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Overview of the main economical events of the current day - 29/11/2013

The Pound Rose to Its High for 27 Months

The US dollar was traded slightly downwards on Thursday Vs most major currencies amid a day-off in the USA and lack of any macrostatistics in the country. The pound rose amid new measures of the Bank of England on restriction of housing market boom. The euro was traded upwards amid positive inflation growth data in Germany and Spain and euro-zone confidence index.

The pound rose Vs the dollar to its high since August, 2011 after the publication of BoE Financial Stability Report which was introduced by the CB governor Mark Carney. Carney said on Thursday that he planned to reduce the support of mortgage lending in the UK to stimulate the banks to increase small business loans and to prevent the threat of financial stability from housing market. Since the next year concessional loans within the program of Funding for Lending Scheme (FLS) will be available only for small businesses and FLS won’t be able to be used for residential mortgage.

The euro was traded upwards on Thursday amid positive data of euro-zone confidence and inflation growth in Germany and Spain. Economic Sentiment Indicator (ESI) from the European Commission rose in November to its high 98.5 p. since August, 2011 compared with 97.7 p. prior month while a growth only to 98 p. was expected.

German inflation accelerated to 1.3% in November at an annual rate having exceeded the expected growth by 1.2%. Annual inflation in Spain rose to 0.3% in November Vs 0% in October. German weak labour market data were ignored. Unemployment rate in Germany increased by 10 thousand in November while no changes were expected. German Unemployment Rate has been 6.9% for three months in a row, which met the forecasts.

The Swiss franc strengthened after the release of GDP which exceeded the outlook. Swiss GDP for the third quarter increased by 0.5% compared with the prior quarter when there was a growth by the same 0.5% - while a growth only by 0.4% was expected. At an annual rate GDP rose by 1.9% while an increase by 1.8% was expected. Last quarter Swiss economy was supported by demand for its exports in Germany.

Australian dollar stopped falling after an unexpected growth of Private Capital Expenditure. The indicator rocketed by 3.6% in the third quarter compared with the prior period when its growth was only 1.6%. The indicator was expected to decrease by 1.2%. Canadian dollar also slowed down falling before Canadian GDP which is released on Friday.

Current account deficit decreased in Canada in the third quarter less than expected confirming weakness of exports. According to the National Bureau of Statistics of Canada, current account deficit dropped to 15.5 billion of Canadian dollars while it was expected to decrease to 14.4 billion. Raw Materials Price Index (RMPI) fell by 2.3% m/m in October amid the fall of prices for mineral fuel – the indicator was expected to fall only by 2%. The index has been falling for two months in a row showing the lowest decrease since June, 2012.

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Overview of the main economical events of the current day - 02/12/2013

The Main Events of the Week

The US dollar was traded differently on Friday, it grew Vs the euro, Swiss franc, yen and Canadian dollar but it fell Vs the pound, Australian and New Zealand dollars. The trades were calm and the currencies were traded at a narrow range amid lowered activity index because of the holidays in the USA. The euro stopped 3-day growth and fell amid an unexpected decrease of German retail sales by 0.8% in October while a growth by 0.5% was expected. Meanwhile, inflation and unemployment data in the euro-zone are better than expected.

Canadian dollar dropped to its low of early October, 2011 Vs the dollar after the release of Canadian GDP that turned out slightly better than expected. Canadian GDP rose by 0.3% m/m in September having exceeded the expected growth by 0.2%. Quarterly growth of economy annualized accounted for 2.7% in Canada Vs the forecast of +2.5% - the economy rose at the fastest rate for two years in the third quarter amid the increase of consumer spending, investment and inventory holdings while the exports decreased. Despite some improvement of economy it is unlikely to make the Bank of Canada to start finishing monetary stimulation earlier than the US Fed.

By the end of the week the US dollar slightly fell according to the dollar index having lost 0.07% and continued the trend of the prior week: the growth Vs the yen and commodity currencies and decrease Vs European currencies. The dollar dropped against the British pound (-0.81%) and the euro (-0.20%), it almost didn’t change Vs the Swiss franc and grew Vs Japanese yen (+1.12%), Canadian dollar (+0.93%) and New Zealand dollar (+0.68%) and Australian dollar (+0.59%). By the end of November the dollar rose by 0.45% according to the dollar index having shown the growth against the yen and commodity currencies; it decreased to the pound and almost didn’t change Vs the euro and Swiss franc.

This week, the first one of the month, a lot of important data will be released: GDP, Trade Balance, Non-Farm Payrolls, and PMI. There will be meetings of four main central banks: the Reserve Bank of Australia – on Tuesday, Bank of Canada – on Wednesday, Bank of England and ECB – on Thursday. However, the main event of the week will be Non-Farm Payrolls released on Friday which will make clear possible terms of QE3 tapering start. Unemployment rate is expected to fall by 0.1% to 7.2% and 183-185 thousand of new jobs. Strong Non-Farm Payrolls (about 200 thousand) can increase the chances that the Fed will make a step towards QE tapering at the meeting on December already.

In the USA ISM Manufacturing PMI will be released on Monday; on Wednesday - ADP Employment Change, Trade Balance, New Home Sales (for two months) and ISM Services PMI; on Thursday – revised GDP for the third quarter (a revision from 2.8% to 3.1% is expected) and Factory Orders; on Friday – Personal Income and Spending and Preliminary U. of Michigan Consumer Sentiment.

In the euro-zone the Final Manufacturing PMI will be released on Monday and Services PMI – on Wednesday; on Tuesday – Producer Price Index and on Wednesday – Retail Sales and revised GDP for the third quarter. In Germany Factory Orders will be released on Friday. In the UK during the first three days of the week there will be a release of Manufacturing PMI, Construction PMI and Services PMI. Chancellor of the Exchequer George Osborne will make an Autumn Forecast Statement on Thursday and introduce the main provisions of government’s policy for the next year.

In Switzerland industrial output for the third quarter will be released on Wednesday and on Friday – inflation. In Australia Retail Sales and Current Account will be released on Tuesday, on Wednesday – GDP for the third quarter and on Thursday – Trade Balance. In Canada Trade Balance will be released on Wednesday, on Thursday – Building Permits and Ivey PMI; on Friday - Labor Market Data.

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Overview of the main economical events of the current day - 03/12/2013

The U.S. Manufacturing PMI Rose Despite Forecasts

The US dollar grew on Monday Vs most major currencies amid the growth of manufacturing PMI in the USA which rose despite the forecasts. The data strengthened the expectations of an earlier QE tapering that puts a lowering pressure on the dollar.

ISM Manufacturing PMI rose unexpectedly in November to 57.3 p. against 56.4 p. in October - despite the expected decrease and it continues to stay at its high of April, 2011. In comparison with October - industrial output, new orders and employment have risen while inventories and prices dropped. Final Manufacturing PMI also turned out better in November than initially estimated 54.3 p. and grew to its high 54.7 p. since January. Construction Spending in the USA rose in October by 0.8% m/m against the expected growth by 0.4%.

The euro dropped on Monday considerably before the ECB meeting which results will be announced on Thursday – although euro-zone PMI in general turned out better than forecasted. Euro-zone final manufacturing PMI grew up to 51.6 p. in November from 51.3 p. in October having slightly exceeded the initial estimates of 51.5 p. However, the PMI of Spain, the fourth euro-zone economy, dropped below 50 p. for the first time for 4 months. French PMI also continues staying below this level.

Euro-zone PMI growth was mainly due to German manufacturing sector: the euro-zone largest economy PMI rose to 52.7 p. in November from 51.7 p. in October. However, according to German Engineering Federation (VDMA) that represents a significant part of medium business companies - German Factory Orders slumped by 10% y/y in October mainly due to demand decrease beyond the euro-zone. Official German Factory Orders will be released on Friday.

The pound updated its annual height Vs the dollar but then dropped. The UK Manufacturing PMI rose to its high since February, 2011 continuing the growth for the eighth consequent month. Manufacturing PMI rose to 58.4 p. in November from the revised reading of 56.5 p, in October. Industrial output and new orders rose to the highest levels for almost 19 years, employment growth also accelerated.

The yen continued falling and USDJPY rose above 103 for the first time since May 23 – after Bank of Japan governor Kuroda had said that the central bank would follow mild policy until inflation reached 2% and extra measures would be taken if needed. According to former Ministry of Finance official Eisuke Sakakibara, also known as “Mr. Yen”, the yen will drop to 108 per dollar in 2014. The Government Pension Investment Fund, whose assets rose last quarter to a record 124 trillion yen ($1.2 trillion), should follow an expert panel’s proposal to boost foreign holdings to as much as 35%, from 23%, according to Sakakibara.

Australian dollar was growing in the first half of the day after the release of stronger than expected Chinese manufacturing PMI on Sunday, but then it fell. NBS Manufacturing PMI amounted to 51.4 p. in November without any changes compared with October and exceeding the forecast. The index has been at its high of 1.5 year for two months. HSBC Final Manufacturing PMI fell in November from 50.9 p. to 50.8 p. having exceeded the estimates of 50.5 p.

New Zealand dollar rose on Monday amid Chinese positive data and Terms of Trade Index of New Zealand that reached 40-year high. According to the Bureau of Statistics of New Zealand Terms of Trade Index rose by 7.5% in the third quarter compared with the second quarter having considerably exceeded the expected growth by 2.9%. The growth of Terms of Trade Index to its high since 1973 was favored by the growth of exports prices for dairy products.

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Overview of the main economical events of the current day - 04/12/2013

The UK Construction PMI Grew to its High for More than 6 Years

The US dollar was traded downwards on Tuesday Vs most major currencies amid no significant macrostatistics in the USA. The pound strengthened on the back of the UK Construction PMI growth to its high since August, 2007. The yen rose amid fixed long positions on USD/JPY and stock markets decrease.

IBD/TIPP Economic Optimism rose by 1.7 p. in December or by 4.1% to 43.1 p. compared with 41.4 p. in November. The index has been growing for two months already after the decrease to 2-year low. The index is a good leading indicator for U. of Michigan Consumer Sentiment that will be released later.

ISM New York index in November rose by more than 10 points to 69.5 p. In October the index was 53.9. November index has become the highest since October, 2010. ISM New York index which mainly refers to non-manufacturing companies is released a day before the national ISM nonmanufacturing report.

The British pound strengthened on Tuesday amid the UK Construction PMI growth to its high of August, 2007. The UK construction PMI rose to 62.6 p. in November from 59.4 p. in October signaling a strong increase in the construction sector. The index above 50 p. indicates activity growth in the sector. The index has been above 50 p. for seven months in a row.

The euro also followed the pound and rose amid unemployment decrease in Spain in November for the first time for 4 months. Spanish Unemployment rate in November fell by 2.5 thousand in comparison with the prior month when it grew by 87 thousand – while unemployment rate was expected to grow by 50 thousand. The decrease has become the first one for November in the country’s history and probably it is a signal that the bottom of unemployment crisis in Spain has passed.

At the same time producer price index in the euro-zone was worse than expected and has fallen in October for the third month in a row, which may strengthen the concerns that a low inflation can threaten a fragile recovery in Europe. Producer price index fell in October by 0.5% in comparison with the prior month while a decrease only by 0.2% was expected. At an annual rate the prices dropped by 1.4% Vs the expected decrease by 1%.

Australian dollar fell after the Reserve Bank of Australia on Tuesday left the interest rates unchanged for the 4th consequent month but then it grew. RBA governor Glenn Stevens said that Australian dollar rate was still unreasonably high and there was a need of currency devaluation for a balanced growth of economy. The AUD was supported by retail sales data which grew by 0.5% m/m in October having exceeded the expected growth by 0.4%. At the same time current account deficit in Australia turned out higher in the third quarter than forecasted.

The yen rose amid the decrease of stock markets and fixation of long positions on USD/JPY within the upcoming annual heights. Another factor was the decrease of the world stock markets, which has increased the demand for safe assets. Dow Jones Industrial Average dropped by 0.6% on Tuesday, which has become the lowest decrease for almost a month.

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Overview of the main economical events of the current day - 05/12/2013

ADP Report Points to Strong Non-Farm Payrolls on Friday

The US dollar rose on Wednesday Vs commodity currencies, fell Vs the yen and almost didn’t change Vs the euro and the pound – amid contradictory statistics. The dollar grew after the release of strong ADP Non-Farm Employment Change but then lost all its growth amid the decrease of Services PMI that accounts for the largest part of the economy.

According to the Automatic Data Processing (ADP) Employment Change rose by 215 thousand in the USA in November while a growth by 170 thousand was forecasted and October growth by 130 thousand was revised to 184 thousand. The increase in November was the largest since the beginning of the year. ADP estimate is released before the official Non-Farm Payrolls of the Bureau of Labour Statistics this Friday and it can be considered preliminary.

According to the Institute for Supply Management the U.S. Services PMI dropped more than forecasted in November and fell to 5-month low 53.9 p. compared with 55.4 p. in October – while a decrease only to 55 p. was expected. The lowest decrease was shown by Business Activity Index/production, prices and employment.

The U.S. New Home sales rose at the fastest rate for 30 years on October – by 25.4% compared the prior month having reached 444 thousand houses at an annual rate. Such result became possible because New Home sales fell by 6.6% in September to 354 thousand, which was the lowest level since April, 2012. The U.S. Trade Balance deficit dropped by 5.4% in October to $40.6 billion - due to exports growth that reached the highest level for all history.

The pound was traded downwards amid the UK Services PMI decrease to 16-year maximum that was much more than expected but then recovered its fall. Services PMI fell to 60 p. in November from 62.5 p. in October while a decrease only to 62 p. was forecasted.

The euro had almost no reaction to a weak retail sales report that fell by 0.2% m/m in October against the expected growth by 0.1%. The euro-zone final Services PMI fell less than expected in November to 51.2 p. Vs preliminary estimate 50.9 p. and 51.6 p. prior month. Slightly better final results were only due to Germany – in France and Italy the index was worse than expected.

Australian dollar dropped to 3-month low Vs the US dollar after the release of a weak GDP for the third quarter. Last quarter Australian economic growth turned out slower than forecasted – the country’s dependence on the mining sector is high and other economic sectors are weak. Australian GDP rose by 0.6% q/q in the third quarter and by 2.3% y/y while a growth by 0.7% q/q and 2.6% y/y was expected. Despite eight decreases of interest rates for last two years record low interest rates didn’t stimulate the economy enough and left an opportunity for further rates decrease in 2014.

Canadian dollar fell on Wednesday to 3.5-year low Vs the dollar after the meeting of the Bank of Canada where, as expected, monetary policy was kept unchanged. However, Bank of Canada’s statement was considered milder as the central bank marked than lowering risks for inflation had strengthened – but significant stimulation measures taken by the Bank of Canada were still appropriate. The yen continued correction after it had weakened to half year low Vs the dollar amid the statements of BoJ member Sato who said that there was no need to further policy easing – which could hurt current efforts towards the exit from many years deflation.

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Overview of the main economical events of the current day - 06/12/2013

The Dollar Fell before the U.S. Non-Farm Payrolls

The US dollar dropped on Thursday Vs most major currencies before Non-Farm Payrolls on Friday despite positive statistics on GDP and Unemployment Claims – but GDP growth was mainly caused by inventories growth. The driving force of dollar’s weakening became growing yen amid stock markets decrease for a few days in a row.

GDP Second Release in the third quarter was raised from 2.8% up to 3.6% at an annual rate. It is the most significant growth since the first quarter of 2012 but the revision upwards was mainly due to the most considerable increase of warehouse inventories since early 1998 which added 0.85% into the GDP growth in comparison with the first estimate. Consumer Spending which brings about 2/3 of the whole share to the GDP – was lowered from 1.5% to 1.4% - it is the weakest growth since the end of recession.

Meanwhile, the U.S. labour market data continue improving. Unemployment Claims dropped by 23 thousand at once to 298 thousand last week – the lowest level for 12 weeks – while the indicator was expected to be 320 thousand. Initial Jobless Claims - 4 Week Average fell to 322.25 thousand from 331.75 thousand. Non-Farm Payrolls are released on Friday – 180-185 thousand of new jobs and unemployment decrease by 0.1% to 7.2% are expected.

The euro grew after the ECB meeting where interest rates were kept unchanged as expected – but no new measures on economic support were announced. ECB president Mario Draghi said that the ECB didn’t plan further monetary policy easing though negative deposit rate was briefly discussed. The central bank raised the euro-zone economic growth outlook for 2014 up to 1.1% from 1% and repeated GDP decrease estimate by 0.4% for 2013. In 2015 according to the expectations of the ECB economic growth rate will increase to 1.5%. Euro-zone inflation estimate was lowered: for 2013 to 1.4% from 1.5% and for 2014 – to 1.1% from 1.3%.

The pound was traded downwards on Thursday amid the BoE meeting, by the end of which the rate and asset purchase program had been left unchanged. Meanwhile, for the first time for three years the UK economic growth outlook was improved – which was announced by Chancellor of the Exchequer George Osborne on Thursday making a traditional Autumn Forecast Statement in the Parliament. The UK government raised GDP growth outlook for 2013 from 0.6% to 1.4%; and for 2014 – from 1.8% to 2.4%. Unemployment rate will drop to 7% in 2015 and to 5.6% in 2018. Osborne marked that the UK economy is growing faster than other developed economies.

Canadian dollar finished the day with a slight growth Vs the US dollar – before Canadian labour market data which will be published on Friday. According to Statistics Canada, Building Permits exceeded the forecasts considerably in October and grew by 7.4% Vs prior month against the expected growth by 1%. At the same time, Ivey PMI fell in November lower than forecasted – to 53.7 p. in comparison with 62.8 p. in October while a decrease to 59 p. was expected.

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Overview of the main economical events of the current day - 12/12/2013

Australian Consumer Confidence Fell

The US dollar was traded downwards on Wednesday Vs the euro, the yen and Canadian dollar but it rose Vs the pound, Australian and New Zealand dollars amid no significant macrostatistics. The euro continued growing while the pound corrected downwards. The yen rose for the second day on the back of stock markets decrease. Australian dollar dropped after Australian Consumer confidence weak data.

The dollar had almost no reaction to the news that budget negotiations in the US Congress ended with 2-year agreement that allows to escape another government shutdown on January 15 and to ensure stability in fiscal policy conduction. The agreement increases spending in internal programs and defense and also includes deficit decrease measures during a decade. The US federal budget deficit fell in November more than expected to $135.2 billion because of the government income growth due to tax revenues increase.

The euro has reached 1.38 to the dollar for the first time since October, 29. The ECB announced on Wednesday that it starts 7-day round to provide liquidity in U.S. dollars to reduce liquidity deficit formed recently in the euro-zone money market. ECB member Coeuré said that he didn’t exclude further policy easing but finds it unlikely. German inflation accelerated in November to 1.3% at an annual rate from 1.2% prior month. French Current Account deficit fell to 2.1 billion euro in October against 3.6 billion euro in September.

The pound was traded downwards on Wednesday after it updated an annual height Vs the dollar the day before. MPC Member Martin Weale said that the guidance accepted in August decreased the uncertainty about Bank of England intentions and probably postponed the expectations of further interest rates increase. Inflation expectations growth is not significant yet and is not a reason for concern. The guidance stimulates the UK economy but its effect is probably moderate – said Weale.

Australian dollar fell after Consumer Confidence weak data. Australian consumer confidence slumped in December to its low since July Westpac Consumer Sentiment dropped by 4.8% m/m to 105 p. in comparison with 110.3 p. in November. The main issue for concern is still employment. Chinese New Yuan Loans grew by 23% in November to 625 billion Yuan in comparison with 506 billion in October having exceeded the expectations. M2 Money Supply slowed down in China last month from 14.3% to 14.2% as expected.

The yen continued strengthening for the second day amid stock markets decrease – Nikkei fell by 0.6% on Wednesday. Swiss franc updated its annual height Vs the dollar before Swiss National Bank meeting on Thursday – no changes in policy are expected. Canadian dollar had been growing on Wednesday for three days. USD/CAD is corrected downwards from an important technical level 1.07.

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Overview of the main economical events of the current day - 13/12/2013

The U.S. Retail Sales Growth Supported the Dollar

The US dollar grew on Thursday Vs all major currencies after retail sales data that exceeded the expectations. The US retail sales showed the highest growth rates in November for 9 month and rose by 0.7% m/m Vs the expected growth by 0.6%.

The growth was mainly caused by auto sales increase by 1.8% - the highest for five months - Retail Sales ex Auto rose by 0.4% m/m having exceeded the expected growth by 0.2%. The sales of 8 from 13 major categories of retail goods increased in November, which can confirm a successful start of Christmas sales season in the USA. Consumer spending growth which is 2/3 of GDP, is a sign of economic improvement in the 4th quarter and it can bring the start of QE3 tapering closer.

At the same time employment market data showed an unexpected growth of Unemployment Claims which rocketed by 68 thousand last week to 368 thousand, the highest reading for two months. Initial Jobless Claims - 4 Week Average grew to 328.75 thousand from 322.75 thousand prior week. However, the US Department of Labor warned that the last week data could be a little distorted due to seasonal factors and holidays during the last two months of the years.

The Swiss franc had almost no reaction to the meeting of the Swiss National Bank (SNB) according to which the policy was kept unchanged as expected – but then it fell. SNB governor Jordan said that the franc rate was still high - downwards risks prevail in the economy, and its growth may slow down in the fourth quarter.

The euro fell after another futile test of $1.38 amid the decrease of euro-zone industrial output which fell by 1.1% m/m in October Vs the expected growth by 0.3%. The data released earlier this week showed industrial output decrease in October in France and Germany – the key countries of the European Union. Since November EURUSD has risen almost by 4% coming close to the height of 2013. ECB president Draghi said on Thursday that another LTRO line must be created to raise the chances that the program could reach real economy.

Australian dollar dropped Vs the dollar to the low of late August after Australian labour market data that showed unemployment growth to 4-year high in November. Employment Change grew by 21 thousand in November having exceeded the expected growth to 10 thousand. Extra pressure was put by the news that a number of companies are going to leave Australia or threaten with a significant reduction in the number of jobs. RBA Governor Glenn Stevens said that he expected Australian currency to fall to $0.85.

New Zealand dollar rose in the first half of the day after the RBNZ meeting where the key interest rate was kept unchanged but then it dropped. RBNZ said that inflation pressure started to rise and the necessity of further stimulation in the current volume is falling. The rate increase wasn’t considered yet but it can be raised if needed to support inflation about 2%. The rate must be increased by about 2.25% during the next two or so years – said RBNZ Governor Wheeler.

The yen again came close to annual heights Vs the dollar on Thursday. According to the QUICK poll, most Japanese analysts expect the Bank of Japan to start further monetary policy easing in spring of 2014. Canadian dollar stopped correctional growth of recent days and fell. Bank of Canada governor Poloz said again in his speech about the neutral position in regard to interest rate changes. He said that it might take two years for inflation to return to the target level of 2%.

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Overview of the main economical events of the current day - 13/12/2013

The U.S. Retail Sales Growth Supported the Dollar

The US dollar grew on Thursday Vs all major currencies after retail sales data that exceeded the expectations. The US retail sales showed the highest growth rates in November for 9 month and rose by 0.7% m/m Vs the expected growth by 0.6%.

The growth was mainly caused by auto sales increase by 1.8% - the highest for five months - Retail Sales ex Auto rose by 0.4% m/m having exceeded the expected growth by 0.2%. The sales of 8 from 13 major categories of retail goods increased in November, which can confirm a successful start of Christmas sales season in the USA. Consumer spending growth which is 2/3 of GDP, is a sign of economic improvement in the 4th quarter and it can bring the start of QE3 tapering closer.

At the same time employment market data showed an unexpected growth of Unemployment Claims which rocketed by 68 thousand last week to 368 thousand, the highest reading for two months. Initial Jobless Claims - 4 Week Average grew to 328.75 thousand from 322.75 thousand prior week. However, the US Department of Labor warned that the last week data could be a little distorted due to seasonal factors and holidays during the last two months of the years.

The Swiss franc had almost no reaction to the meeting of the Swiss National Bank (SNB) according to which the policy was kept unchanged as expected – but then it fell. SNB governor Jordan said that the franc rate was still high - downwards risks prevail in the economy, and its growth may slow down in the fourth quarter.

The euro fell after another futile test of $1.38 amid the decrease of euro-zone industrial output which fell by 1.1% m/m in October Vs the expected growth by 0.3%. The data released earlier this week showed industrial output decrease in October in France and Germany – the key countries of the European Union. Since November EURUSD has risen almost by 4% coming close to the height of 2013. ECB president Draghi said on Thursday that another LTRO line must be created to raise the chances that the program could reach real economy.

Australian dollar dropped Vs the dollar to the low of late August after Australian labour market data that showed unemployment growth to 4-year high in November. Employment Change grew by 21 thousand in November having exceeded the expected growth to 10 thousand. Extra pressure was put by the news that a number of companies are going to leave Australia or threaten with a significant reduction in the number of jobs. RBA Governor Glenn Stevens said that he expected Australian currency to fall to $0.85.

New Zealand dollar rose in the first half of the day after the RBNZ meeting where the key interest rate was kept unchanged but then it dropped. RBNZ said that inflation pressure started to rise and the necessity of further stimulation in the current volume is falling. The rate increase wasn’t considered yet but it can be raised if needed to support inflation about 2%. The rate must be increased by about 2.25% during the next two or so years – said RBNZ Governor Wheeler.

The yen again came close to annual heights Vs the dollar on Thursday. According to the QUICK poll, most Japanese analysts expect the Bank of Japan to start further monetary policy easing in spring of 2014. Canadian dollar stopped correctional growth of recent days and fell. Bank of Canada governor Poloz said again in his speech about the neutral position in regard to interest rate changes. He said that it might take two years for inflation to return to the target level of 2%.

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Overview of the main economical events of the current day - 16/12/2013

The Main Events of the Week

The US dollar grew on Friday Vs major European currencies but fell against the yen and commodity currencies. The euro and the pound continued correctional decrease of the prior day. The yen updated its annual low but then rose. Bank of Japan Governor Haruhiko Kuroda said that the central bank would take extra stimulation measures if consumer prices growth rates start weakening. Commodity currencies showed growth after a strong decrease of prior days.

The U.S. Producer Price Index turned out worse than expected and had dropped for the third consecutive month, which was mainly caused by energy prices decrease. Producer prices fell in November by 0.1% while no changes were expected. At an annual rate producer price growth accounted for 0.7% against the expected growth by 0.8%. The inflation fall can make it difficult for the Fed to take a decision of the start of QE tapering.

By the end of the week the US dollar had fallen slightly according to the dollar index by 0.10% having recovered almost all its decrease by the end of week after strong retail sales data, which strengthened the expectations of a possible start of QE3 tapering. The dollar grew Vs the Australian dollar (+1.52%), Japanese yen (+0.32%), British pound (+0.28%) and New Zealand dollar (+0.20%) – but it fell Vs the Canadian dollar (-0.51%), Swiss franc (-0.31%) and the euro (-0.27%).

The main event of the week and the whole month will be FOMC meeting on 17-18 December; its results will be announced on Wednesday – and also a quarterly press conference of the Fed governor Ben Bernanke will be held; and FOMC economic outlook for the GDP growth, inflation and rates will be published. It will be the last meeting of Bernanke as a Fed governor. And though most experts don’t expect QE3 tapering start – considering rather successful recent macrostatistics the process is possible to start. Last week President of the Federal Reserve Bank of St. Louis James Bullard insinuated it. Besides, the first reduction may be small, for example, by $5 billion.

There will be rather a lot of US data: on Monday - Empire State Manufacturing Index, Flash Markit Manufacturing PMI; on Tuesday – Consumer Price Index, Current Account and NAHB Housing Market Index; on Wednesday – Building Permits and Housing Starts; on Thursday – Existing Home Sales and Philadelphia Fed Manufacturing Index; on Friday - Final GDP for the third quarter. The US Senate will vote to pass or reject the nomination of Janet Yellen as Federal Reserve Chairperson.

In the euro-zone there will be Flash Manufacturing PMI & Flash Services PMI of France, Germany and the whole euro-zone; on Tuesday – the final inflation data; and on Thursday – Current Account. In Germany ZEW Economic Sentiment will be released on Tuesday; on Wednesday - IFO Business Climate; and on Friday - GfK Consumer Climate. ECB president Mario Draghi will make a speech on monetary policy in the European Parliament on Monday.

In the UK consumer price index and producer price index will be published on Tuesday, on Wednesday – BoE meeting minutes and labour market data; on Thursday – retail sales, on Friday – the final GDP for the third quarter and current account. The results of BoJ 2-day meeting will be announced on Friday. On Monday Tankan indices will be released; and on Wednesday – Japanese Trade Balance. In China HSBC Flash Manufacturing PMI will be released on Monday.

In Australia on Tuesday the Reserve Bank of Australia meeting minutes, New Motor Vehicle Sales and Conference Board Leading Index will be published; and on Wednesday - Westpac Leading Index. In New Zealand Westpac Consumer Sentiment for the fourth quarter will be released on Monday, on Wednesday - ANZ Business Confidence and Current Account; and on Thursday – GDP for the third quarter. In Canada Manufacturing Sales will be released on Tuesday, on Wednesday - Wholesale Sales and on Friday – inflation and retail sales.


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Overview of the main economical events of the current day - 17/12/2013

The Main Events of the Week

The US dollar fell slightly on Monday Vs the euro and the yen – and almost didn’t change Vs the pound and commodity currencies amid contradictory statistics. The US industrial output rose more than forecasted while manufacturing PMI strengthened less than expected. The euro was traded upwards amid the euro-zone manufacturing PMI growth to 31-month high.

The dollar recovered some loss after the U.S. industrial output release. Industrial output rose to 101.3 in November from 100.2 in October, having exceeded the top of recession for the first time and having shown the historical height – which has become another sign of the U.S. economic growth rate acceleration.

The U.S. industrial output rose by 1.1% in November compared with October while a growth by 0.6% was expected. This is the highest growth rate for a year. Prior month data were revised upwards. Capacity Utilization Rate grew by 0.8% to 79% above expectations.

At the same time manufacturing PMI turned out weaker than forecasted. Empire State Manufacturing Index rose to 0.98 p. in December compared with -2.21 p. in November while a growth to 5 p. was expected. Flash Markit Manufacturing PMI fell to 54.4 p. in December Vs the final reading 54.7 p. in November and forecasted growth to 55 p.

The euro grew on Monday after two days of decrease amid the euro-zone Manufacturing PMI growth. Euro-zone Flash Manufacturing PMI grew to 31-month high in December. At the same time euro-zone Services PMI dropped to 4-month low. Euro-zone Composite PMI maintained only to 3-month high. In France both manufacturing and services PMI decreased. In Germany only manufacturing PMI has risen which continues pulling the whole euro-zone.

The euro-zone trade balance surplus rose 1.6 times in October to 17.2 billion euro compared with 10.9 billion in September. ECB president Mario Draghi making speech in the European Parliament on Monday said again that economic recovery in the euro-zone was still fragile – price pressure would be still moderate and interest rates in the region would stay at the current low level for an extended period of time. Meanwhile, the ECB got 3-Year LTRO Repayment - for the loans given at the end of 2011 within LTRO first round – for the highest since February 22.7 billion euro.

The yen rose amid the decrease of Japanese stock market – Nikkei fell on Monday by 1.6%. Pressure was put by Chinese manufacturing PMI decrease. HSBC Flash Manufacturing PMI dropped to its low 50.5 p. for the past three months n December from 50.8 p. in November while the index was expected to grow. At the same time Tankan Large Manufacturing Index rose to its high in the fourth quarter since December, 2007. However, concerns managers worsened the forecasts of Business Spending for the current fiscal year and the next quarter estimate.

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Overview of the main economical events of the current day - 18/12/2013

Markets Wait for FOMC Meeting Results

The US dollar rose on Tuesday Vs the pound and Australian dollar, it fell Vs the yen and almost didn’t change Vs the euro amid the start of FOMC meeting which results will be announced on Wednesday. The pound dropped after a weak inflation report that showed a decrease of annual inflation rates to 4-year low. The euro had almost no reaction to German Economic Sentiment growth to its high for more than 7.5 years.

FOMC meeting on 17-18 December, the last one this year, may become conclusive. Many analysts estimate 50% probability of QE3 tapering at this meeting as American economy outlook is improving significantly. The markets wait for the Fed to take a decision on a small QE3 reduction – however, the probability of this step is not high.

More than 25% of analysts polled by The Wall Street Journal expect the Federal Reserve to announce QE3 tapering at December meeting already. More than 46% of analysts expect it till late January, 2014. According to December’s Bloomberg poll, 34% of respondents wait for the Fed to taper QE3 at this meeting. And another quarter believes that the reduction will start in January, the rest 40% wait for the reduction only in March.

The US inflation data were weaker than forecasted while current account and housing market data turned out better than expected. In November the US consumer prices didn’t change Vs October due to energy prices decrease – while a growth by 0.1% was expected. Annual inflation growth rates accelerated in November to 1.2% after a slowdown to 4-year low in October at 1% but turned out less than forecasted +1.3%. Weak inflation can make it difficult for the Fed to take a decision on QE3 tapering.

The US current account deficit fell to $94.8 billion in the third quarter, which turned out less than expected $100 billion. The deficit dropped to 2.2% GDP compared with 2.3% GDP in the second quarter. NAHB Housing Market Index rose in December by 4 p. to 4-month high of 58 p. – while a growth only to 55 p. was expected.

The pound dropped after a weak inflation report which showed a decrease of annual inflation growth rate in November to 4-year low of 2.1% from 2.2% in October while no changes were expected. Producer prices and retail prices also turned out worse than expected. The pound was slightly supported by BoE governor Mark Carney’s speech in the Parliament who said that the UK showed one of the fastest growth rates among G7 countries and there was no need in extra quantitative easing.

The euro had almost no reaction to German Economic Sentiment growth to the high since April, 2006 having recovered its fall by the end of the day. German ZEW Economic Sentiment grew to 62 p. in December against 54.6 p. in November having considerably exceeded the forecast 55 p. German ZEW Current Situation rose to 32.4 p. in December from 28.7 p. prior month.

Australian dollar dropped on Tuesday Vs the dollar to early August low after the release of RBA meeting minutes. The central bank said that it didn’t exclude the possibility of further interest rate fall – and further AUD rate decrease is necessary for economic growth. Besides, Australian Minister for Finance introduced a Mid-Year Economic and Fiscal Outlook providing a sharp decline of the budget and a weak economic growth in 2014. The budget is supposed to stay deficit-ridden for a decade.

In contrast to the AUD, the New Zealand dollar remained stable on Tuesday. New Zealand Finance Minister said that RBNZ was expected to raise interest rates in the first half of 2014. The yen continued strengthening for the third day in a row. BoJ governor Kuroda in the interview to the Financial Times made it clear that the central bank wouldn’t take new monetary policy measures besides those which are already used.

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Overview of the main economical events of the current day - 19/12/2013

Fed Started QE3 Tapering

US dollar sharply rose this Wednesday after the announcement of the results of the December FOMC meeting, during which it was decided to reduce the QE by $10 billion per month, to $75 billion. The reduction of the programme will be started by the Fed in January. This decision was undertaken due to the positive dynamics of the US labor-market and its forcoming perspectives. At the same time the Fed is ready to continue tapering at further meetings if the macroeconomic forecast will prove itself to be correct.

The key rate was also confirmed to stay at its present level 0-0.25% till the unemployment rate is higher than 6.5%, and the inflation rate is no more that 2.25%. The economic forecast was raised up to “moderate”. The results of the voting were 9-1. Eric Rosengren, Boston Fed President, voted against this decision referring to the fact that this decision was premature.

The FOMC refreshed forecast of GDP growth, inflation and unemployment rate was published this Wednesday. FOMC members lowered the unemployment forecast for 2013 and next years. The inflation rate forecast was also lowered for the upcoming year. The economic growth rate forecast was also a bit improved for next several years. The target unemployment level 6.5% will be probably reached in 2014; and in 2015 – one year earlier than it was planned before – the unemployment level will be lower than 6%.

Fed chairman Ben Bernanke during the last press-conference announced that he expected further recovery of the US economy and its confident rise. Bernanke expressed confidence in the fact that US job creation will be endured, and he specially emphasized the appearance of the new signs of consumers’ expenditures growth. Henceforth QE tapering is going to be held at a rate planned in December which was found moderate by the Fed governor.

This Wednesday the US senate approved the settled by mutual concession budget for the nearest 2 years, which is going to be helpful to avoid a new shutdown of the US government financing from January 15, 2014. The published data for US appeared to be quite positive as well. Housing Starts increased by 22.7% till the maximum rate over the last 6 years – 1.091 houses – this fact significantly exceeded the expectations. The building permits fell less than it was forecasted.

Only the pound demonstrated the rise Vs the US dollar this Wednesday and renewed its annual maximum after the publication of positive British labor-market report. Exceeding the expectations the unemployment claims decreased by 36.7 thousand. The unemployment level according to the standards of International Labor Organization (ILO) decreased to 7.4% between August and October, which is the floor from April, 2009. In previous 3 month it was 7.6%.

German IFO Business Climate rose to 109.5 p. in December from 109.3 p. in November as it was predicted. The December index was the highest from April, 2012. IFO Current Assessment fell, whereas IFO Expectations demonstrated increase.

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Overview of the main economical events of the current day - 23/12/2013

The Main Events of the Week

Last Friday the US dollar fell Vs most major currencies after two days of growth. The euro strengthened amid Consumer Confidence Index growth in Germany and the eurozone. The Canadian dollar fell after the publication of weak inflation and retail sales data, but then gained all the losses. The yen updated its annual low after the two-day meeting of the Bank of Japan.

During the American session the US dollar fell after the publication of the US GDP data. The final US GDP estimate of the third quarter was increased from 3.6% to 4.1% on annual bases. These are the fastest growth rates from the fourth quarter of 2011. However, the storage growth rates were increased – it had the positive contribution to the GDP growth – 1.67% comparing to +0.85% predicted earlier. At the same time the consumer spending were revised up while there were no changes expected.

The Canadian dollar fell after the publication of weak inflation and retail sales data, but then gained all the losses. The inflation in Canada this November increased by 0.9% y-o-y, which appeared 0.1% less than expected. The core inflation slipped to 1.1% from 1.2% in October despite expected growth to 1.3%. In October retail sales decreased by 0.1% m/m, whereas the growth by 0.2% was expected. The euro was supported by the German GfK Consumer Confidence growth data, which reached its maximum from August 2007.

According to the results of the week the US dollar increased by 0.6% according to the dollar index receiving support after Fed announced QE3 reduction start from January 2014. The dollar increased Vs the Japanese yen (+0.81%), the New Zealand dollar (+0.71%), the Swiss franc (+0.66%), the Canadian dollar (+0.64%), the euro (+0.44%), and the Australian dollar (+0.40%), but fell Vs the British pound (-0.28%).

Fed improved the US economic state estimate and increased the forecast for the next year. However the Fed highlighted that the key interest rate will be at the same low level for quite a long period of time – even after the unemployment rate will become lower than 6.5% especially in case of the same low inflation rates. In future it may put pressure upon the dollar.

In the coming holiday week rather little significant macro statistics data is going to be published, and due to the holidays reduced market activity will be felt. On the 25th of December on Wednesday all the markets will be closed due to Christmas. On Thursday it will be a bank holiday in Europe, Australia, New Zealand and Canada.

On Monday Chicago Federal National Activity Index, Personal Income & Personal Spending reports, Revised U. of Michigan Consumer Sentiment are going to be published in the USA; on Tuesday – Durable Goods Orders and New Home Sales; and on Thursday – the unemployment claims data.

In eurozone on Monday the Consumer Confidence Index in Italy is going to be published; on Tuesday – Final GDP in France for the 3rd quarter and French Consumer Spending for November will be published; and in the UK the BBA Mortgage Approvals.

There is a bank day-off in Japan. The monthly Bank Report will be published in Japan on Tuesday; on Thursday – BoJ meeting minutes of 20-21 November; and on Friday – a big data block on inflation, unemployment rate, industrial output and retail sales. The October Canadian GDP data will be released on Monday.

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Overview of the main economical events of the current day - 24/12/2013

Canadian Economic Growth Rate Exceeded the Expectations

This Monday the US dollar was traded with slight decrease Vs most major currencies amid weak US macro statistic data. The data of consumer confidence and personal income appeared to be worse than expected. The Canadian dollar has continued to grow for three days at a row amid the Canadian GDP data, which exceeded the expectations. The Swiss franc strengthened amid the growth of UBS Consumption Indicator.

Personal income of the Americans increased in November by 0.2% in comparison with the previous month, which appeared to be significantly worse than expected growth by 0.4%. Personal income increased by 0.5% m/m, which appeared to be in line with the expectations. Modest income growth can bound future consumer spending, which is the major GDP component. The inflation is moderate – PCE Deflator had been the same in November for already two months comparing to the previous month – increase only by 0.1% was forecasted before.

Revised U. of Michigan Consumer Sentiment did not change in December comparing to the initial evaluation of 82.5 p, whereas the growth of the index to 83 p was expected. Led by gains in employment- and production-related indicators, the Chicago Fed National Activity Index (CFNAI) increased to +0.60 in November from –0.07 in October – a growth only to 0.30 was expected. The index’s three-month moving average, CFNAI-MA3, increased to +0.25 in November from +0.12 in October, marking its second consecutive reading above zero and highest reading since February 2012.

This Monday Jeffrey Lacker, the Chairman of the Federal Reserve Bank of Richmond, announced that interest rates may be increased in the beginning of 2015, though this forecast is not the final one. Meanwhile, the International Monetary Fund (IMF) announced their readiness to improve the forecast of the US economic growth for 2014, referring to economic growth acceleration in the USA, which will lead to further improvement of business climate. IMF will publish the new forecast in January.

This Monday the Canadian dollar has continued to increase for three days in a row amid the Canadian GDP data, which exceeded the expectations. Canadian economy in October increased by 0.3% m/m, whereas a growth by 0.2% was expected. The growth within the manufacturing industry segment appeared to be the highest for the recent two years. The GDP growth has been continuing for the fourth month in a row. Y-o-y growth accelerated to 2.7% from 2.4% a month earlier – it is the strongest growth from May 2012.

The Swiss franc strengthened its position amid the UBS Consumption Indicator, which in November increased to 1.43 p, comparing to 1.26 p in October. The rise was due to a higher estimation of business conditions in the retail segment in connection with Christmas trading period.

On Monday the euro tested the rate 1.37 Vs the dollar for the second day in a row. Meanwhile, Italian Consumer Confidence fell to a half a year minimum – 96.2 p Vs 98.2 p in November – whereas the growth of the indicator was expected. The pound strengthened after Bank of England Deputy Governor Andrew Bailey announced that the central bank may take actions to prevent the rapid growth of house prices in the UK.

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Overview of the main economical events of the current day - 06/01/2014

The Main Events of the Coming Week

The US dollar strengthened its position during the first two trading days of the New Year Vs the major currencies, and decreased Vs the raw currencies in terms of weak trading during the holidays. The pound decreased after the publication of the UK Manufacturing Index data, which appeared to be weaker than it was forecasted.

At the beginning of the year the participants of the market fixed profits on short positions of the dollar, the yen and the Australian dollar after the significant fall of the yen and AUD of the last year. The positive data of the US Manufacturing PMI, and the appearance of Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, who stated that the federal funds rate should probably be advanced earlier than expected, have provided support of the US dollar. The Japanese yen took a shot at strengthening its position amid reduction of the yen short positions which have reached its high from July 2007.

According to the results of the week the US dollar increased by 0.7%, having strengthened its positions Vs the major European currencies, but having decreased Vs the raw currencies and the yen. The US dollar most of all increased Vs the Swiss franc (+1.53%) and the Euro (+1.16%), and a little bit less Vs the pound (+0.38%). The US dollar decreased Vs the NZD (-1.51%), the AUD (-0.86%), the Canadian dollar (-0.67%), and the yen (-0.29%)

The Change of the Main Futures Contracts for 2013​

According to the results of 2013 the Japanese Stock Market Nikkei demonstrated the strongest increase (+55.1%) – it is the best growth dynamics from 1972. A little less increase demonstrated the US Stock indices: Russell 2000, NASDAQ, S&P 500, and DIJA. The natural gas, cocoa, and orange juice prices have significantly grown. The main outsiders of the last year became trading assets, except silver (-35.9%) and gold (-28.5%); corn, coffee, wheat, soybean oil, and sugar demonstrated the most large-scale fall from 1981.

The Change of the Major Currencies Vs the US dollar for 2013​

According to the results of the year of the Currency Market among the major currencies which demonstrated decrease Vs the US dollar were the Japanese yen (-17.7% - the largest fall from 1979) and the Australian dollar (-14%). The Canadian dollar decreased slightly less. The NZD did not change Vs the USD according to the results of the year. Only the European currencies increased Vs the USD: the Euro (+4.5%), the Swiss franc (+2.9%), and the pound (+2%). The US dollar Index which demonstrates the relation of the USA dollar to six major currencies - increased by 0.5% during the year.

As usual, the forthcoming week will be saturated with important events. The USA ISM Non-Manufacturing PMI and Factory Orders will be published on Monday. On Tuesday the Trade Balance is going to be revealed, on Wednesday – ADP Employment Change and the last Fed journals. On Thursday Unemployment Claims will be published. The most important account of the US Non-Farm Payrolls will complete this week – 194 thousand of created jobs and unchanged Unemployment rate (7%) are being anticipated. On Monday the US Senate is going to take a vote at Janet Yellen approval for the Fed Chairman.

On Monday in the Euro zone Non-Manufacturing PMI is going to be published. The prior inflation data will be published on Tuesday; on Wednesday Retail Sales and Unemployment data will be revealed; and on Thursday – European Committee Confidence Index will be published. On Thursday the ECB decision about the rate will be announced. The press-conference of the ECB Chairman Mario Draghi will also take place on Thursday; policy changes are not yet expected.

The prior German inflation data will be published on Monday; on Tuesday – Retail Sales and Employment Change data; on Wednesday – Trade Balance and factory Orders; on Thursday – Industrial Output data. On Wednesday the German Constitutional Court should take a decision of OMT Program lawfulness, in the framework of which the ECB promised to purchase bonds of problem Euro zone countries.

On Monday the UK Non-Manufacturing PMI will be revealed; on Thursday – the Trade Balance data; on Friday – Industrial Output data. The Bank of England will proclaim the results of the monthly sitting on Thursday. The policy changes are not expected. On Friday the Swiss Inflation and Unemployment Rate data will be published.

On Tuesday the Australian Trade Balance will be revealed, and on Thursday – Retail Sales and Building Approvals data. The New Zealand Building Approvals data will be revealed on Thursday as well. The Canadian Trade Balance and Ivey PMI will be published on Tuesday; on Thursday – Building Approvals data and Housing Market Index; and on Friday – Employment Change account. On Wednesday the Chinese Trade Balance will be revealed, on Thursday – the Inflation data, and on Friday new loans data will be published.

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Overview of the main economical events of the current day - 07/01/2014

US Non-Manufacturing Activity Reached Semiannual Minimum

This Monday the US dollar decreased Vs most major currencies after the publication of the US Non-Manufacturing PMI, which in December decreased to the semiannual minimum. According to the results of the day the pound almost did not change after rather weak data of Non-Manufacturing PMI. The Canadian dollar fell amid the strongest monthly decrease of staple prices for the last 2.5 years.

ISM Non-Manufacturing PMI suddenly decreased in December to the semiannual minimum 53 p from 53.9 p in November, whereas growth to 54.7 p was expected. The PMI has been changing for two months in a row. Stock and order sub-indices decreased most of all, whereas employment and price sub-indices increased. The similar Markit Non-Manufacturing PMI according to the results of the final reading appeared to be worse than expected at the level of 56 p, and decreased to 55.7 p.

The euro strengthened its position on Monday after it has reached its month high Vs the dollar. The final Euro zone Non-Manufacturing PMI in December coincided with the preliminary estimations at the level of 51 p, but decreased comparing to the November level of 51.2 p. The German and Italian PMI also appeared to be worse than expected, whereas in France and Spain the situation is opposite.

The Composite PMI coincided with the preliminary estimations as well and increased in December to three-months’ high of 52.1 p comparing to 51.7 p in November. Meanwhile the Euro zone Sentix Investors’ Confidence Index increased in January to 11.9 p from 8 p of the previous month, having significantly exceeded the 9.5 p forecast.

The pound have been decreasing for three days in a row and fell to almost two-week minimum Vs the dollar, but till the end of the day it has regained all the losses. The UK Non-Manufacturing PMI decreased in December to 58.8 p from 60 p in November – against the growth expectations of 60.6 p. The PMI has been decreasing for the second month and still stays at the level of the semiannual minimum. All three PMIs fell in December.

On Monday George Osborne, the minister of finance, announced that after the UK Parliamentary elections of 2015 it will be necessary to cut down the budget expenses by £25 billion. The economic situation is improving, but the borrowing rate is still high, and it is necessary to come to noticeable budget cutting down – George Osborne noticed.

The Canadian dollar fell amid the decrease of the oil prices to the month minimum. The staple prices index also demonstrated dramatic month fall for the last 2.5 years, and decreased by 4.1% m/m – whereas 1.8% decrease was expected. The index has been decreasing three months in a row.

The yen increased amid the continued fixation of short positions of the Japanese currency and the decrease of the Japanese Stock market – on Monday Nikkei 225 lost 2.4% during the first trading of the year, which appeared to be the most sharp fall from the 25th of October 2013.

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Overview of the main economical events of the current day - 08/01/2014

The Canadian Dollar Sharply Fell On Tuesday

The US dollar strengthened its position on Tuesday Vs most major currencies before the publication of the Fed last minutes meeting and ADP Non-Farm Payrolls. The USA Trade Balance data demonstrated significant decrease of its deficit due to the growth of the export. The Canadian dollar fell most of all on Tuesday after the publication of the negative Canadian Trade Balance statistics and Ivey PMI.

The USA Trade Balance data appeared to be better than expected. In November the deficit of the US trade balance shortened to $34.3 b which has significantly exceeded the expectations of decrease by 49 billion. It is the lowest deficit rate from October 2009. The October data was also revised downwards. The export rate increased by 0.9% comparing to the previous month’s rate, having reached the highest rate in its history – meanwhile the import rate reduced by 1.4%.

The data may be favorable for the US GDP of the 4th quarter. Baclays improved the US 4th quarter GDP estimation to 3% from 1.5%; Morgan Stanley – to 3.3% from 2.4%; Goldman Sachs – to 2.8% from 2.3%. Fed representative Williams announced on Tuesday that Fed will probably continue the reduction of bond purchase and finish the program in 2014.

On the contrary, the Canadian Trade Balance deficit appeared to be significantly worse than expected, which helped the Canadian dollar to refresh the last year minimum and to approach to 2010 minimum. The Canadian Trade Balance deficit increased in November to 0.94 billion of Canadian dollars, whereas the reduction to 0.14 billion was expected. The import rate increased by 0.1 % m/m, and export stayed at the same level. The Canadian Ivey Manufacturing PMI has also essentially decreased in December to 3-years minimum of 46.3 p comparing to 53.7 p in November, whereas the increase of the PMI was expected.

The pound almost did not change on Tuesday – whereas the Euro slightly decreased Vs the dollar amid the lowering inflation rate in the Euro zone in December to 0.8% from 0.9% of the previous month – unchangeable value of indicator at the level of 0.9% was expected. In October the inflation rate fell to 0.7%. This fact induced the ECB to reduce the base interest rate to its historical minimum of 0.25%.

The positive German data slightly supported the Euro. Retail Sales in November increased after two-month decrease by 1.5% m/m, having exceeded the expectations by 0.5%. The Unemployment rate in German has decreased by 15 thousand in December for the first time during 5 months, whereas the decrease only by 1 thousand was forecasted. The French Consumer Confidence has increased in December to 85 p comparing to 84 p in November – whereas increase was not expected.

The Australian dollar decreased on Tuesday after the publication of the country Trade Balance data – even in spite of reduction of the Australian Trade Balance deficit to 118 million of Australian dollars instead of 300 million forecasted earlier. However the decrease was achieved by means of import reduction by 1% m/m, but not due to the export rate rise which remained unchangeable in comparison with the previous month.

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Overview of the main economical events of the current day - 09/01/2014

The USA Employment Growth Reached 13-months maximum

This Wednesday for the second day in a row the USD continued its increase Vs the most major currencies amid the positive ADP labor-market data, which demonstrated the growth of new positions in the USA in December to the 13-months maximum. The Euro had been decreasing for the second day in a row this Wednesday before the announcement of the results of the ECB meeting which will take place on Thursday. The pound has increased amid the positive Mortgage Approvals.

According to the data of Automatic Data Processing (ADP), the US Employment change in December grew by 238 000 above the forecast of growth by 200 000, and the November surplus by 215 000 was revised upwards to 229 000. The US Employment Change increased at a swift rate from November 2012. The published ADP data, which is often considered as preliminary – forecast a strong Non-Farm Payrolls, which is to be published this week.

The US ADP Employment Change and Non-Farm Payrolls

The USD almost did not react the last Fed minutes meeting. The majority of Fed chiefs supported the decision of bond purchase reduction in terms of market situation improvement, which will continue to improve further. Fed chiefs discussed the financial health risks and considered them to be moderate. Some of the chiefs put the use of the reduction of bond purchase in terms of slowing inflation into question, whereas other insisted on more significant bond purchase reduction.

The Euro was traded this Wednesday with decrease before the announcement of the ECB meeting, which will take place on Thursday. The Euro zone Unemployment Rate in November stayed at record high of 12.1% for the 8th month in a row – at the same time in Italy the rate increased to 12.7% comparing to 12.5% in October having exceeded the expectations. The Euro zone Retail Sales shot up in November by 1.4% m/m after 2-months decrease, having fixed the fastest monthly growth from November 2001 – however the data is rather volatile from month to month. The German Factory Orders increased in November by 2.1% m/m having exceeded the expectations of growth by 1.5% and fully compensating the same 2.1% decrease in October.

Only the pound has increased this Wednesday Vs the dollar amid the BOE Credit Conditions Survey in the 4th quarter of 2013. According to the Survey the mortgaging demand in the 4th quarter from the survey start in 2007 has increased at the highest rate for the last 6 months at least. The loan offices plan to increase mortgaging in the first quarter of 2014 which is the sigh of the speeding UK Housing Market recuperation. At the same time according to Halifax House Prices suddenly decreased in December having fixed the first recession since the beginning of 2013 and released some pressure over the Housing Market.

The CND continued to decrease and the currency pair USDCAD increased over 1.08 for the first time since 25 May 2010. The chances of the rate reduction by the Bank of Canada increase. Stephen Poloz, the Head of the Bank of Canada confirmed, that the interest rates will be held at the same level till the economic circumstances are not improved. He also announced the possibility of interest rate decrease. On Wednesday the yen lost its position after several days strengthening aid the Japanese Stock Market growth – Nikkei 225 increased by 1.94% following the American Stock indices which increased the day before.

This Wednesday the NZD fell after Danone announced the breach of active contract with Fonterra which is the largest company of New Zealand and the most significant dairy products exporter in the world. The dairy product composes 20% of the general export of New Zealand.

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Overview of the main economical events of the current day - 10/01/2014

The Euro Restored its Position after a Sharp Decrease

The USD was traded mingled on Thursday before Non-Farm Payrolls publication on Friday. The USD decreased Vs the major European currencies, increased Vs the CND and NZD, and almost did not change Vs the yen and the AUD. The Euro increased amid the positive European Economic Sentiment Indicator (ESI) and the German Industrial Production data. The CND continued to decrease amid the negative Canadian Housing Market data.

The US Unemployment Claims data was published on Thursday. The Unemployment Claims in the USA decreased by 15 000 to 5 weeks’ minimum of 330 000 last week having exceeded the expectations to 335 000. Meanwhile the last week data was revised downwards by 6 000 to 345 000. The average Unemployment Claims for the last 4 weeks decreased by 9 750 to 349 000, comparing to 358 750 of the previous week. However the representative of the US Labor Department pointed that the data may be volatile due to the New Year holidays.

It is forecasted that the number of work positions in the US economy in 2013 have increased at the highest speed for the last 8 years – by 2.27 million. The data is going to be published by the Labor Department on Friday. The Fed representative Williams announced quite an optimistic forecast of GDP growth of 2014, 2015 this Thursday, and he noticed the strengthening of increasing economy risks. The Fed representative Kocherlakota said that the bond purchase will be continued till the economic growth rate corresponds the forecasts.

The Euro won back its decrease which occurred during the press-conference of Mario Dragha, the head of the ECB. The ECB saved the monetary policy without changes as it was expected. However Mario Dragha noticed still low inflation rate and the retaining downward risks for the Euro zone economy – and he claimed that drastic actions will be taken if the medium-term inflation prospect will get worse or unreasonable growth of short-term credit rates will take place. We have discussed and we are ready to consider all the instruments, Dragha added.

The positive Euro zone data supported the Euro. In December the Economic Sentiment Indicator (ESI) increased by 1.6 points in the Euro area (to 100.0). Sentiment in the Euro area is thus back to its long-term average for the first time since July 2011.The growth to 99.1 p was predicted. The index returned to its average rate long-term level for the first time for 29 months – it is a mark that economy recuperation takes off after a long-time decline. The German Industrial Production increased after two-months decrease to the maximum 1.9% from June – it has exceeded the expectations by 1.5%. Factory Orders, Retail Sales and the German Labor market data also appeared to be better than forecasted this week.

The pound also strengthened its positions after the announcement of the meeting results of the Bank of England during which Base Interest rate was left without changes. BoE Asset Purchase Facility was also left at the same level of £375 billion – in fact it means that the program the avenues of which were exhausted in October, is frozen at the moment. The deficit of the Trade Balance of the UK fell due to the export growth to £9.4 billion and it is the minimum from June.

The CND continued to decrease having refreshed the 2010 minimum and reached the 2009 minimum of October. It happened amid the negative Housing Market data in Canada. Hosing starts and new housing prices data appeared to be worse than predicted. The AUD almost did not change according to the results of the day amid the controversial statistics. Retail sales appeared to be better than forecasted, Housing starts data on the contrary was worse.

By MasterForex Company