Capital Goods Orders Ex Aircraft – dropped in April by 1.2% m/m after the growth by 4.7% in March.

The US S&P/Case-Shiller Composite-20 HPI increased in March by 12.4% y/y, having exceeded the expectations of growth by 11.8%. S&P/Case-Shiller Home Price Index strengthened its positions in March for the first time after four months of decrease. The Federal Housing Finance Agency (FHFA) also appeared to be better than it was forecasted. FHFA Housing Price Index increased in March by 0.7% m/m against the expectations of growth by 0.5%.

CB Consumer Confidence strengthened its positions in May to 83 p. in comparison with 81.7 p. in April which coincided with the expectations. Current Assessment, Labor Market in particular, and Economy Prospects Expectations, Employment, and Personal Finance appeared to be more positive in May than in the previous month.

The US Markit Flash Services PMI reached in May the highest rate for over 26 months: 58.4 p. in comparison with 55 p. in April. Richmond Fed Manufacturing Index was left unchanged in May at the level of 7 p., whereas decrease to 5 p. was expected.

The euro was traded downwards amid speech of ECB’s officials who exasperated the expectations of monetary policy easing, though at the beginning of the day the euro slightly strengthened its positions. ECB’s Nowotny announced that the Euro-Zone Inflation Rate is considerably lower the target ECB’s rate of 2%, and it is so low, that there is a risk of economy growth decrease. Nowotny indicated that the discussions held incline to decrease of interest rates. ECB’s President Draghi noted that ECB keeps in mind the risks connected with too long periods of low inflation, but he doesn’t see the risk of deflation.

The pound sterling dropped amid release of BBA Mortgage Approvals in the UK. According to BBA, Mortgage Approvals dropped in April to 8-month low against the expectations of growth. Mortgages decrease last month to 42,200 in comparison with 45,000 in March. At the same time New Mortgages turned into cash increased to £12.2 И against £11 И in March, and it is the highest monthly total since August 2008.

The Australian dollar strengthened its positions on Tuesday to weekly high vs. the US dollar amid increase of iron ore prices – iron ore is the largest item of Australian export. Iron ore prices repulsed from lows of 20 months after the comments of Chinese prime-minister at the end of last week where he pointed the increased readiness for taking stimulation measures considering the downward risks.

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