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Overview of the main economical events of the current day - 12/05/2014

Main Events of the Coming Week

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

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

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

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

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

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

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

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

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

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

Pound Sterling Dropped After Double Impact

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

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

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

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

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

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

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

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

Main Events of the Coming Week

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

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

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

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

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

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

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

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

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

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

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

Bundesbank Waits For German Economy Slow Down

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

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

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

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

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

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

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

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

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

The Australian Dollar Was a Leader of Decrease

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

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

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

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

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

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

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

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

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

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

The US Dollar Dropped After the Release of FOMC Meeting Minutes

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

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

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

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

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

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

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

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

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

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

Euro-Zone Manufacturing Activity Dropped to 6-Month Low

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

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

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

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

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

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

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

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

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

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

German Consumer Confidence Is Still Persistently High

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Overview of the main economical events of the current day - 2/06/2014

Main Events of the Coming Week

On Friday 30 May the US dollar decreased vs. most major currencies, having lost 0.17% to the dollar index amid weak US Consumer Sentiment. The US Personal Spending also reduced in April for the first time this year.

UoM Consumer Sentiment decreased in May to 81.9 p. in comparison with 84.1 p. in April – and appeared to be higher the initial evaluate of 81.8 p., but considerably higher the expectations at the level of 82.5 p. Current Assessment considerably fell in May as well. Food prices growth, high prices for oil, and slow growth of wages decreased Consumer Sentiment.

The US Personal Spending sharply reduced in April by 0.1% m/m against the expectations of growth by 0.2%. Personal Spending increased in March by 1% m/m (the highest rate since August 2009). Personal Spending decreased of the first time for over a year which became the new sign of the US economy slowdown after several negative months when the data was corrupted by the deterrent weather. At the same time Chicago PMI increased in May to 7-month high at the level of 65.5 p. from 63 p. in April against the expectations of decrease.

The pound sterling strengthened its positions on Friday amid growth of the UK Consumer Confidence to the highest rate for over 9 years since April 2005. GfK Consumer Sentiment increased in May to zero in comparison with -3 in April, having exceeded the expectations of growth to -2 p. The euro also increased despite the decrease of inflation rate in Spain and Italy. According to preliminary data annual inflation growth rate dropped in May – in Italy from 0.6% to 0.5%, and in Spain – from 0.3% to 0.2%.

The Canadian dollar decreased amid the Canadian economy growth. Annual GDP growth deteriorated in March to 8-month low at the level of 2.1% from 2.3% in February, whereas no changes were expected. The Canadian Quarterly GDP annualized slowed down in the first quarter to 1.2% in comparison with 2.7% in the previous quarter and the forecast of 1.8%. The lowest growth rate for over 5 quarter was mainly due to sharp decrease of investment and export.

The yen strengthened its positions after the release of Japanese inflation rate, but then it negated the whole growth. Japanese inflation accelerated in April to the highest rate since 1991, whereas industrial production and household spending dropped after the increase of sales tax. Consumer Price Index increased in April to 3.4% y/y in comparison with the growth by 1.6% in March.

According to the results of the week the US dollar demonstrated mixed dynamics vs. major currencies and had almost no changes to the dollar index. The US dollar decreased vs. the Australian dollar, the yen, and the Canadian dollar; increased vs. the New Zealand dollar and the pound sterling; and had almost no changes vs. the euro and the Swiss franc. Weak economy growth rate and the US Consumer Confidence put additionally pressurized the US dollar. According to the results of May the US dollar added slightly more than 1% to the dollar index, and the dynamics was mixed as well: the US dollar increased vs. major European currencies and NZD, but decreased vs. the yen, CAD, and AUD.

During the coming first week of the month there will be a lot of important data released, including the US Non-Farm Payrolls, and the Meeting of four major Central Banks which will also take place this week. The major event will be the release of the key US Non-Farm Payrolls on Friday; preliminary ADP will be released on Wednesday. On Monday ISM Manufacturing PMI and Construction Spending will be released; on Tuesday – Industrial Orders; on Wednesday – Trade Balance, ISM Services PMI and Beige Book; on Thursday – weekly Unemployment Claims.

The major event in the Euro-Zone will be the Meeting of the European Central Bank, the results of which will be announced in Thursday. Decrease of all three ECB rates is expected as well. ECB will probably take other measures of easing as well which will be directed for acceleration of economy growth and inflation rate. On Tuesday important preliminary inflation rate will be released in the Euro-Zone – no changes of inflation rate are expected (0.7% y/y). On Monday Final Manufacturing PMI will be released; and on Wednesday – Final Services PMI; on Tuesday – Euro-Zone Unemployment Rate; on Wednesday – Revised GDP of the first quarter; and on Thursday – Retail Sales.

On Monday in German preliminary Inflation Rate will be released; on Thursday – Industrial Orders, and on Friday – Trade Balance and Industrial Production. In the UK Manufacturing PMI, Construction PMI, and Services PMI will be released in the first three days. On Monday BOE Monetary & Financial Statistics will be released; and on Friday – Trade Balance. On Thursday the results of Monthly BOE Meeting will be announced – no policy changes are expected. On Wednesday and Thursday G7 Meeting in Brussels will take place.

On Tuesday in China Non-Manufacturing PMI and HSBC Final Manufacturing PMI will be released; and on Sunday 8 June – Trade Balance. On Tuesday in Australia Retail Sales will be released, and RBA will announce the results of its Meeting about rates; on Wednesday GDP for the first quarter will be released; and on Thursday – Trade Balance. On Wednesday in Canada Trade Balance will be released; on Thursday – Building Permits and Ivey PMI; and on Friday – Labor Market report. On Wednesday the results of the BOC Meeting about the rates will be released.

By MasterForex Company

 

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

The US Services Activity Rocketed to 9-Month High

On Wednesday 4 June the US dollar strengthened its positions vs. most major currencies, having added 0.17% to the dollar index amid growth of Services Activity increased to the highest rate for over 9 months. The euro decreased amid weak Euro-Zone Services Activity.

The US Services Activity continued to grow for the third month in a row and reached in May the highest rate since August 2013. The US ISM Services PMI rose in May to 56.3 p. in comparison with 55.2 p. in April, having exceeded the expectations of growth to 55.5 p. Backlog of Orders, New Orders, Business Activity, and Employment increased most of all. Markit data also pointed acceleration of Services Activity growth in the USA in May to the highest rate for over more than two years – since March 2012. According to Fed’s Beige Book economy activity increased during recent two weeks in all US regions and this fact promoted increase of Consumer Spending.

At the same time ADP Employment and the US Trading Balance released on Wednesday appeared to be worse than expected. ADP Employment Change in the USA increased in May only by 179,000 in comparison with downwardly revised previous month’s reading at the level of 215,000 and the forecast of 210,000. Employment Change appeared to be the lowest for over 4 months. On Friday the US Labor Department will perform official Non-Farm Payrolls report. It is expected that Non-Farm Payrolls in May increased by 218,000 against 288,000 in April, and Unemployment increase by 0.1% to 6.4%.

The US Trade Balance deficit spread in April to 2-years high due to considerable growth of import, which appeared to be the highest throughout the history. Trade Balance deficit increased in April by 6.9% m/m to $47.2 billion, having considerably exceeded the expectations at the level of $40.8 billion. Previous month Trade Balance deficit at that was revised downwards – to $44.2 billion from the March reading of $40.4 billion. Import increased in April by 1.2% m/m, whereas export decreased by 0.2% m/m. Import growth indicates that consumers and companies started their spending recovery after winter fall.

The euro decreased amid Euro-Zone Services Activity which slowed down stronger than the initial estimate. Euro-Zone Final Services PMI in May composed 53.2 p. and appeared to be lower initial estimations of 53.5 p. Euro-Zone Flash Manufacturing PMI and Flash Services PMI decreased from 3-year high of 54 p. to 53.5 p., whereas 53.9 p. was reported before. Euro-Zone Revised GDP of the 1st quarter was confirmed at the level of 0.2% - at the same time 4th quarter data was revised upwards to +0.3% q/q from +0.2%.

The pound sterling the least decreased vs. the US dollar on Wednesday amid strong UK Services Activity growth rate. Services PMI just slightly decreased in May – from 58.7 p. to 58.6 p., whereas a more considerable decrease to 58.2 p. was predicted. Country’s services sector continued to steadily develop in May due to increase of new working places and creation of new companies, which is supported by the forecast of the Bank of England about the UK GDP growth this year by 3%. At the same time, BOE’s Richard Sharp announced that despite explosive growth of activity the economy of the UK is still unsteady and vulnerable to a whole range of risks – both inside ТВ outside the country.

The Canadian dollar dropped to its month low vs. the US dollar amid finished BOC’s Meeting during which the Overnight Rate was left without changes. Bank of Canada pointed downward risks for inflation prospects and weak export growth. Canadian economy recovers after the break in the 1st quarter, but the dynamics is slightly less than it was expected before. Canadian Trade Balance appeared to be worse than expected. Trade Balance deficit of 0.64 billion CAD was fixed in April, whereas its proficit of 0.20 billion was expected. Export dropped by 1.2% m/m, whereas import increased by 1.4% m/m to its record high.

Only the Australian dollar managed to strengthen its positions vs. the US dollar on Wednesday after the release of positive Australian economy growth rate which appeared to be the highest for over 2 years. Country’s GDP in the 1st quarter increased by 1.1% q/q, having exceeded the expectations of growth by 1%. Export gave a more contribution to the growth than before – in whole Australian economy returns to upward trend. New Zealand dollar was traded downwards amid drop of commodity prices. ANZ Commodity Prices dropped in May by 2.2% m/m after the drop by 3.7% in April, the decrease continues for the third month in a row.

By MasterForex Company

 

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Overview of the main economical events of the current day - 10/06/2014

Main Events of the Coming Week

On Friday 6 June the US dollar strengthened its positions vs. most major currencies, having added 0.07% еще he dollar index amid the US Non-Farm Payrolls. The US Unemployment Rate appeared to be better than expected, whereas Employment Changes coincided with the forecasts.

According to the US Department of Labor Unemployment Rate in May stayed at the same April level of 6.3%, whereas growth to 6.4%was predicted. The US Unemployment Rate still stays at the lowest rate since September 2008. The US Non-Farm Payrolls increased in May by 217,000 in comparison with downwardly revised 282,000 in April – which in whole coincided with the expectations which varied from 210,000 to 218,000.

Average Hourly Earnings increased in May by 0.2% m/m which coincided with the forecasts. Average workweek and Participation Rate had no changes in May comparing to April. Underemployment Rate – U6 decreased from 12.3% to 12.2%. Total nonfarm in the USA in May reached 138.5 million, having exceeded the previous Employment Change high which was reached in January 2008 – this fact again pointed the acceleration of economy recovery this spring.

The euro and the pound sterling decreased amid weak data. German Industrial Output increased in April by 0.2%, whereas growth by 0.4% was expected. German Trade Balance at the same time appeared to be better than expected. Trade Balance proficit increased in April to €17.7 billion comparing to €15 billion in March and the forecast of €15.2 billion. Bundesbank increased the German GDP forecasts for 2014, but decreased Inflation Rate forecast. Vice President of the ECB Vitor Constancio announced that ECB still has additional tools of policy weakening in the form of rates decrease and asset purchase. The UK Trade Balance Deficit expanded in April to £9.6 billion comparing with £8.3 billion in March and the expectations at the level of £8.7 billion.

The Canadian dollar slightly decreased on Friday amid Unemployment Rate in Canada which appeared to be worse than expected. Unemployment Rate increased in May to 7% comparing to 6.9% in April, whereas no changes were expected. Employment Change in May increased by 25,800 which coincided with the forecasts – however the whole growth fell on Part Time Employment Change. Full Time Employment Change reduced in May by 29,100.

According еще the results of the week the US dollar demonstrated mixed dynamics vs. major currencies and for the second week has almost no changes to the dollar index. The US dollar decreased vs. the pound sterling, the Australian dollar, the Swiss franc, and the euro; but increased vs. the Canadian dollar, the yen, and the New Zealand dollar. Major European currencies stopped the decrease after ECB Meeting which took place the week before. The Canadian dollar which appeared to be under pressure last week before the BOC Meeting about rates decreased vs. the US dollar most of all.

During the second week of the month there will be not so much significant data released. On Tuesday in the USA JOLTS Job Openings, Wholesale Sales, and Wholesale Inventories will be released; on Wednesday - Federal Budget Balance; on Thursday – Retail Sales and Import Prices; on Friday – Producer Price Index and Preliminary UoM Consumer Sentiment.

On Thursday in the Euro-Zone Industrial Production and Monthly ECB’s Report will be released; and on Friday – Trade Balance and Quarterly Employment Level. On Friday in Germany Final Inflation Rate will be released as well. On Tuesday in France Industrial Production will be released; and on Thursday – Inflation Rate. On Tuesday in Italy Industrial Production and Final GDP for the first quarter will be released; and on Friday – Final Inflation Rate.

On Tuesday in the UK Industrial Production will be released, and on Wednesday – Employment Rate. Growth of Industrial Production and fall of Unemployment Rate is expected. On Monday in Japan Final GDP for the 1st quarter and Current Account will be released, on Wednesday – Quarterly BSI Manufacturing Index, on Thursday – Core Machinery Orders, and on Friday – Bank of Japan will announce the results of its 2 days Meeting.

On Tuesday in Australia NAB Business Confidence will be released, on Wednesday – Westpac Business Confidence, and on Thursday – Labor Market report. On Thursday the decision of the Reserve Bank of New Zealand about Official Cash Rate will be announced and Quarterly Press-Conference of RBNZ’s Governor Wheeler will also take place. Increase of Official Cash rate is expected. On Thursday in Canada New House Price Index is going to be released; on Friday – Manufacturing Sales. On Tuesday in China Inflation Rate will be released; and on Friday – Industrial Production, Retail Sales, and and Fixed Asset Investment.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 10/06/2014

Euro Continued Its Fall

On Monday 9 June the US dollar was traded mixed, having added 0.25% to the dollar index amid absence of any significant macro statistics in the USA and bank holidays in some countries of the Euro-Zone.

The US dollar increased vs. the yen and the Swiss franc, decreased vs. the Canadian dollar and the Australian dollar, and had hardly any changes vs. other major currencies. In Germany, France, and Switzerland there was a banking holiday on Monday. The markets continued to evaluate the US Non-Farm Payrolls released on Friday.

Conference Board Employment Trends Index increased in May to 118.58 from downwardly revised April reading of 117.32. The Index confirmed acceleration of Employment growth rate in the USA. FOMC Member James Bullard announced that FOMC is at the nearest stage of achieving target levels of inflation and employment than during these 5 years. Increase US 10-Years Treasury Yields from 2.59% to 2.61% positively affected the US dollar.

The euro considerably decrease, having again dropped lower than $1.36 amid unexpected drop of Euro-Zone Investor Confidence to the lowest rate for over 6 months despite new ECB measures for economy growth acceleration. Euro-Zone Sentix Investor Confidence sharply dropped in June to 8.5 p. comparing to 12.8 p. in May against the expectations of growth.

The index decreases for the second month in a row from 3-years high that have been reached in April. The decrease mainly occurs due to fall of Current Assessment, but 6-months Expectations also decreased. The pound sterling, on the contrary, had almost no changes according to the results of the day before the release of the data on Tuesday and Wednesday. On Tuesday the UK Industrial Output will be released.

The yen slightly strengthened its positions after the release of Japanese economy growth data which exceeded the expectations. Final Japanese GDP growth for the 1st quarter was revised upwards to 1.6% q/q against the preliminary evaluate of +1.5% and +0.2% in the previous quarter. This is the highest growth for over 2.5 years since the 3rd quarter of 2011. Consumer Sentiment in Japan rocketed to its high for over 4 months after 5 months of decrease. At the same time Japanese Current Account proficit in April increased less than it was expected.

After last optimistic economic reports, the forecasts and BOJ Governor Kuroda’s comments – market participants started to revise their expectations in relation to additional stimulation measures on the part of Bank of Japan. Reuters survey demonstrated that only 4 out of 35 interrogated analysts expect BOJ to interfere changes in their monetary policy at the July Meeting – it is considerably less comparing to the previous month.

The Canadian dollar increased vs. the US dollar amid positive Canadian Housing Market. Housing Starts increased in May by 0.8% in comparison with April – to 198,300 of houses, whereas decrease to 185,000 was expected. It has confirmed deceleration of the Canadian economy growth during recent several months which was due to weather, nit due to fundamental factors. Oil prices which reached the highs of the middle of April also positively influenced CAD.

The Australian dollar was traded upwards amid Chinese foreign commerce released on Sunday. Chinese Trade Balance proficit expanded in May to $35.9 billion in comparison with $18.5 billion in April and the forecast of $22.6 billion. Proficit appeared to be the highest for over more than 5 years. Export from China increased in May by 7% y/y, having exceeded the expectations, while import reduced by 1.6% in comparison with the same month the year before. Demand for AUD was also supported by “carry trade” - demand for high-yielding assets with “AAA” rating lead to capital inflow in Australia.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 11/06/2014

New Zealand Dollar Strengthened Its Positions Before RBNZ Meeting

On Tuesday 10 June the US dollar was traded mixed, having added 0.22% to the dollar index amid positive US data. The pound sterling and the Swiss franc decreased amid weak Retail Sales. The Australian dollar strengthened its positions amid stable Business Confidence in Australia.

The US dollar increased vs. major European currencies and the Canadian dollar, but decreased vs. the yen, the New Zealand dollar, and the Australian dollar. The US Labor Market continues to improve. JOLTS Job Openings according to Bureau of Labor Statistics increased in April to 4.46 million vs. 4.17 million in March, having reached the levels of late 2007 which were noticed before the start of recession. NFIB Small Business Index continued its growth for the 3rd month in a row and reached in May the highest rate since September 2007. The index increased to 96.6 p. in comparison with 95.2 p. in April, having exceeded the forecasts.

The US Wholesale Inventories notably increased in April, having exceeded the forecasts and strengthened possibility of economy growth acceleration in the 2nd quarter. Wholesale Inventories rose by 1.1% m/m after the similar growth in March, whereas growth by 0.6% was expected. Inventories are the key component of the GDP. In the 1st quarter GDP fell by 1% as Inventories Change decreased GDP by 1.6%. In the 2nd quarter it is expected that GDP growth will exceed 3% but Inventories growth in April may mark up the GDP growth estimate. Wholesale Trade Sales increased in April by 1.3% m/m, having exceeded the forecasts of growth by 0.9%.

The euro continued its decrease on Tuesday for the 3rd day in a row amid controversial Industrial Production which appeared to be worse than expected in France and better in Italy. Bank of France Business Sentiment dropped in May to 10-month low at the level of 97 p. from 98 p. in April, whereas no changes were expected.

ECB’s Liikanen announced on Tuesday that ECB intends to save highly soft monetary policy. ECB is ready to take further measures in order to deal with long period of low inflation which may negatively influence price stability and Euro-Zone economy growth. ECB’s Makuch stated that ECB still has field for further decrease of key interest rate to zero rate as in Czech Republic.

During the last few days after the decrease of rates the euro dropped to semiannual low vs. the Australian dollar. The euro matures into category of low-profit currencies that use carry trade as a tool of funding. Many financial institutions have to sell common currency as legislation doesn’t allow then possess assets with negative yield.

The pound sterling and the Swiss franc decreased amid weak Retail Sales. BRC Retail Sales Monitor increased in May by 0.5% y/y against the expectations of growth by 1.6%. The reading is used to be released a week before official Retail Sales report and lets to have common understanding about the trend. Official ONS Retail Sales report is going to be released on Thursday 19 June. The UK Industrial Production in April coincided with the expectations (+0.4% m/m) and did not lend support to the British currency. Retail Sales in Switzerland increased in April by 0.4% y/y, whereas growth by 2% was predicted before.

According to NIESR British economy of the recent three month demonstrated deceleration of growth rate to 0.9% comparing with 1.1% of the previous month. According to NIESR British economy reached the peak fixed before the financial crisis of 2008. British GDP in late May 2014 was higher by 0.2% than the pre-crisis peak. British economy strengthening will let the Bank of England to start increase of Base interest rate which is at the moment at record low of 0.5%. It is expected that BOE will start increase of rates in 2015.

The Australian dollar strengthened its positions to 4-week high vs. the US dollar amid stable business Confidence in Australia which stayed in May at April level (+7 p.). This positive result amid Consumer Confidence weakening in recent weeks after budget adoption for 2014-2015 foresees interference of new taxes and reduction of spending.

New Zealand dollar increased before RBNZ Meeting the results of which will be announced on Wednesday at 21:00 GMT. It is expected that base interest rate will be increased by 0.25% to 3.25%. NZD may get support in short-term if RBNZ will confirm its intension to increase interest rate in middle term. IMF announced on Tuesday that New Zealand economy growth becomes more and more large-scale.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 12/06/2014

The Pound Sterling Increased Amid Unemployment Rate


On Wednesday 11 June the US dollar was traded downwards vs. most major currencies amid absence of any significant macro statistics in the USA and the Euro-Zone. The pound sterling increased after release of positive UK Labor Market. The New Zealand dollar rocketed after RBNZ increased Official Cash Rate.

The US dollar decreased vs. most major currencies except for the euro and the Swiss franc, having almost no changes to the dollar index. The euro continued to stay under pressure on Wednesday falling to 4-days low vs. the US dollar. ECB’s Hansson announced that ECB should start technical preparation to QE – but it is early to speak whether there is strong necessity in further measures. ECB should be ready to QE; this option is still in ECB’s reserve for possible usage in future.

The pound sterling strengthened its positions after three days decrease amid positive UK Labor Market which demonstrated UK jobless rate fall to the lowest rate for more than 5 years since early 2009. Unemployment Rate and Claimant Count Change decreased more than it was expected; this fact reflects acceleration of economy recovery. ILO Unemployment Rate dropped in April to 6.6% from 6.8% in March, whereas decrease only to 6.7% was expected. Decrease of Unemployment Rat may force BOE to start increase of rates in the end of this year already.

Unemployment Rate decreased in May by 27,400, which appeared to be more than expected at the level of 25,000. The UK Employment Change rocketed in the three months through April by 345,000. At the same time – increase of people in employment appeared to be record high since 1971 when calculation of this reading in the country has started. Employment Change also refreshed historical high and reached 30.5 million. At the same time, Average Earnings Index in February-April decelerated to 0.7% from 1.9% the month before – this is the lowest growth rate for over almost a year.

The yen increased amid decrease of stock markets, which led to growth of demand for save heaven currency. Stock markets dropped after the decrease of world economy growth forecast by the World Bank. The previous forecast of 3.2% growth was reduced to 2.8%. Among key reasons of forecast decrease according to bank experts are abnormally cold winter in the USA and geopolitical conflict between Russia and Ukraine. Besides not very convincing Chinese economy growth rate this year also had influence to the revision.

The New Zealand dollar rocketed after RBNZ Official Cash Rate increase this year for the 3rd time in a row – from 3.00% to 3.25%. The decision coincided with the forecasts, but RBNZ Rate Statement pointed stronger inclination to policy tightening than it was expected. RBNZ signaled further increase of rate by 1.00% in nest 12 months, as the Central Bank presses for preventing Inflation pressure.

RBNZ’s Wheeler announced that New Zealand economy growth has considerable impulse and inflation pressure increases due to Construction Spending, Net stream increase, and high prices for New Zealand commodity export lend support for export income. New Zealand dollar is still high, but it will be possibly corrected amid lower commodity prices – Dairy prices decrease by 12% is expected next year. RBNZ expects decrease of New Zealand trade weighted index almost by 7% during next three years.

The Australian dollar was traded upwards before the release of Australian Labor Market. AUD was in demand on the part of pension funds and Japanese insurance companies, which strive to more “AAA” bond yield. Australian Consumer Confidence which increased after sharp decrease the month before also positively affected AUD. Released on Thursday Australian Labor Market data appeared to be mixed. Unemployment Rate in May had no changes (5.8%) against the expectations of growth to 5.9% - while Employment Change sharply reduced by 4,800, whereas growth by 10,000 was expected.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 13/06/2014

The US Dollar Dropped Amid Retail Sales


On Thursday 12 June the US dollar dropped vs. most major currencies, having lost 0.25% to the dollar index amid weak Labor Market and Retail Sales in the USA. The Australian dollar strengthened its positions amid Australian Labor Market report. The pound sterling spiked after BOE Governor Mark Carney’s announcement.

The US Initial Unemployment Claims last week increased by 4,000 to 317,000, whereas decrease of claims by 3,000 to 313,000 was expected. Previous week data was revised downwards from 312,000 to 313,000. Claims increase for the second week in a row. Four-Week Moving Average of Initial Claims increased by 4,750 – from 310,500 to 315,250. Four-Week Moving Average increased from the lowest rate for over 7 years for the first time after 4 weeks of decrease.

The US Retail Sales increased in May less than it was expected, and its growth rate decreases for two months already. Retail Sales increased in May by 0.3% m/m against the expectations of growth by 0.6%. The increase of sales was mainly due to increase of Motor Vehicle Sales by 1.4%. Retail Sales Ex Auto increased by 0.1% m/m, which appeared to be less than the expected forecast of +0.4%. At the same time previous month data was revised upwards. Retail Sales increased in April by 0.5% m/m, but not by 0.1% as it was reported earlier.

The US Business Inventories increased in April by 0.6% m/m – this is the highest growth rate for over 6 months and this fact supports the expectations of economy growth recovery in the 2nd quarter.

The euro descended to the weekly low vs. the US dollar, but strengthened its positions according to the results of the day amid weakness of the American currency. Euro-Zone Industrial Production appeared to be better than expected and demonstrated the highest monthly gain for over 5 months. Industrial Production increased in April by 0.8% in relation to the previous month having twice exceeded the forecast.

The pound sterling continued its growth on Thursday after positive UK Labor Market released on Wednesday. Housing Market also supported the pound sterling. RISC House Price Balance increased in May to 57% from 55% in April against the expectations of decrease. The pound sterling spiked at the end of the day after Bank of England Governor Mark Carney announced that interest rates in the UK could rise sooner than investors expect. To choose the moment of rates increase correctly Bank of England will precisely watch the Labor Market, and increase of interest rates will be gradual and limited.

The Australian dollar strengthened its positions to 2-month high vs. the US dollar after the release of Australian Labor Market. Unemployment Rate had no changes in May (5.8%) against the expectations of growth to 5.9%. Employment Change suddenly reduced by 4,800 whereas growth by 10,000 was expected. However, the reduction of employed mainly fell on Part Time Employment Change which reduced in May by 27,000.Full Time Employment Change increased by 22,200. Chinese Monetary & Financial Statistics also had positive effect. New Loans increased in May to 871 billion of yuans from 775 billion in April against the expectation of decrease.

New Zealand dollar demonstrated the highest growth on Thursday and rose to monthly high vs. the American currency after RBNZ Meeting during which the Central Bank of New Zealand increased Official Cash Rate for the third time in a row this year. RBNZ Rate Statement pointed more inclination to policy tightening than it was expected. The Canadian dollar strengthened its positions amid Oil Prices growth to 9-month high. Increase of Oil Prices triggered concerns about possible break of supply amid escalation of conflict in Iraq.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 17/06/2014

The Pound Sterling Reached $1.70


On Monday the US dollar was traded downwards vs. most major currencies, having lost 0.12% to the dollar index before the two-day FOMC Meeting which starts on Tuesday. IMF downwardly revised the forecasts of the US GDP for the current year.

The forecasts of the US GDP growth for 2014 were revised downwards by 0.8% to 2%. International Monetary Fund refers to severe winter, Housing Market problems, and weak international demand. The forecast of the US economy growth for 2015 was left without changes at the level of 3%. IMF stated that the US interest rates should stay near zero level even after the middle of 2015. Last week World Bank also decreased the forecasts of the US GDP growth for the current year from 2.8% to 2.1%.

Meanwhile, released on Monday US data were not bad. Industrial production in May exceeded the expectations (+0.5%) and increased by 0.6% m/m, previous month data was revised upwards from -0.6% to -0.3%. Capacity Utilization Rate increased by 0.2% to 79.1% from upwardly revised 78.9%, whereas no changes were expected.

Empire State Manufacturing Activity continued its growth in June and reached the highest rate for over 4 years. Empire State Manufacturing Index increased in June to 19.28 p. in comparison with 19.01 p. in May, whereas decreased to 15 p. was expected.

Constructors’ Confidence at the US Housing Market increased in June for the first time for over half a year. NAHB Housing Market Index rocketed in June by 4 p. to 49 p. from the lowest year’s reading of 45 p. in May, having exceeded the expectations of growth to 47 p. Historically low interest rates and more favorable Housing Market situation improve sentiment of potential customers.

The euro was traded upwards amid Bundesbank Monthly Report in June. Bundesbank predicts considerable German economy growth in the 3rd quarter. Among reasons of economy expansion are explosive growth of construction sphere and favorable consumer climate. According to Bundesbank, German GDP will increase in 2014 by 1.9%, and in 2015 -by 2%.

On Monday the pound sterling refreshed the year’s high and rose higher than $1.7 for the first time since August 2009 before the U.K. inflation rate which will be released on Tuesday. A slight deceleration of annual inflation growth rate is expected in May to 1.7%in comparison with 1.8% in the previous month. BOE’s Charles Bean announced that decrease of interest rates would be a sign to suggest that economy resumes its normal course. Bean noted that he estimates British economy’s prospects in a more optimistic way.

The New Zealand dollar was traded upwards amid New Zealand Institute of Economic Research (NZIER) forecast about New Zealand economy growth acceleration this year. Westpac Consumer Sentiment decreased in the 2nd quarter by 0.5 p. to 121.2 p., but it is still around 9-year high which was reached in the previous quarter.

The Australian dollar had almost no changes according to the results of the day amid RBA Assistant Governor Christopher Kent’s comments – he announced that according to recent forecast of the Central Bank – Unemployment Rate will stay high during two years and Employment Rate growth will be gradual.

The Canadian dollar strengthened its positions amid growth of Canadian Existing Home Sales in May at maximum rate for over 4 years (+5.9% m/m). Foreign portfolio investment in Canadian securities in April appeared to be the highest for over a year. The yen increased amid increase of tension in Iraq and decrease of Japanese stock market.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 18/06/2014

Australian Dollar Dropped Amid RBA Meeting Minutes Release

On Tuesday 17 June the US dollar strengthened its positions vs. most major currencies, having added 0.22% to the dollar index before the release of results of FOMC Meeting on Wednesday. The euro dropped amid decrease of German Economic Sentiment to 1.5 year low. The pound sterling decreased amid weak U.K. inflation rate.

The US dollar strengthened its positions amid strong U.S. Consumer Price Index which accelerated its growth and grew in May with the highest pace for over 15 months. Consumer Price Index (CPI) increased in May by 0.4% m/m, having twice exceeded the expectations of growth. Inflation Annual Growth Rate composed 2.1% - this is the highest growth rate since October 2012. Core Consumer Price Index Ex Food and Energy increased by 0.3% m/m and by 2% y/y, having exceeded the expectations.

10-Years U.S. Treasury Yield which rose from 2.60% to 2.66% also promoted the U.S. dollar strengthening. At the same time Housing Market data appeared to be worse than expected. Building Permits dropped in May by 6.4% to 0.99 million of houses against the expectations of decrease by 0.4%. Housing Starts dropped last month by 6.5% to 1.00 million of houses, whereas decrease by 2% was predicted.

The pound sterling decreased after 4 days of growth amid weak U.K. inflation rate which decelerated more than it was expected. Consumer Price Index Annual growth rate decreased in May to 1.5% in comparison with 1.8% in April, whereas decrease only to 1.7% was expected. This is the lowest CPI growth rate since October 2009. Deceleration of CPI in May was due to Food and Transportation prices fall. Retail Price Index and Producer Price Index also appeared to be worse than expected.

The euro dropped amid decrease of German Economic Sentiment to 18-month lows. German ZEW Economic Sentiment continued to decrease in June for the 6th month in a row against the expectations of growth. The index decreased to 29.8 p. in comparison with 33.1 p. in May. Business Confidence decreased in recent months due to concerns about the Ukrainian crisis, developing markets, and Chinese economy deceleration.

At the same time, German Current Assessment continued its growth in June for the 7th month in a row, having strengthened its positions to 67.7 p. against 62.1 p. in April. June reading of the index is the highest for over almost 3 years since July 2011. Euro-Zone ZEW Economic Sentiment stopped in June its 4-month decrease and rose to 58.4 p. in comparison with 55.2 p. in May.

On Tuesday the largest decrease was demonstrated by the Australian dollar which dropped to 7-day low vs. the U.S. dollar after the release of the last RBA Meeting Minutes in which the Central Bank confirmed that interest rates will stay at record low for some period of time. RBA expects for the growth of GDP lower than the trend during the next year. AUD course is high according to historical standards especially in terms of decrease of commodity prices – it lends less support to economy rebalancing.

The New Zealand dollar was also corrected downwards on Tuesday after considerable growth of the previous week. Meanwhile, GDT Price Index increased during the Tuesday GlobalDairyTrade auction for the first time since early February. During this period of time the Index decreased by 25%. The Swiss franc dropped amid decrease of forecasts of country’s GDP by the Swiss Government for 2014 and 2015 due to possible export deceleration.

By MasterForex Company

 

[MFX Broker]

Overview of the main economical events of the current day - 19/06/2014

The U.S. Dollar Dropped Amid FOMC Meeting Results

The U.S. dollar dropped on Wednesday 18 June vs. most major currencies, having lost 0.27% to the dollar index after the announcement of FOMC Meeting results.

The U.S. dollar was traded downwards and dropped during the press-conference of Fed’s Chair Janet Yellen who seemed to disenchant the U.S. dollar buyers. Yellen did not set time limits of possible increased of rates. As it was expected FOMC reduced QE3 for the 5th time in a row by another $10 billion to $35 billion.

FOMC sharply reduced the forecasts of the US economy growth for the current year, having left it without changes for 2015-2016. FOMC reduced the forecasts of Unemployment Rate for the nearest years. Inflation Rate forecasts were left without changes. Most of Fed’s officials expect the first increase of rates in 2015. In comparison with March forecasts a more sharp increase of rates in 2015 and 2016 is expected.

During the Press-Conference Fed’s Chair Janet Yellen announced that FOMC intends to maintain near zero rates during long period of time after Bond-Buying ends. Increase of rates has no fixed time. Fed Balance will stay large for some period of time. FOMC will continue discussions about normalization policy tools at future Meetings, but it is not a signal of imminent action.

Released on Wednesday data in the USA also appeared not to be dollar’s favor. The U.S. Current Account deficit expanded more than it was expected ($97 billion), having increased in the 1st quarter by 27% to $111.2 billion in comparison with $87.3 billion in the 4th quarter. The deficit appeared to be the largest for over 6 quarters which was due to export fall and decline in earnings.

The pound sterling decreased after the release of the last Bank of England Meeting Minutes, but then it negated all the losses, having even increased. Meeting Minutes signaled about possible but hardly probable increase of rates this year. Monetary Policy Committee Members were surprised but low probability attached by investors to 2014 Rate Move.

Most MPC Members agreed to see more evidence of reduction in slack before rate rise – MPC Members saw spare capacity in range of 1% to 1.5% of GDP. Premature rate rise could lead to considerable costs in lost output. Uncertainty over impact reinforces case for raising Bank Rate gradually and cautiously.

The New Zealand dollar was traded upwards before the release of New Zealand GDP for the 1st quarter. New Zealand Current Account Proficit of the 1st quarter reached 1.41 billion NZD in comparison with the deficit of 1.51 billion in the previous quarter, having exceeded the expectations. New Zealand GDP increased in the 1st quarter by 1% q/q against the forecast of +1.2%.

The Canadian dollar strengthened its positions amid Canadian Wholesales Sales growth at the highest rate for over 9 months. Wholesales Sales increased in April by 1.2% m/m having twice exceeded the expectations. The yen increased amid Japanese Trade Balance the deficit of which expended in May less than it was expected – to 0.91 trillion JPY in comparison with 0.81 trillion in April, whereas deficit at the level of 1.17 trillion was expected. The export dropped by 2.7% y/y, whereas import reduced by 3.6% y/y.

By MasterForex Company

 

[MFX Broker]

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

Australian Dollar Rockets

On Tuesday 1 July the US dollar decreased vs. most major currencies amid decrease of the US Manufacturing Activity. The pound sterling strengthened its positions amid growth of the UK Manufacturing Activity. The euro decreased amid weak Euro-Zone Manufacturing Activity and German Employment Rate.

ISM Manufacturing PMI suddenly dropped in June from semiannual high after 4 months of growth. The index decreased to 55.3 p. in comparison with 55.4 p. in May, whereas growth to 55.8 p. was expected. Backlog of Orders, Prices, and Supplier Deliveries decreased most of all. Import and New Orders increased. Growing demand for Motor Vehicles and Construction Supplies, stable Consumer Demand, low Inventories, and improvement of situation at foreign markets will stimulate the US economy growth in the 2nd quarter.

The rest US data released on Tuesday appeared to be worse than expected. Final Markit Manufacturing PMI in June was revised downwards to 57.3 p. in comparison with preliminary estimate of 57.5 p. and 56.4 p. in May. At the same time June reading of the index appeared to be the highest since May 2010. Construction Spending increased in May by 0.1% m/m against the expectations of growth by 0.5%. IBD/TIPP Economic Optimism dropped in July to 4-month low at the level of 45.6 from 47.7 in June against the forecasts of growth.

The euro was traded slightly downwards amid weak Euro-Zone Manufacturing Activity which dropped to 7-month low. German Manufacturing Activity dropped to 8-month low, in France – to6-month low, and in Italy – to 3-month low. Final Euro-Zone Manufacturing PMI decreased in June to 51.8 p. from 52.2 p. in May and appeared to be lower than preliminary estimate of 51.9 p. Final German and Italian data was also revised downwards.

German Unemployment Change increased in June by 9,000 against the expectations of decrease. German Unemployment growth continues for the second month in a row. German Unemployment Rate stayed unchanged at the level of 6.7%. At the same time, Euro-Zone Unemployment appeared to be better than expected. Euro-Zone Unemployment Rate stayed unchanged in May in comparison with downwardly revised April reading of 11.6%, whereas growth to 11.7% was expected. Italian Unemployment Rate increased in May to 12.6% from 12.5% in April, which coincided with the forecasts.

On Tuesday the pound sterling refreshed its high vs. the US dollar for over more than 5years amid growth of the UK Manufacturing Activity to the highest rate for over 7 months, which increased the prospects of interest rates increase till the beginning of 2015. Manufacturing PMI rose in June to 57.5 p. in comparison with 57 p. in May, whereas decrease of the index was expected. The UK Manufacturing sector continued its growth and saved leading positions from the point of contribution to the whole economy, finishing one of the best quarter for over 2 recent decades.

The largest growth on Tuesday was demonstrated by the Australian dollar after the announcement of RBA Meeting results where key interest rate was again left without changes for the 11th month in a row. But final RBA Rate Statement didn’t demonstrate inclination to soft policy which was expected by some market participants after Jun Meeting Minutes, the last weak Consumer Sector and Employment, and amid the growth of currency quotation as well. The last announcement was slightly different from the previous one. RBA pointed that currency quotation now provides less support for achievement of balanced economy growth than it might have done.

AUD was positively affected by the growth of Chinese Manufacturing Activity to 7-month high. NBS Manufacturing PMI increased in June to 51p. from 50.8 p. in May. NZD also strengthened its positions. Meanwhile, Dairy Prices Index refreshed its fall again on Tuesday at the last GlobalDairyTrade, having decreased by 5.4% to the reading of the previous auction and having reached the rate of early February.

The yen weakened after 4 days of strengthening amid growth of Japanese stock market. Though most of Tankan Large All Industry Capital Expenditure in Japan appeared to be worse than expected, and Business Climate dropped after recent increase of sales tax – large Japanese corporations are inclined to increase capital expenditure in the current financial year by 7.4% in comparison with 0.1%, which were expected in the 1st quarter. This is good news for the Bank of Japan, which hopes that corporate expenditure will help to compensate the fall of consumption.

By MasterForex Company