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Overview of the main economical events of the current day - 13/01/2014

The Main Events of the Forthcoming Wee

The USD sharply decreased Vs the most major currencies having offset the whole week’s growth after the publication of the Labor Market official data, which has demonstrated the sudden sharp fall of the new places of work created in the US in December till the 3-year minimum. The pound decreased after the weak Industrial Production data, but then it has won back. On Friday the CND continued to decrease after the weak Canadian Labor Market data publication.

The official data of the new working places’ growth stands in contrast with the data performed two days earlier by the nongovernmental organization ADP. According to the data of the Labor Department the new working places of the US nonfarm economy in December suddenly fell to 74 000 (the minimum from January 2011), which appeared to be almost thrice less than expected at the level of 196 000. The November data was revised upwards from 203 000 to 241 000. During 2013 the average rate of the monthly increase of working places was 182 000 – a little bit less than in 2012 when it was 183 000.

The Unemployment Rate decreased again like in previous month – by 0.3% from 7% to 6.7% (the minimum rate from October 2008), whereas no changes were expected. However, the decrease was more about the result of labor power elimination – Participation Rate again decreased from 63% to 62.8% (minimum rate from 1978). The published Friday account will hardly let Fed to continue QE3 Tapering in the end of January – it may put pressure to the USD.

The Change of the Major Currencies Vs the USD for the Last Week

According to the results of the week the USD lost 0.35%, though in the first half of the week the growth was demonstrated. The USD decreased Vs the yen (-0.66%), the euro (-0.60%), the AUD (-0.56%), the UK pound (-0.37%), the NZD (-0.35%), and CHF (-0.30%). the USD increased Vs only the CND (+2.37%). It is notable that the weekly growth was the highest from September 2011.

The CND was in the spotlight and decreased during the whole week – it was also encouraged by mostly negative published Canadian data. The final flourish was the Canadian Labor Market Account, which demonstrated the Net Change in Employment decrease by 45 900 (the highest decrease for the last 9 months) against the expectations of growth – and the increase of Unemployment Rate by 0.3% to 7.2% (the highest rate for the last 14 months) – from 6.9% of the previous month.

Retail Sales and Import Prices will be published in the USA on Tuesday; on Wednesday – Producer Price Index, Empire State Manufacturing Index and the Beige Book; on Thursday – Headline Inflation, Capital Influx, Philadelphia Fed Manufacturing index, and NAHB House Price Balance; and on Friday – Building Permits, Housing Starts, Industrial Production, and Preliminary U. of Michigan Consumer Sentiment. Fed Chairman Bernanke due to deliver a speech titled “The Fed Yesterday, Today, and Tomorrow” in Washington DC.

Industrial Production data is to be published in the euro zone on Tuesday; on Wednesday – the Trade Balance; on Thursday – the monthly ECB account, and final Headline Inflation data. On Wednesday preliminary GDP data of 2013 will be published in Germany. On Tuesday the Inflation data will be performed in the UK, and on Friday – Retail Sales. In Switzerland Retail Sales will be published on Wednesday, and the Manufacturing Inflation – on Friday.

On Wednesday new transport facilities sales data will be published in Australia, and on Thursday – Labor Market data. NZIER Business Confidence will be performed in New Zealand on Tuesday, and on Thursday – REINZ House Sales. On Monday Bank of Canada Business Outlook Survey will be published, and on Wednesday – aftermarket House Sales data. On Tuesday Trade and Payment Balance is to be performed in Japan, and on Thursday – Core Machinery Orders. In China New Loan data will be published on Monday.

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Overview of the main economical events of the current day - 14/01/2014

The US dollar Continued to Fall

n Monday the US dollar was traded with fall Vs the most major currencies after the release of weak Non-Farm Payrolls, but rose Vs the pound, and almost didn’t change Vs the euro. AUD, NZD, and the yen continued the tendency of Friday growth. After 5-days reduction of the previous week the CAD has undergone upward correction.

There was hardly any significant statistical data in any country on Monday. The Conference Board Employment Trends Index (ETI) rose in December to 115,76 from the upwards revised November level of 115,72. The data appeared to be better than the official Employment Rate report in December. The USA budget surplus in December formed $53,2 b having exceeded the expectations at the level of $44 billion.

Fed representative Lockhart announced on Monday that Fed will continue to reduce bond purchase in case of further economy recuperation – the December Employment Rate report didn’t decrease QE3 Tapering support. Lockhart believes that the US economy growth to be high this year and may give a positive surprise – the GDP rate will grow by 2,5% - 3%. Threshold point of Unemployment rate of 6,5% is close, and perhaps Fed will have to improve the supplies marks.

The pound fell after several-days growth of the previous week, whereas the euro almost didn’t change according to the results of the day. The purchase of British oil-engineering company Amec – trading in the USA Foster Wheeler AG for $3,2 billion – has partly influenced the reduction of the pound Vs the USD.

On Monday OECD released the forecasts of global economy development especially pointed Europe’s recuperation and its positive influence to the global growth. Economic advance will be improved in the USA, the UK, Japan and the Euro zone. Though Germany will be the main mover of the Euro zone economy recuperation as before; there are also signs of GDP growth restoration in forthcoming months in France and Italy.

According to VDMA German Industrial Group data Machinery Orders rate in Germany rose by 7% comparing to the same period of the last year due to the increased external demand – more recent evidence of gradual recuperation of the key economic sector supports this data.

The rate of the Italian Industrial Production growth slightly decreased. Manufacturing activity increased in November by 0,3% after the October growth by 0,7% which coincided with the expectations.

The calendar adjusted industrial production of Italy demonstrated positive tempo of change from August 2011.

The yen continued its correctional growth for the second day in a row amid the futures reduction at Nikkei almost by 2% - the Japanese markets were closed due to the holiday. Stock markets of the American session also demonstrated negative dynamics. The Dow Jones Industrial Average fell by 1,1% on Monday which appeared to be the most considerable fall from 20 September of the previous year. USDJPY pair decreased lower 103 rate for the first time since 18 December 2013.

The Australian dollar reached monthly high Vs the USD on Monday, and the New Zealand dollar almost reached the 2-months high Vs the dollar. Housing Market data of Australian appeared to be a bit better than expected – Home Loans in Australia increased in November by 1,1% m/m, and by 15,3% comparing to the previous year.

NZD strengthened its positions before the release of NZIER Business Confidence, which increased in the forth quarter to the level of 52%, comparing to 38% of the previous quarter. The index appeared to be the highest for almost 20 years from June 1994.

CAD was undergoing upward correction after 5-days decrease of the last week and almost didn’t react the quarterly BOC Business Outlook Survey. The survey didn’t demonstrate considerable improvement of the expectations, but its decrease was not pointed out. The participants of the survey hope for export and investment increase, this fact lets to expect support of the economic growth.

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Overview of the main economical events of the current day - 16/01/2014

Empire State Manufacturing Index Reached its 20-months High

On 15 January on Wednesday the US dollar rose Vs most major currencies amid the release of positive data of Empire State Manufacturing Index and Producer Price Index. Euro was traded downwards amid the deceleration of economic growth in Germany in 2013.

Empire State Manufacturing rocketed in January. Empire State Manufacturing Index shot up to 12,51 p. in January from the upwards revised December reading of 2,22 p., and reached its high from May 2012. The growth to only 3,75 p. was expected. The new orders subindex increased most of all (2-years high), as well as the general business conditions, shipments and inventories. New-York is the largest metropolis and the most important economic center of the USA and the whole world.

Producer Price Index in the USA in December increased by 0,4% m/m after 3-months decrease which coincided with the expectations. Annual Producer Price growth rate in the USA in December exceeded the expectations (+1,1%) and increased by 1,2% after the growth by 0,7% in November. Producers Price Index Ex Food & Energy increased by 1,4% y-o-y against the expectations of growth by 1,3%. The US headline inflation data will be released on Thursday.

On Wednesday FOMC Member Evans announced the QE3 reduction plan seems substantiate, and QE3 Tapering by $10 billion in January will be continued – however, the US economy will need Fed’s special support for quite a long time. The Central Bank will save low rates for a long time even after achieving 6,5% Unemployment Rate. The USA House of Representatives approved the draft bill of the government funding till September. It is expected that the Senate will approve the bell on Saturday.

The pound fell to more than 3-week low Vs the US dollar. The euro was also traded downwards amid more weak than expected Real German GDP Growth data. The economic growth rate of Germany slacked to 0,4% in 2013 from 0,7% of the previous year – whereas the annual growth by 0,5% was expected. German Public Finances Balance of the last year made 0,1% of GDP Ratio in 2012. Balanced budget was forecasted (indicator values at the level of 0,0%).

The Euro zone Trade Balance increased in November to €16.0 b from € 14.5 b of the previous month, which appeared to be less than expected growth to € 16.7 b. The Euro zone export rate was reduced in November for the first time for the last 4 months. ECB’s Yves Mersch informed about the possible inflation deceleration in the Euro zone, though he doesn’t observe direct danger yet.

The yen continued to lose its position for the second day in a row amid the Stock Market growth after the release of the US Retail Sales positive data. On Wednesday Nikkei 225 rocketed by 2,5%, having recuperated after strong Tuesday fall since August 2013. The Australian dollar was traded downwards amid crediting recession in China, the largest trading partner of Australia. New Loans fell in December to 482,5 b yuans from 624,6 b in November, whereas less decrease to 590 b was expected. AUDNZD pair reached 8-year low.

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Overview of the main economical events of the current day - 20/01/2014

The Main Events of the Week

On 17 January on Friday the US dollar increased Vs main major currencies, despite weak Consumer Confidence. The pound rocketed after strong Retail Sales data in the UK and won back most of the last week losses.

Preliminary UoM Consumer Sentiment in January suddenly fell to 80,4 p. comparing to 82,5 p. in December – whereas growth to 83,5 p. was expected. The U.S. Industrial Production in December increased by 0,3% m/m which coincided with the expectations. The U.S. Building Permits appeared to be worse than expected, whereas Housing Starts – better.

Building Permits in December decreased by 3% to 986 000, Housing Starts decreased by 9,8% to 999 000. The readings a little bit fell from 5-years high, but still continue to be at a high rate. During 2013 Building Permits increased by 17,5% comparing to 2012 to 974 000, Housing Starts – by 18,3% at an annual rate to 923 400 – this is the best annual result since 2007.

The pound rocketed after strong Retail Sales data in the UK and won back most of the last week losses. In December Retail Sales in the UK demonstrated record high month growth since February 2010, +2,6% - having considerably exceeded the growth expectations by 0,4%. In an annual rate Sales increased by 5,3%, which appeared to be the best result since October 2004. According to the results of 2013 Retail Sales growth rate became the most immense for the last 9 years.

Change of Major Currencies Vs the US Dollar during the Week

According to the results of the week the US dollar added 0,78% according to the dollar index Vs the rest major currencies. Besides the strong Retail Sales data, last week the US dollar was also supported by numerous speeches of Fed representatives almost everyone of whom supported further QE3 Tapering. The Australian dollar decreased Vs the US dollar most of all (-2,40%). Then the euro (-0,94%), the Swiss franc (-0,80%), the Canadian dollar (-0,65%), the New Zealand dollar (-0,55%), the pound (-0,33%), and the yen (-0,14%).

There is a Bank Holiday in the USA on Monday. Afterwards this week little data will be released. On Thursday Existing Home Sales, Chicago Fed National Activity Index, FHFA House Price Index, Markit Flash Manufacturing PMI, and CB Leading Indicator will be released. From Wednesday till Saturday World Economic Forum Annual Meetings will take place in Swiss Davos.

The main events of the Euro-zone will be the Tuesday release of German ZEW Economic Sentiment; and Flash Manufacturing PMI and Flash Services PMI in France, Germany and the whole Euro zone on Thursday. ZEW and PMI are expected to increase, and it will point further economy recuperation in the Euro zone. On Thursday in the Euro-zone Current Account and Flash Euro-zone Consumer Confidence will be released. On Monday in Germany Industrial Inflation data is going to be released, on Thursday in France – Business Confidence Indicator, and on Friday in Italy – Retail Sales.

The main event in the UK will be the release of Labor Market report and Bank of England Minutes. On Tuesday CBI Industrial Order Expectations will be released, on Wednesday – Public Sector Net Borrowings, on Thursday – CBI Released Sales, and on Friday – BBA Mortgage approvals. On Wednesday BOJ Interest Rate Decision will be announced, and on Thursday – BOJ Monthly Report will be released. On Monday in China big block of data will be released (GDP, Industrial Production, Retail sales, Fixed Asset Investment), and on on Thursday – Preliminary HSBC Manufacturing PMI.

On Wednesday in Australia quarterly Consumer Price Index will be released, and Westpac Consumer Confidence as well, and on Thursday - Consumer Inflation Expectations. On Tuesday in New Zealand quarterly Report on Consumer Inflation will be released, and on Thursday – Business NZ Manufacturing Index. On Tuesday in Canada Manufacturing and Wholesale Sales will be released, on Thursday - Retail Sales, and on Friday - Consumer Price Index. On Wednesday BOC Interest Rate Decisions will be announced, BOC Monetary Policy Report will be released, and BOC Press Conference will take place.


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Overview of the main economical events of the current day - 21/01/2014

The Euro Increased Before the Release of ZEW Report

On 20 January on Monday the US dollar was traded slightly downwards vs. most major currencies amid low trading volume. The U.S. Markets were closed due to the celebration of Martin Luther King Day. The dollar continued the tendency decreasing for seven days in a row already. The euro increased before the Tuesday release of German ZEW Survey.

The euro reached 8-weeks low vs. the dollar at the beginning of Monday, but then strengthened its position before the release of German ZEW Economic Sentiment on Tuesday which is expected to demonstrate growth to new 8-year highs. German Production Inflation appeared to be slightly better than expected.

Producer Price Index increased in December for the first time for 5 months – by 0,1% in relation to previous month, whereas changes were not expected. Industrial Orders in Italy increased in November by 2,3% m/m against the growth expectations by 0,3%. Italian Industrial Sales rose in November by 0,9% after decrease by 0,7% in the previous month.

On Monday the pound was traded upwards. According to Sky News International Monetary Fund plans to revise the UK economic growth forecast earlier than for any other large economy. The Fund may increase the economic growth forecast of 2014 from 1,9% to 2,4%. Meanwhile Rightmove House Price Index in the UK increased in January after 2-month decrease which appeared to be highest in history price growth in January.

The yen strengthened its position amid drop of Asian Stock Markets due to the weakening of Chinese economic growth data – Nikkei 225 dropped by 0,6%. Industrial Production and Investment into Capital Funds data in December also appeared to be worse than expected. Growth rate of the second largest world economy in the 4th quarter decreased to 1,8% q/q from 2,2% q/q in the 3rd quarter, whereas decrease to 2% only was expected. In 2013 GDP of China increased by 7,7% which coincided with 2012 growth rate which was the worst since 1999.

Deceleration in the 4th quarter was mainly induced by investment growth slowdown. Investment into Capital Funds in 2013 increased by 19,6% against the growth expectations by 19,8%. Industrial Production increased in December by 9,7% in an annual rate comparing with the growth by 10% in an annual rate - whereas growth by 9,8% in an annual rate was expected.

The Australian dollar had almost no reaction to the Chinese GDP data, and according to the results of the day it has slightly strengthened its positions after 4-days decrease. TD Securities – Melbourne Institute Inflation suddenly demonstrated high Consumer Price growth in December – by 0,7% m/m (the highest growth rate almost for 4 years). Inflation growth in Australia may force the Reserve Bank of Australia to save the rate unchanged. UBS forecasts AUDUSD decrease to 0,86 during 3 nearest months.

The New Zealand dollar decreased at the beginning of the day after announce of the earthquake at the Northern Island of New Zealand, but then won back all the losses - the actual damage after the earthquake appeared to be minor. Meanwhile, REINZ House Price Index dropped in December by 1% m/m – decrease occurred for the first time for the last 5 months. House Sales decreased in December by 1,1% in an annual rate, after decrease by 6,6% in an annual rate in the previous month.

NZD rocketed after the strong Inflation report. Consumer Price Index increased in the 4th quarter by 0,1% toward the previous quarter, whereas decrease by 0,1% was expected. In an annual rate inflation strengthened its position by 1,6% having exceeded the growth expectations by 1,5%.

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Overview of the main economical events of the current day - 23/01/2014

The UK Unemployment Rate Dropped to Almost 5-years Low

On Wednesday the US dollar increased vs. the Canadian dollar and the yen amid finished meetings of the Bank of Canada and Japan – but decreased vs. the pound and the Australian dollar. The pound rocketed after positive Labour Market report release, and approached to the highs of the beginning of the year. The Australian dollar strengthened its position after the Inflation Report release in Australia for the 4th quarter which has exceeded the expectations.

The dollar increased inconsiderable vs. the rest major currencies, having strengthened its position by 0.1% according to the dollar index. For the second day in a row there were no significant macrostatistic data in the USA on Wednesday. Therefore a lot of statistic data is expected to be released on Thursday – Unemployment Rate, Existing Home Sales, Chicago Fed National Activity Index, and FHFA House Price Index.

The pound rocketed after positive Labour Market Report release, having approached to 3-weeks highs of the beginning of the year. ILO Unemployment Rate dropped in September-November by 0.3% to 7.1% - the lowest rate for almost 5 years since February 2009. Decrease to only 7.3% was expected. Claimant Count Change in December decreased a little less than it was expected - to 24 000 instead of 32 000.

Unemployment Rate approached to target rate of the Bank of England, after that it may consider the matter of interest rate increase. The decrease of Unemployment Rate to 7% was expected not earlier than in the second half of 2015. Nonetheless in the last released minutes of the BOE it was stated that there is no necessity to increase interest rates even if the Unemployment Rate reaches 7% in the nearest future.

The yen weakened amid 2-days meeting of the BOJ, during which the course of the monetary policy was saved at the same level as it was expected. BOJ left economy estimation unchanged for the 5th month in a row. BOJ Governor Kuroda announced that current monetary policy will be the same if there are no upward or downward risks for the economy. Fewer experts suppose the Central Bank will agree to QE in 2014 as the inflation gathers pace.

The Australian dollar strengthened its position after release of the Australian Inflation Rate which exceeded the expectations. Consumer Price Index increased in the 4th quarter by 0.8% having twice exceeded the growth expectations by 0.4%. In an annual rate inflation increased by 2.7% against the forecast of +2.4%, which appeared to be the highest for the last 2 years. The data lower the possibility of further decrease of the rate by the Reserve Bank of Australia. Meanwhile Westpac Consumer Confidence decreased in January for the second month in a row – the index dropped by 1.7% to 103.3 p. – the lowest for the last six months.

The Canadian dollar sharply fell after the BOC Rate Statement during which the interest rate was left at the same level, but the final announcement in which the Central Bank highlighted the downwards inflation risks was considered as a milder one. At the press-conference the BOC Governor Poloz announced the Canadian dollar is still a problem for exporters, and weakness of the Canadian dollar is advantageous for the economy. In the quarterly BOC Monetary Policy Report the Canadian currency was mentioned to stay strong, and this fact complicates non- recourse Canadian export.


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Overview of the main economical events of the current day - 24/01/2014

Manufacturing PMI in China Dropped to Half-Year Low

On Thursday the US dollar decreased vs. most major currencies amid negative macrostatistics data in the USA. The euro increased amid the growth of Manufacturing PMI in France, Germany, and Eurozone. The Australian dollar dropped after release of Manufacturing PMI decrease data in China.

On Thursday the US dollar demonstrated a sharp drop for the last 3 months, and reached 3-weeks low according to the dollar index. Negative data in China, which caused a strong decrease of Stock Markets, inflicted the USA data bearing mostly negative character as well. The driver of the dollar weakening was increasing yen – futures at Nikkei dropped by more than 3%.

Initial Unemployment Claims in the USA last week appeared to be slightly better than expected (330 000), and increased by 1 000 to 326 000. Chicago federal National Activity Index dropped in December to +0.16 from +0.69 in November against the expectations of growth. Preliminary Markit Manufacturing PMI decreased in January to 3-months low of 53.7 p. from 54.4 p. in December, whereas growth to 55 p. was expected.

FHFA House Price Index in November demonstrated the lowest rates of addition for 15 months, +0.1% - against the expectations of growth by 0.4%. Annualized Existing Home Sales increased less than it was expected, to 4.81 m of houses – whereas sales at the level of 4.93 m were forecasted before. CB Leading Index strengthened its positions in December only by 0.1% against the expectations of growth by 0.2%.

The euro sharply increased after the release of positive Purchasing Manager Index in France, Germany, and the Eurozone. All preliminary PMI’s increased in January, and almost all of them appeared to be better than expected. Manufacturing and Services PMI in France in January reached 3-months high; in Germany – 32- and 2-months high, and in the Eurozone – 32- and 4-months high. Eurozone Flash PMI Composite increased to 31-months high of 53.2 p. from 52.1 p. in December.

The Swiss franc demonstrated the greatest increase on Thursday, it was due to Swiss National Bank proposal to increase the countercyclical capital buffer, which they must have for insurance against risks in the Housing Market – it may lead to repatriation of capital for appropriation. The pound was traded upwards and closed higher than 1.66 vs. the dollar for the first time since the beginning of May 2011.

The Australian dollar dropped and refreshed the annual low after the release of Manufacturing PMI decrease data in China. Preliminary HSBC Manufacturing PMI suddenly dropped in January to half-year low of 49.6 p. from 50.5 p. in December. The Index decreased lower than 50, and this fact points activity decay for the first time for 6 months.

The Canadian dollar continued decrease, having dropped on Thursday to new 4-year low, but then it gained back all the losses – after release of Retail Sales in Canada which appeared to be slightly better than expected. Retail Sales increased in November by 0.6% m/m, having exceeded the expectations of growth by 0.2%. Core Retail Sales increased by 0.4% m/m which appeared to be slightly better than forecasted +0.3%.

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Overview of the main economical events of the current day - 27/01/2014

Main Events of the Coming Week

On Friday the US dollar was traded mixed amid the absence of any statistics in the USA, and it almost had no changes according to the dollar index. The US dollar decreased vs. the yen, the Swiss franc, and the Canadian dollar, but increased vs. the Australian dollar, the New Zealand dollar, the pound, and the euro.

The yen continued its growth on Friday for the second day in a row amid the fall of Stock markets, which strengthened after the release of negative data in China. Nikkei 225 Futures dropped by 5% during the week –it was the highest weekly decrease since May 2013. American DJIA decreased by 3.5% during the week – it was the worst weekly result since November 2011. The CBOE Volatility Index, which is often called the index of fear – has rocketed on Friday almost by 30% till the highest level since the middle of October.

The pound dropped after the BOE’s Governor Carney announced that the new Interest Rates Guidance will be updated in February in relation with Unemployment which has fallen faster than expected. The economy will have to work its long way before the rates will be increased, he added.

The Canadian dollar a bit strengthened its position on Friday before the release of Inflation rate data in Canada which in whole coincided with the expectations. The rate of annual inflation in Canada decreased in December to 1.2% from 0.9% in the previous month, but it was still lower than the BOC target rate of 2%.

On Friday the Australian dollar dropped lower than $0.87 for the first time since July 2010 amid the comments of the RBA’s Board Member Heather Ridout about the forecast of the Australian dollar’s drop even lower in order to support the economy recuperation. To her opinion, fair AUD standard for exporters and importers will be $0.80.

According to the results of the week the USA also demonstrated mixed dynamics having lost 1% according to the dollar index. Dollar increase vs. commodity currencies: the Canadian dollar (+1.15%), the Australian dollar (+1.13%), and the New Zealand dollar (+0.51%); but decrease vs. the yen (-1.94%), and the European currencies: the Swiss franc (-1.69%), the euro (-0.99%), and the pound (-0.33%).

The main event of the coming week will be the FOMC meeting on 28-29 January, the results of which will be announced on Wednesday. The January meeting will be the last for Ben Bernanke – on 31 January he will resign, and on 1 February Janet Yellen will follow him. The majority of analysts interrogated by Bloomberg expect that Fed will assets purchase by $10 и to $65 и per month, and will continue QE3 Tapering at the same pace during the future meetings. Weak Non-Farm Payrolls data in December was probably caused by weather anomaly.

During the last week of the month in the USA New Home Sales will be released on Monday; on Tuesday – Durable Goods Orders, S&P/Case-Shiller Composite-20 HPI, and CB Consumer Confidence; on Thursday - Advance GDP for the 4th quarter, and Pending Home Sales; and on Friday - Personal Income & Personal Spending, Chicago PMI, and Revised UoM Consumer Sentiment.

The main event in the Eurozone will be the German IFO - Business Climate release on Monday, and on Friday - Eurozone CPI Estimate. IFO Index and Inflation growth are expected. On Thursday Euro-Zone Confidence Indices from European Commission will be released; and on Friday – Unemployment Rate. On Wednesday German GfK Consumer Confidence will be released; on Thursday – Reports on Labour Market and Inflation; and on Friday – Retail Sales.

The main event in the UK will be the Tuesday release of Preliminary GDP for the 4th quarter. It is expected that the economy growth rate a bit weakened in the 4th quarter – to 0.7% q/q comparing to 0.8% in the 3rd quarter. BOE’s Governor Carney will perform on Wednesday. In Japan on Thursday Retail Sales report will be released; and on Friday – a big block of statistics of the end of the month: inflation, unemployment, industrial production.

In Australia on Tuesday NAB Business Confidence will be released, on Thursday – Quarterly Import Prices report; and on Friday – Quarterly Producer Price Index. On Thursday RBNZ Interest Rate Decision will be announced; on Friday Trade Balance data will be released, and RBNZ Governor Graeme Wheeler will perform. There will be GDP data in Canada on Friday as well.

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Overview of the main economical events of the current day - 28/01/2014

German Business Climate Reached 2,5-years High

On 27 January on Monday the US dollar was traded mixed before the beginning of the 2-days FOMC meeting on Tuesday, and almost didn’t change according to the dollar index. The US dollar decreased vs. the pound sterling and the Australian dollar, and a bit increased vs. the yen, the Swiss franc, and the Canadian dollar. According to the results of the day the euro had almost no changes amid the growth of the German Ifo Business Climate.

Trading of the first day of the week underwent staid, and the participants abstained from active actions before the important events which will take place this week. Few statistical data of Monday didn’t significantly influence the trading process. The US New Home Sales appeared to be considerably worse than it was forecasted, whereas manufacturing index appeared to be better.

The US New Home Sales in December dropped by 7% comparing with the previous month – to 414 000 of new houses in an annual rate, whereas the reading was forecasted to be at the level of 455 000. Home Sales decrease for the second month in a row from the 5-years highs being reached in autumn. Anomalously cold weather could influence the decrease of sales activity.

Dallas Fed Manufacturing Activity in January increased to 3.8 against 3.7 in December, whereas the decrease was expected. Markit Flash Services PMI strengthened its position in January to 56.6 p. from 55.7 p., having exceeded the expectations of growth to 56.2 p.

The euro had almost no changes according to the results of the day amid the improvement of the Business Climate in Germany. According to the Ifo Institute for Economic Research, German IFO - Business Climate increased in January to the highest rate since July 2011 of 110.6 p. from 109.5 p. in December, having exceeded the expectations of growth to 110 p. German IFO - Current Assessment increased to 112.4 p. (the highest since June 2012), comparing with 111.6 p. in December which coincided with the forecast. German IFO - Expectations strengthened its positions more than expected (108 p.) – to 108.9 p. from 107.4 p.

According to January German Bundesbank Monthly Report released on Monday – the German production sector gathers pace, and the Central Bank expects the GDP growth rate increase in the 1st quarter of 2014. Meanwhile, Governor of the Bank of Italy and the ECB Governing Council Member, Ignazio Visco, indicated that the central bank could cut its key interest rates further and engage in asset purchases, provided the outlook of the region deteriorates. According to the forecasts of a series of Banks, ECB may cut the interest rates in the nearest future due to the record high Unemployment rate and Credit decrease.

On Monday the yen slightly decreased after 2-days growth amid the weak Trade Balance data in Japan. Trade Balance Deficit in December was 1.30 trillion yen against the forecast of 1.22 trillion. During 2013 the Trade Balance Deficit increased almost twice comparing with 2012 to 11.5 trillion, which is mainly due to the import growth of energy supplies and the weakness of the yen.

The pound sterling gained back more than a half of the Friday losses before the Tuesday release of the Preliminary GDP data in the UK for the 4th quarter. The Canadian dollar went on decreasing, it was partly due to the speech of the Minister of Finance of Canada who announced that the weakness of the Canadian dollar is induced by the comparatively positive situation in the USA; he also mentioned the deflationary risk for the Canadian economy.

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Overview of the main economical events of the current day - 30/01/2014

Fed Continued Tapering of QE3

On 29 January on Wednesday the US dollar dropped vs. the yen and the Swiss franc; increased vs. the New Zealand dollar and the Australian dollar; and had almost no changes vs. the euro, the pound sterling and to the dollar index – amid the FOMC decision about QE3 Tapering, which coincided with the expectations. The yen increased amid the decrease of stock markets. The New Zealand dollar dropped after the announcement of the meeting’s results of the Reserve Bank of New Zealand.

The US dollar had almost no reaction to the Fed decision which in whole coincided with the expectations. FOMC saved the base interest rate without changes and reduced bond purchases since February by $10 и per month to $65 b. FOMC voted was unanimous for the first time since June 2011. FOMC prudently continued tapering bond purchases during further meetings. FOMC upgraded assessment of economy’s performance and announced that economy has picked up in recent quarters.

Easing of the economic situation and labor market becomes visible. Economy and labor market prospects’ risks became more balanced. Household spending, business investment advanced “more quickly”. At the same time labor market indicators are mixed, though they demonstrate further improvement. In whole FOMC announcement suffered little changes comparing with the previous month. FOMC did not mention recent spottiness of developing markets.

The pound sterling is still supported by good data of the UK statistics, on Wednesday it was the House market data. Nationwide House Prices exceeded the expectations (+8.5% y/y) and demonstrated the fastest annual growth rate since May 2010, +8.8%. House Prices are supported by considerable growth of employment sector, record low mortgage rate, and confidence growth.

The euro has almost no changes according to the results of the day as well amid German GfK Consumer Confidence growth to 6.5-years high. Out run German Gfk Consumer Confidence increased in February to the highest rate since August 2007 – 8.2 p. against 7.7 p. in January – and exceeded the expectations at the level of 7.6 p. The growth was due to the optimism about the economy state and steady German Labor Market.

The yen reached its high since 6 December of the previous year amid the stock markets decrease, which led to safe assets demand decrease. Futures at Nikkei 225 dropped on Wednesday by 1.5%. The Swiss franc also strengthened its positions amid the consumption growth in Switzerland. The UBS consumption indicator jumped to 1.81 index points in December from 1.40. Although the rise was apparent across all sub-indicators, the significant increase was chiefly due to the strong performance of new car registrations and high levels of confidence among retailers.

The New Zealand dollar dropped after the Reserve Bank of NZ kept cash rate unchanged – though the probability of increase in rates was estimated from 30% to 50%. Besides, RBNZ’s Wheeler announced that current high exchange rate is not sustainable in long run. However, Wheeler is expected to start rate adjustment soon, which speaks for high probability of the increase during the nearest meetings. Interest rates need to return to more normal levels, but scale and speed of rises depend on economic indicators that will be released further – Wheeler added.

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Overview of the main economical events of the current day - 01/02/2014

The Main Events of the Week

On 31 January the US dollar was traded upwards vs. most major currencies amid the positive US macrostatistic data. The euro dropped amid weak inflation rate data and Retail Sales in the Eurozone. The yen continued to strengthen its positions after the release of the inflation rate report in Japan.
Revised UoM Consumer Sentiment in January composed 81.2 p., and appeared to be higher than the initial estimate of 80.4. The index slightly fell from the December high for 6 months at the level of 82.5 p., but it still stays at adequate high level. Chicago PMI decreased in January less than it was expected, to 59.6 p. from the upwards revised December reading of 60.8p., whereas falling to 59 p. was expected.
Personal Spending increased in December more than it was expected (+0.2%), by 0.4% m/m – however personal income had no changes, whereas the growth by 0.2% was expected. President of the Federal Reserve Bank of Dallas Richard Fisher announced that it was time to make adjustments to threshold unemployment rate of 6.5% which will be probably reached rather early if taking into consideration strong indication of economy recuperation.
The euro dropped amid the weak Eurozone inflation rate and German Retail Sales data. Annual inflation rate in the Eurozone in January slacked again to 0.7% as in October – from 0.8% in December, whereas the growth to 0.9% was expected. This is the lowest inflation rate since November 2009. Retail Sales in Germany in December dropped by 2.5% m/m against the growth expectations. The euro was negatively influenced by the announce that Bundesbank would favor the ending ECB’s weekly draining of funds from banking system – such sterilization of government bonds investment in fact prevented from direct QE.

The yen continued to strengthen its positions on Friday after the release of inflation rate data in Japan, which demonstrated the highest augmentation since October 2008. Annual inflation growth rate in December composed 1.6% having exceeded the expectations at the level of 1.5%. Inflation precipitation may push the Bank of Japan to less aggressive actions of economy priming, which is auspicious for the yen. Futures at Nikkei dropped on Friday by more than 3%.

According to the results of the week the US dollar added 1.03% according to the dollar index and increased vs. all major currencies, except for the Australian dollar (-0.85%) and the yen (-0.33%). Most of all the US dollar increased vs. ТЯВ (+1,52%), EUR (+1.39%), and CHF (-1.29), and a little bit less vs. CAD (+0.34%) and GBP (+0.25%). According to the results of January the US dollar increased by 1.37% according to the dollar index, having strengthened its positions vs. all major currencies, except for the yen (-3.20%). Most of all the US dollar increased vs. the Canadian dollar (+4.48%). And a little bit less vs. EUR (+2.20%), AUD (+1.94%), CHF (+1.92%), NZD (+1.80%), and GBP (+0.78%). The main weekly and monthly increase occurred during the last two days of January. The US dollar was supported by the decision of QE3 Tapering continuation adopted at the January Meeting of FOMC.
The first week of the month will be rich with events as usual. Three ECBs Meetings (on Tuesday – the Reserve Bank of Australia, on Thursday – the Reserve Bank of England and the European Reserve Bank), PMI data, Retail Sales, Trade Balance, Labor Market data will be released. The main events of the week will be the US Non-Farm Payrolls on Friday; ADP Non-Farm Employment Change is going to be released on Wednesday. Besides, the most important ISM PMIs will be released: ISM Manufacturing PMI – on Monday, and ISM Non-Manufacturing PMI – on Wednesday. On Tuesday Factory Orders will be released, and on Thursday – Trade Balance.
On Monday in the Eurozone Manufacturing PMI will be released, and on Wednesday – Non-Manufacturing PMI; on Tuesday – Producer Price Index; and on Wednesday – Retail Sales. On Thursday the monthly ECB’s meeting will take place, no policy changes are expected. The analysts expect the reduction of rates in March or in the second quarter of the year. On Thursday in Germany Factory Orders will be released, and on Friday – Trade Balance and Industrial Production.
During the first three days of the week in the UK industry, housebulding and Non-Manufacturing PMI will be released. On Friday Manufacturing PMI and Trade Balance will be released. The Bank of England is getting ready to release new interest rate target in February, and it may happen on Thursday when the BOE Rate Decision will be announced.
On Thursday in Australia Retail Sales and Trade Balance will be released, and on Friday – the Quarterly RBA Monetary Policy Statement. The RBA Meeting will traditionally take place on the first Tuesday of the month, and the policy changes are not expected. The Quarterly Labor Market Report in New Zealand will be released on Wednesday. On Thursday in Canada Trade Balance and Ivey PMI will be published; and on Friday – Labor Market Report.

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

Activity in the US Manufacturing Sector Decreased

On Monday 3 February the US dollar dropped vs. most major currencies after the release of weak ISM Manufacturing PMI report in the USA. The euro strengthened its positions amid the manufacturing activity growth in the Eurozone, and the pound sterling considerably decreased after the release of the similar Markit PMI report. The yen increased amid continuing fall of stock markets.

ISM Manufacturing PMI in the USA suddenly appeared to be weak – activity dropped to the lowest level since June 2013. ISM Manufacturing PMI in the USA suddenly dropped in January by 5.2 p. to 51.3 p. from the downwards revised 56.5 p. in December, whereas slight drop to 56 p. was expected. Non-Manufacturing PMI also decreased a month ago to half-year low.

All the subindices except for prices and supplier deliveries decreased. New Orders dropped most of all. Remarkable decrease demonstrated Production, Employment, and Inventories. Manufacturing PMI decrease might be affected by poor weather conditions in January. On Monday treasury secretary Jack Lew appealed to the congress to extend the government’s borrowing limit, warning that the country will be unable to meet its debt obligations at some point very soon, possibly by the end of the month.

The euro strengthened its positions after two-day decrease amid the Eurozone Manufacturing PMI growth which is still at high levels since May 2011. The Final Eurozone Manufacturing PMI increased in January to 54 p. from 52.7 p. in December, and appeared to be slightly better than preliminary estimations at the level of 53.9 p. Manufacturing PMI increased in January in all major countries, except for Italy – in Germany it reached 32-months high.

The pound sterling on the contrary demonstrated considerable fall to 1.5-month low vs. the dollar – after the release of the similar Markit report. Manufacturing PMI in the UK decreased in January to 3-months low of 56.7 p. from 57.2 p. in December – whereas less decrease to 57 p. was expected. Despite the decrease for the second month in a row from the highest readings for almost three years, the Index is still at high rate, which exceeds the average reading of 51.3 p.

The yen increased almost to 2.5-months high vs. the dollar amid the continuing fall of stock markets. The US stock markets dropped on Monday by more than 2%, amid the concerns about Manufacturing Activity decrease in the USA and China. Nikkei Futures again decreased on Monday by more than 3% after the same decrease on Friday. The Swiss franc also strengthened its positions amid thу demand pull for safety assets. SVME PMI in Switzerland increased in January to 56.1 p. having exceeded the expectations at the level of 55.4 p.

The Australian dollar was traded upwards in the first half of the day before the meeting of the Reserve Bank of Australia on Tuesday – but according to the results of the day it had almost no changes amid the weak data in Australia and the fall of Manufacturing PMI in China. Building Permits in Australia dropped by 2.9% m/m, having considerably exceeded the expectations. Building Permits are being decreased for the third month in a row. The official Manufacturing PMI in China, which was released on Saturday, demonstrated the decrease in January to 50.5 p. from 51 p. Non-Manufacturing PMI as dropped as well.

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Overview of the main economical events of the current day - 05/02/2014

The Australian Dollar Demonstrated the Highest Growth for More than 2 Years

On Tuesday February, 4 the US dollar was traded mixed amid the controversial statistics in the USA. The US dollar increased vs. the yen and the Swiss franc, but considerably decreased vs. AUD and NZD. The Australian dollar sharply increased after the Reserve Bank of Australia didn’t signal the inclination of monetary policy easing. The pound sterling strengthened its positions amid the growth of Manufacturing PMI of the construction sector in the UK.

Factory Orders in the USA decreased in December by 1.5% which appeared to be slightly better than expected by 1.8%. The decrease of orders was entailed by the sharp fall of orders Ex transportation which increased by 0.2%. IBD/TIPP Economic Optimism decreased in February to 44.9 p comparing with 45.2 p. in January against the expectations of growth.

President of the Federal Reserve Bank of Richmond Jeffrey Lacker announced on Tuesday that Fed will probably reduce acquisition costs by $10B at every meeting because significant improvement of the Labor Market reading is observed. President of the Federal Reserve Bank of Chicago Charles Evans pointed that the US economy will be in need of strong support of the Fed for quite a long time, and the rates will be hardly increased till 2015.
The Australian dollar sharply increased and demonstrated the highest day growth vs. the dollar for the last two years since October 2011 – after the RBA left the rate unchanged, but announced that taking into consideration current circumstances, the most prudent course is likely to be a period of stability in interest rates. The familiar statement about the disadvantageous high currency level was not mentioned in the announcement. This announcement was estimated as rejection of further monetary policy easing.

The New Zealand dollar also considerably strengthened its positions on Tuesday before the quarterly Labor Market report in New Zealand. Employment Change in New Zealand in the 4th quarter of 2013 increased by 1.1% in relation to the previous quarter, having exceeded the expectations of growth by 0.6%. Unemployment Rate in the 4th quarter decreased to 6% comparing with 6.2% in the 3rd quarter as it was expected. Unemployment Rate appeared to be the lowest for almost 5 years since the 1st quarter of 2009.

The pound sterling slightly increased after several-days fall amid the Manufacturing PMI of the construction sector report release in the UK. The PMI increased in January to 64.6 p. comparing with 62.1 p. in December, whereas the decrease was expected. The PMI is still at high rates since August 2007, and it stays higher than 50 p. for the 9th month in a row – this reading separates the expansion of the construction sector from reduce.

The euro was traded slightly downwards vs. the dollar amid the Spanish Labor Market data. Spanish Unemployment Change increased in January by 113 100 comparing with the previous month mostly due to dismissals in the non-manufacturing sector of the country. Producer Prices in the Eurozone increased in December by 0.2% m/m having fixed the 1st monthly growth for the last three months.
The yen broke the 2-days growth and decreased on Monday amid some stabilization of stock markets. The US Stock Markets have recuperated a bit on Tuesday after thу strong fall of the previous day. Nikkei Futures also strengthened. Some analysts consider that the Bank of Japan will not allow Nikkei 225 fall lower than 14000p., and may increase Japanese ETF purchase. Annual Monetary Bas growth rate in Japan in January was the second in history – 51.9% y/y.


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Overview of the main economical events of the current day - 06/02/2014

The US Employment Growth Became the Lowest for the Recent Five Months

On Wednesday February, 5 the US dollar a bit decreased vs. the euro and the yen, and had almost no changes vs. the rest major currencies – amid controversial US statistic data. The euro a bit strengthened its positions amid the Non-Manufacturing PMI growth in the Eurozone. The pound sterling a bit decreased after the weak Index of Services release in the UK, but then negated almost all the losses.
Non-Manufacturing PMI in the USA increased to 3-months high, whereas ADP Labor Market appeared to be worse than expected – Non-Farm Employment Change in the USA dropped to 5-months low. According to Automatic Data Processing (ADP), Non-Farm Employment Change increased in January by 175 000 against the downwards revised 227 000 in December, which appeared to be lower than expected at the level of 185 000.

Employment Change is being reduced for the second month in a row, and its January augmentation became the lowest for the recent 5 months. Severe and windy weather still puts pressure on Employment Change data. ADP is frequently considered as preliminary before the most important Non-Farm Payrolls report of the USA Department of Labor.
ISM Non-Manufacturing PMI in the USA increased in January to 54 p. comparing with 53 p. in December, having exceeded the expectations of growth to 53.7 p. All the subindices except Import and New Export Orders increased. At the same time the largest growth was demonstrated by Inventory components, Inventory Sentiment, and Prices. FOMC Member Dennis Lockhart announced on Wednesday that QE Tapering will be probably continued and may finish till the 4th quarter. Oncoming before the publication data may be weak due to weather conditions.

The euro a bit strengthened its positions on Wednesday amid the Eurozone Non-Manufacturing growth, which appeared to be the highest for the recent 4 months. The Final Eurozone Non-Manufacturing PMI increased in January to 51.6 p. from 51 p. in December, though it appeared to be slightly less than the preliminary estimation of 51.9 p. Services PMI in January increased in all major countries except Germany.
The composite index measuring business activity of Manufacturing and Non-Manufacturing sectors increased in January to the highest rate since June 2011 – to 52.9 p. against 52.1 p. of the previous month. At the same time Retail Sales in the Eurozone dropped in December by 1.6% against the expectation of decrease by 0.7% which appeared to be the most considerable fall since May 2011. Previously released data in Germany also pointed out the decrease of Retail Sales in December by 2.5%.
The pound sterling decreased after weak Services PMI data release in the UK, which appeared to be the lowest over the last 8 months, but then gained back almost all the losses. Non-Manufacturing PMI which composed the major economy part decreased in January to 58.3 p. from 58.8 p. in December, against the expectations of growth. The Index has been decreasing for the third month in a row, though it stays above 50.0 indicates industry expansion, below indicates contraction.
The Canadian dollar decreased after weak Building Permits data, but then it won back all the losses. The Australian dollar had almost no changes according to the results of the day after the strong growth of the previous day. RBA Board Member John Edwards announced on Wednesday that the drop of the Australian dollar is probably not final, though it may cause the inflation pressure increase. Gradual fall of AUD is more positive for the economy.

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Overview of the main economical events of the current day - 07/02/2014

The Euro Sharply Rose after the Announcement of the Results of ECB’s Meeting

On Thursday February, 6 the US dollar increased vs. the yen, but decreased vs. the euro and the Australian dollar amid controversial statistics in the USA. Labor Market report appeared to better than expected, whereas the deficit of the US Trade Balance increased more than it was forecasted. The euro sharply rose after the ECB didn’t announce the new measures of monetary policy easing. The Australian dollar strengthened its positions amid positive Australian statistics.
The US dollar strengthened its positions vs. the yen amid the Stock markets growth – Nikkei Futures increased on Thursday by 1,7%. The US dollar strengthening vs. the yen was also supported by the US Labor Market positive data released before the Friday key report of Non-Farm Payrolls. 175 000 – 189 000 of new working places is expected in January, as well as the unchanged Unemployment Rate of 6.7%. Strong Non-Farm Payrolls in January alongside with Unemployment Rate fall will indicate easing of economic situation, which may support the dollar.
Initial Claims in the US last week decreased by 20 000 to 331 000 from the upwards revised 351 000 which appeared to be better than expected 335 000. Initial Jobless Claims decreased for the first time over the last three weeks. 4-Week Moving Average of Initial Claims inconsiderably increased to 334 000 from 333 750 of the previous week.

The US Trade Balance deficit increased in December by 12% to $38.7B from the upwards revised $34.6B, having exceeded the expectations of growth to $36B. The export of goods and services in the USA decreased in December by 1.8% whereas the import increased by 0.3%. According to the results of 2013 the US external deficit decreased by 11% to its low since 2009 $471.5B. Export of goods and services at the same time increased by 2.8% y/y.
The euro sharply increased having demonstrated the highest growth over the last 2 weeks – after that according to the results oа the meeting the ECB left the interest rates unchanged, and didn’t announce new measures of monetary policy easing, as it was expected by some participants of the market. The ECB’s President Mario Draghi announced that the decision of unchanged policy was made due to the complex situation and the necessity in additional information.
Draghi repeated that the rates will stay at the current level or lower for quite a long time, though he didn’t exclude the possibility of further actions. He also pointed the necessity of data collection of the inflation perspectives. The new medium-term forecast of price stability will be released in March. Sterilization breakdown of the assets purchase, performed in the SMP framework, wasn’t discussed.
The pound sterling had almost no changes according to the results of the day after the Bank of England left the monetary policy, directed to the economy growth stimulation, unchanged. The key interest rate stays at record low of 0.5% as it has been since March 2009. The Central Bank also left Asset Purchase Facility at the rate of £375B. The Bank of England will correct the guidance on 12 February when it will perform BOE Inflation Report.
The Australian dollar strengthened its positions on Thursday till the highest rate vs. the US dollar for over three weeks – after the release of positive Australian statistics. Retail Sales in December increased by 0.35% m/m having exceeded the expectations of growth by 0.4%. NAB Quarterly Business Confidence reached its high in the 4th quarter of 2013 for almost three years at the level of +8 p. from the upwards revised reading of +5 p. in the 3rd quarter. The Trade Balance proficit increased in December to 468 m of Australian dollars from 83 m in November – two months proficit was watched for the first time over 2 years.

The Canadian dollar decreased after the weak Canadian Trade Balance data, the deficit of which appeared to be the highest over the year – but then it won back all the losses after the release of Ivey Manufacturing PMI in Canada. The Trade Balance deficit in Canada increased in December to 1.66B of Canadian dollars from the upwards revised 1.53B having significantly exceeded the expectations. Ivey PMI strengthened its positions in January to 56.8 p. from 46.3 p. in December against the growth forecast to 51 p.


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Overview of the main economical events of the current day - 11/02/2014

The Markets Expect the Speech of the New Federal Reserve Chair

On Monday February, 10 the US dollar was traded almost without changes vs. major currencies before the report of the new Federal Reserve Chair Janet Yellen in the US Congress on Tuesday. The euro slightly strengthened its positions amid Investor Confidence in the Eurozone. The Canadian dollar slightly decreased amid weak Housing Market data in Canada.

On Monday trading at Forex passed without any definite course, because many participants of the market abstained from large-scale deals on the eve of the first speech of the Federal Reserve Chair Janet Yellen in the US Congress scheduled for Tuesday. There was no significant macrostatistic data released in the USA. On Tuesday Janet Yellen will report before the House Financial Services Committee, and on Thursday – before the Senate.
The markets will expect the signals from the US Central Bank about the QE3 Tapering plans, which negatively influences the dollar. Though straightway signals of the rate’s correction of assets buyout are not expected, confirmation of the US monetary policy continuation will be of great importance, especially after the release of a series of negative statistical economic data.

The US Labor Market report from Conference Board research group didn’t show slowdown in employment growth, which slightly contrasts with official data. Employment Trends Index increased in January to 116.61 from the upwards revised December reading of 115.62. In an annual rate the index increased by 6.0% in January.

The euro slightly strengthened its positions on Monday amid the Investor Confidence growth in the Eurozone. According to research-and-development center Sentix, Investor Confidence in the Eurozone suddenly increased in February by 1.4 p. to 13.3 p., whereas the decrease was expected. The improvement was mainly induced by the growth of current situation estimation in February. Subindex of the current situation appeared to be positive for the first time since August 2011.

At the same time industrial production in Italy and France appeared to be worse than expected. Industrial production in Italy sharply dropped in December after 3 months growth – by 0.9% comparing with November. Industrial production in France in December also decreased more than expected, by 0.3% m/m, whereas no changes were expected before. At the same time petroleum processing volume and automobile production sharply dropped. The German data which was released on Friday also demonstrated decrease of industrial production by 0.6% m/m.

Meanwhile the Minister of Industry of France appealed to Eurozone statesmen to move into action of easing the overestimated euro, which suppresses the economic activity and trading in France. According to him, the most depressed Eurozone region has the most expensive currency. In 2012-2013 the euro increased vs. the US dollar by 10%, and vs. the yen – by more than 40%. At the same time the GDP of the Eurozone countries in 2013 was reduced by 0.2%, whereas the US GDP increased by 3.4%, and the Japanese GDP – by 2.3%.
The Canadian dollar a bit decreased on Monday amid weak Housing Market data in Canada. Housing Starts in Canada in January decreased by 3.7% comparing with the previous month to 180 200 houses per annum, whereas less decrease to 185 000 was expected before. Despite the last positive Employment report – 3-months Employment trend can be hardly considered to be positive. The Canadian dollar is also under pressure of the weakening of the national currency, which didn’t sufficiently influence the Canadian export.

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Overview of the main economical events of the current day - 14/02/2014

Unemployment Rate in Australia Increased to the Highest Level Over 10.5 Years

On Thursday February, 13 the US dollar increased Vs. most major currencies amid weak Retail Sales and Labor Market data in the USA. The strongest growth Vs. the dollar was demonstrated by the Swiss franc. The Australian dollar sharply dropped after the release of weak Labor Market report in Australia. The pound sterling refreshed the year’s high, and the euro strengthened its position Vs. the US dollar to almost 3-weeks high amid the weakness of the dollar.

The US Retail Sales sharply dropped in January by 0.4% comparing with December (highest decrease rate over 10 months) in the lead of auto sales drop, whereas the change in the sales was not expected. Core Retail Sales stayed unchanged comparing with the previous month, whereas growth by 0.1% was expected. Previous month’s data was revised downwards: in December sales decreased by 0.1% m/m, whereas growth by 0.2% was announced earlier.

Considering the revision, the sales are being decreased for the second month in a row, which reflects on the possibility of steady economy recovery this year. After the release of weak Retail Sales data in the USA, Goldman Sachs Bank decreased the US GDP forecast in the first quarter to 1.9% from 2.3%. Goldman Sachs expects for the GDP growth data revision for the 4th quarter from 3.2% to 2.4%.

Initial Unemployment Claims in the USA last week increased by 8 000 to 339 000, from 331 000 of the previous week. The reading which smoothes the volatility of weekly data: 4-Week Moving Average of Initial Claims increased to 4-weeks high at the level of 336 750 from last week’s 334 000. Increase of initial claims is a troubling sign after the last week’s Employment report, which demonstrated weak augmentation of working places.

The Australian dollar sharply dropped after the release of weak Labor Market report in Australia. According to the report of the Australian Statistics Department Unemployment Rate increased in January to 6% comparing with 5.8% in the previous month, whereas growth only to 5.9% was expected. This is the highest reading over 10.5 years – since June 2003. Employment Change decreased by 3 700, whereas growth by 15 000 was forecasted – at that Full Time Employment Change dropped even more – by 7 100.

The pound sterling refreshed the year’s high. BOE Chief Economist Spencer Dale said that key interest rate increase will be equal to expectations in 2015 – till the end of 206 the rate may reach 2%. The euro increased Vs. the US dollar till the high for almost 3 weeks, having almost no reaction to the Italian government crisis. The ECB in its February Monthly Report decreased the inflation forecasts for this and next year.

The yen strengthened its position on Thursday amid the fall of Asian and European stock markets, which increased demand for save-heaven currencies. Nikkei Futures dropped on Thursday by 1%. The US dollar reduced part of the losses Vs. the yen amid the positive dynamics of the US stock markets.

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Overview of the main economical events of the current day - 17/02/2014

The Eurozone Economy Grows for the Second Quarter in a Row

On Friday February, 14 the US dollar was traded downwards Vs. most major currencies after the release of weak Retail Sales data. Released on Friday Industrial Production report in the USA appeared to be worse than expected. The euro strengthened its positions amid the Eurozone economy growth data, which appeared to be better than the forecasts. The Canadian dollar slightly decreased after the release of weak Manufacturing Sales data in Canada.

The US Industrial Production fell in January by 0.3% comparing to the previous month against the expectations of growth by 0.2%. The Industrial production decreased for the first time over 6 months. Manufacturing Production reduced by 0.8% m/m working towards decrease of the whole industrial production. Capacity utilization decreased by 0.4% to 78.5% keeping to reduce for the second month in a row after reaching of the semiannual high.

The US consumer confidence data released on Friday appeared to be slightly better than expected. Preliminary U. of Michigan Consumer Sentiment in February stayed unchanged at the rate of the final January reading of 81.2 p., whereas decrease was expected. There is a bank holiday on Monday in the USA, that’s why the activity of the American session is going to be low.

The pound sterling was closed on Friday at the point higher than $1.67 for the first time since the end of April 2011. The euro increased more than $1.37 for the first time over 3 weeks amid the Eurozone economy growth increase data, which appeared to be better than forecasted. According to preliminary data the Eurozone GDP growth in the 4th quarter composed 0.3% in relation to the previous quarter against the expectations of growth by 0.2%. The French and German economy growth data appeared to be better than expected: the GDP of the largest Eurozone economy zone – Germany – strengthened its positions by 0.4%, whereas +0.3% was forecasted.

The yen strengthened its positions amid the fall of Japanese stock market due to increased demand for save-heaven currency – Nikkei 225 dropped on Friday by 1.5% decreasing for the third day in a row amid another strong snow flurry in Japan. During the week Nikkei lost 1.8%. The Japanese Trade Balance deficit in January may appear to be record high - ¥ 2.49 trillion, which will again mark that weak yen don’t support export growth. The data will be released on Thursday February, 20.

On Friday the Canadian dollar stemmed three-day growth and slightly decreased after the release of weak Manufacturing Sales report in Canada, which dropped by 0.9%, whereas the growth was expected. The sales decreased for the first time over 8 months.

The Australian dollar increased after the Chinese Inflation Rate report, and fully restored after the sharp fall on Thursday amid weak Labor market data in Australia. According to National Bureau of Statistics of China, Consumer Price Index (CPI) in China in January increased by 2.5% comparing to January of the previous year, as in December – whereas growth only by 2.4% y/y was expected. AUD ignored the report of RBA Assistant Governor Kent in which he mentioned than the Australian currency may continue to fall.

The New Zealand dollar strengthened its position Vs. the dollar to the highest rate over the month. The National Bureau of Statistics of New Zealand reported on Friday about the increased inflation pressure in the country. CPI increased in January by 1.2% comparing to the previous month, and by 0.9% comparing to the same period of the previous year. Food Price Index (FPI) increased in January by 1.2% m/m after three months decrease. Besides, Fonterra reported the growth of milk production over 8 months by 4.2% comparing to the same period of the previous year. Milk production export composes ¼ of country’s export income.

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Overview of the main economical events of the current day - 18/02/2014

The Main Events of the Week

On Monday February, 17 the US dollar was traded almost without changes Vs. most major currencies amid the banking holiday in the USA and absence of significant macro statistics in majority of countries. The US dollar strengthened its positions Vs. the pound sterling and the yen, but slightly decreased Vs. the euro and the Canadian dollar.

The Presidents Day was celebrated in the USA; there was a feast day in some provinces in Canada as well. The US dollar slightly decreased at the beginning of the day and refreshed the lows of the year to the dollar index – but then it recovered, having closed almost without changes. The pound sterling increased above level of $1.68 for the first time since November 2009 after the release of positive Rightmove Housing Market report; but then it decreased. According to Rightmove, House Prices in the UK increased in February by 3.3% m/m – it is the highest monthly growth rate since October 2012.

The Australian dollar increased at the beginning of the day amid strong Chinese data released on Saturday, but then it fell. New Yuan Loans increased to 4-year high of 1.32 trillion yuans having exceeded the forecasts at the level of 1.1 trillion. The yen a little lost its positions before the publication of weak GDP report in Japan. According to preliminary data GDP Annualized increased by 1% in the 4th quarter comparing to 1.1% growth in the previous quarter – it appeared to be considerably lower than the expectations of growth by 2.8%. The Japanese economy growth appears to be lower than expected for the 3rd quarter in a row; and this fact increases the chances for the Bank of Japan to take new measures of monetary policy easing.

The euro had almost no changes on Monday, getting support from the prospects of organization of the new Italian government and possible improvement of the Eurozone economy state. Bundesbank Monthly Report states that the German economy experienced rise this winter, and this fact will influence the country’s GDP for 2014. Last week the German government increased the GDP growth forecast in 2014 from 1.7% to 1.8%. At the same time ECB’s Novotny announced that the question of interest rate reduction is still open despite the strong Eurozone economy growth in the 4th quarter.

According to the results of the week the US dollar decreased Vs. all major currencies having lost 0.7% according to the dollar index – the decrease mainly happened during the last two days of the week. The dollar index decreased approximately to 7-weeks highs amid strong snow flurries walloped the south and north-east states of the USA, and weak Retail Sales and Industrial Production data which raise doubts of possible stable economy recovery of the USA this year. The pound sterling demonstrated the biggest growth VS. the US dollar during this week – more than 2%.

There will be quite a lot of data in the USA this week: on Tuesday Empire State Manufacturing Index will be released, as well as Treasury International Capital Data, and NAHB Housing Market Index; on Wednesday – Building Permits, Housing Starts, Producer Price Index, and FOMC Meeting Minutes; on Thursday – Consumer Price Index, and Philadelphia Fed Manufacturing Index; on Friday – Existing Home Sales. Fed Chair Janet Yellen is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee. The main theses of the first speech are usually repeated in the second one, but something new still may appear.

The main events in the Eurozone will be the release of German ZEW Survey on Tuesday, and Flash Manufacturing PMI, and Flash Services PMI in Germany and France, and in the whole Eurozone on Thursday. On Tuesday Eurozone Current Account will be released; on Friday – European Commission Economic Forecast. In Germany Producer Price Index will be released on Thursday.

Consumer Price Index and Producer Price Index will be released in the UK on Tuesday; on Wednesday – MPC Meeting Minutes and Labor Market data; on Friday – Retail Sales. The results of the 2-days meeting of the Bank of Japan will be released on Tuesday. The Japanese Trade Balance will be released on Thursday; and on Friday – Bank of Japan January 21-22 Meeting.

The Monetary Policy Meeting Minutes will be released in Australia on Tuesday; on Wednesday – CB Leading Index, and Wage Price Index. Quarterly Producer Price Index will be released in New Zealand on Thursday. Wholesale Sales will be released in Canada on Wednesday; on Friday - Inflation and Retail Sales reports. HSBC Flash Manufacturing PMI will be released in China on Thursday.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 19/02/2014

The Euro Reached the Highs of the Beginning of the Year

On Tuesday February, 18 the US dollar was traded mixed; it fell Vs. the euro and the Swiss franc, but rose Vs. the pound sterling and the yen – amid negative statistics. The pound sterling fell after the weak UK Inflation report. The yen fell after the release of Bank of Japan Meeting Results.

On Tuesday the US dollar decreased after the release of weak US data, and lost 0.2% to the dollar index. Manufacturing PMI, Treasury International Capital Flows and Housing Market data in the USA were negative. Empire State Manufacturing Index sharply fell in February. Empire Manufacturing dropped to 4.48 p. Comparing with 12.51 p. in January, whereas less decrease to 9 p. was expected. New Orders and Supplies Index considerably decreased as well.

The US Treasury International Capital (TIC) data in December demonstrated considerable increase of its outflow in December. Total Net TIC Flows demonstrated outflow of $119.6B against $16.6B of the previous month. The Net Foreign Sales of long-term securities composed $45.9B comparing with the outflow of $28B in November, whereas capital inflow of $30B was predicted.

NAHB Housing Market Index sharply decreased in February and dropped lower than 50, which is the boundary between negative and positive forecast, for the first time over 9 months. Housing Market Index dropped in February to 46 p. (9 month low) comparing with 56 p. in the previous month. The decrease was probably entailed by extreme weather conditions of this winter, shortage of workers, and limited ground access.

On Tuesday the euro went on strengthening its positions, having increased Vs. the US dollar till the highs of the beginning of the year – despite the predictions of ECB’s monetary policy easing next month. The euro ignored slight decrease of German Business Confidence, which fell to three-month lows, though it is still at considerably high rates.

German ZEW Economic Sentiment decreased in February to 55.7 p. comparing with 61.7 p. in January having considerably exceeded the expectations of decrease to 61.5 p. At the same time German ZEW Current Situation increased in February to 50 p. from 41.2 p. in January having exceeded the expectations – it reached the highest rate since August 2011. ECB’s Peter Praet announced on Tuesday that in case of further restricting the Eurozone GDP growth may exceed the expectations.

The pound sterling fell on Tuesday due to the weak Inflation report on the UK, which appeared to be lower than the BOE target range for the first time for over 4 years. Annual change of CPI decreased in January to 1.9% against 2% in December, whereas no changes were predicted. Annualized core inflation dropped in January to 1.6% y/y from 1.7% in the previous month against the expectations of growth to 1.9%. Inflation decrease gives reason to believe that the Central Bank will save low interest rates for economy recovery support. Monetary Policy Committee Member Ian McCafferty announced that economy has enough space for growth before the increase of the rates.

The yen dropped after the release of BOJ Monetary Policy Statement, where the policy was left unchanged – but two special loan programs were doubled and extended for a year in order to increase the stimulation effect and to master the deflation. According to the Central Bank Loan Programs data is of the part of QE. This decision influenced the forecasts of further QE increase.

On Tuesday the Australian dollar reached monthly high Vs. the US dollar after the release RBA February Meeting Minutes, but then it fell. RBA announced the period of stable interest rates which it is reasonable to leave unchanged further. The Canadian dollar slightly strengthened its positions amid oil price hike to 4 month high – it ignores Foreign Securities in December, which appeared to be sold for the first time since June, 2013.

By MasterForex Company