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185

Overview of the main economical events of the current day - 18/10/2013

The Agreement Is Reached but the Dollar Slumped

The US dollar slumped on Thursday having shown the lowest daily drop for a month after the American lawmakers approved a bill on Wednesday evening which recovered government work and increased national debt limit. Unemployment Claims also turned out worse than expected. The pound growth was supported by retail sales data which exceeded the forecast. Business Confidence rose in Australia and Consumer one – in New Zealand.

The US technical default was managed to be prevented but the attention of the markets is shifted towards the damage made by the shutdown and also towards the fact that the Fed will have to put off the start of QE3 tapering off for a later period. Government shutdown caused a serious damage to economy, said President Obama.

FOMC member Evans said on Thursday that the Federal Reserve would probably keep stimulating for some time considering the lack of macroeconomic data for the estimate of economic state. FOMC member Fisher said that the Fed was not likely to taper QE3 at the nearest meeting on October 29-30.

The leaders of BlackRock and PIMCO investment funds believe that the Federal Reserve could put off asset purchase reduction till June, 2014 to support the economy after the political crisis. The expenditure for the US government recovery may turn out higher than the losses caused by a temporary shutdown - say the analysts polled by Bloomberg.

According to the Standard and Poor’s, temporary government shutdown will lead to the US GDP decrease in the 4th quarter of this year by 0.6% and will cause serious negative consequences on consumer confidence. Bloomberg Consumer Sentiment fell to its low last week for almost two years. Americans became more pessimistic in estimating economic outlook amid aroused concerns that the political opposition could do harm to the economy.

China’s credit rating agency Dagong has downgraded the U.S. rating from A to A- with a negative forecast. Although this step is rather symbolic – they say that the Fitch is going to follow Dagong soon. At the same time Moody’s agency announced that the decrease of the US credit rating in the nearest 2 years was unlikely.

Meanwhile, Philadelphia Fed Manufacturing Index turned out slightly better than forecasted (15 p.) and dropped in October to 19.8 p. in comparison with 22.3 p. in September. At the same time the US Unemployment Claims fell less than expected last week – by 15 thousand to 358 thousand against the expected decrease to 335 thousand.

The euro reached 8.5-month high Vs the dollar and the pound – almost 2-week. The UK retail sales rose in September by 0.6% against the expected growth by 0.4%. At an annual rate retail sales rose by 2.2% last month in comparison with the growth by 2.1% in August and the forecast of +2.0%. Retail sales growth for the third quarter accounted for 1.5% q/q – it is the highest quarterly growth from the first quarter of 2008.

Retail Sales Change in the UK and the USA (m/m)

[B]Retail Sales Change in the UK and the USA (m/m)[/B]

Australian and New Zealand dollar continued growing and updated the heights of October on Thursday. NAB Quarterly Business Confidence rose to +3 in the third quarter compared with -1 in the second quarter – and reached the highest level for two years. ANZ Consumer Confidence Index rose by 2.9% in October to 122.3 p. in comparison with 118.8 p. in September. According to the Westpac report for the nearest 10 years on New Zealand economy, a stable growth will continue till 2015 and will start slowing down only in the second part of the decade.

By MasterForex Company

186

Overview of the main economical events of the current day - 21/10/2013

The Main Events of the Week

The US dollar almost didn’t change at the end of trade on Friday after a sharp decline on Thursday and amid lack of any significant macrostatistics. Canadian dollar had almost no reaction towards consumer price index data which in general coincided with the forecast. Australian dollar continued growing on the back of Chinese positive GDP and industrial output data. Chinese economic growth at an annual rate accelerated in the 3d quarter, which was recorded for the first time in three quarters.

Be the end of the week the dollar had lost 1.04% according to the dollar index amid the growth of expectations that the Fed would continue stimulus measures for a longer period of time after approving a temporary budget agreement in the USA. The highest growth Vs the dollar was shown by New Zealand dollar (+2.23%), Australian dollar (+2.20%) and British pound (+1.34%). After them go Swiss franc (+1.07%), euro (+1.06%), Japanese yen (+0.81%) and Canadian dollar (+0.62%).

On Wednesday the Congress and the White House came to an agreement which allowed to avoid the US debt default and recover government work after 16 days of shutdown. However, the problem is not solved and the crisis is just put off for three months. The agreement is valid only till January 15 and it means that the budget stalemate can happen in January again –when the debates about the budget and national debt limit increase return. Budget uncertainty will influence Fed decisions and it is unlikely to start QE tapering at October or even December meeting.

This week will be saturated. The US federal institutions started working from Thursday and this week some missed statistics data which haven’t been released for almost three weeks will be published. On Tuesday October, 22 there will be a release of Non-Farm Payrolls, on Wednesday – imports prices and on Thursday - JOLTS Job Openings. Missing Crude Oil Inventories for a week till October 11 will be published on Monday and Natural Gas Storage – on Tuesday.

Inflation data will be published in a week: PPI – on Tuesday, October 29, and CPI – on Wednesday, 30. Labour market report for October is likely to be released a week later – on November 8. The rest statistics data released on November also may be delayed.

Among the USA plan data - on Monday there will be a release of Existing Home Sales (a drop by 3.3% is expected – the lowest monthly decrease since June, 2012) and on Thursday - New Home Sales. On Tuesday - Richmond Manufacturing Index, on Wednesday - FHFA House Price Index, on Thursday - Flash Markit Manufacturing PMI and on Friday – Durable Goods Orders and Revised U. of Michigan Consumer Sentiment.

The main event in the euro-zone will be preliminary manufacturing and service PMI of France, Germany and the whole euro-zone which is released on Thursday; and also IFO Business Climate report on Friday. There is an expectation of index growth which will show euro-zone improving economic state. On Wednesday Flash Euro-Zone Consumer Confidence will be released, and on Friday – retail sales in Italy.

The main event in the UK will be a publication of preliminary GDP for the third quarter on Friday. It is expected that the economic growth rates have gathered pace in the third quarter to 0.8% q/q compared with 0.7% in the second quarter. On Tuesday state finance data will be released, on Wednesday – the Bank of England Meeting Minutes and BBA Mortgage Approvals; on Thursday - CBI Industrial Order Expectations; and on Friday - Index of Services.

Trade balance of Japan will be released on Monday and Consumer Price Index – on Friday. In Australia inflation report for the third quarter and CB Leading Index will be released on Wednesday. In New Zealand trade balance will be released on Wednesday. On Wednesday there will be announced a decision of the Bank of Canada on interest rate, there will be a release of BOC Monetary Policy Report and BOC Press Conference will be held. On Tuesday retail sales in Canada will be released. On Thursday there will be a release of HSBC Flash Manufacturing PMI.

By MasterForex Company

187

Overview of the main economical events of the current day - 22/10/2013

Dollar Stopped Falling Before Non-Farm Payrolls

The US dollar almost didn’t change at the end of trades on Monday according to the dollar index before the publication of important labour market data for September on Tuesday which can turn out good as it will reflect the period before the government shutdown. The dollar lost almost all its slight growth after the release of housing market data which turned out a little worse than forecasted. The yen fell amid weak trade balance data of Japan.

Non-Farm Payrolls which must have been released on October 4 will be published this Tuesday. The U.S. employment rate is expected to have risen by 180 thousand in September against 169 thousand prior month – and unemployment rate remained unchanged at 7.3%. Employment and unemployment growth rate is paid special attention as the Federal Reserve announced unemployment rate one of the Forward Guidance for monetary policy.

The US Existing Home Sales data for September are slightly worse than expected. According to the NAR – home sales decreased to 5.29 million at an annual rate against the forecasted decline to 5.30 million. However, prior month data were considerably revised for the worse – from 5.48 million to 5.39 million. Home sales dropped after reaching its height for four years.

FOMC member Charles Evans made speech on Monday supporting the continuation of monetary stimulation and repeated that the central bank would need at least a few months more to watch labour market data before taking decision on QE tapering. Evans said that a number of good labour market reports are required as well as confirmation of economic growth strengthening and a few months to estimate the trend. He marked that the Fed wouldn’t be able to make the decision on QE tapering in December confidently – amid the expectations of reviving debates on the US budget issues in January-February.

According to the economists polled by Bloomberg the decision on QE tapering from $85 billion to $70 billion will be made at Fed meeting only on March 18-19, 2014. By July, 2014 the Fed will have decreased asset purchases to $25 billion a month and will finish it in October. Besides, fiscal crisis in the USA will lead to economic growth rate decline in the current quarter by 0.3%.

Finance Minister Jacob Lew urged the members of the Congress to do everything possible to avoid another government shutdown and “almost default” situation. Meanwhile, according to The Wall Street Journal, frightening prospects of further reductions in the U.S. defense spending in the current fiscal year that began October 1, could push the Republicans and Democrats to a more rapid and efficient budget deal. However, the negotiations will be complicated due to political struggle before the elections to the Congress 2014.

The yen dropped on Monday against all major currencies after the release of trade balance which deficit decreased less than expected. Trade deficit fell to 932.1 billion yen in September from 962.8 billion in August – while a decrease to 918.6 billion was expected. Exports growth slowed down in September to 11.5% at an annual rate from 14.6% prior month, the imports grew from 16% to 16.5%. It is the 15th month in a row when the trade balance runs with deficit and it is the longest period of deficit since 1979. Extra pressure on the yen was put by the speech of the Bank of Japan governor Haruhiko Kuroda who promised to continue a soft monetary policy to reach a stable inflation. The Bank of Japan raised economic estimate of all nine regions of the country on Monday.

Germany Finance Ministry said on Monday that the country’s economy will continue to grow in the second half of the year thanks to a strong industry, a large amount of investment and private consumption. Optimistic outlook marks a good momentum of Europe’s largest economy, which grew by 0.7 % in the second quarter of this year. Last week the leading economic research institutes of the country reported that GDP growth this year will be 0.4 %, and next year it will increase to 1.8%. German government will publish a revised economic growth forecast on October 23.

According to analysts polled by Bloomberg, the chances of the euro to become an alternative to the dollar strengthened as the US budget crisis will probably occur every several months. On this background the situation in the euro-zone seems calm despite the problems of certain countries. This year the euro performs better among currencies of 10 developed countries. From the beginning of the year the euro rose by 5.8% to a basket of currencies of other nine developed countries, showing the best dynamics in the group while the dollar gained 1.5%. Before that the euro had been falling every year for four years: from 2009 to 2012 it dropped by 20%.

By MasterForex Company

188

Overview of the main economical events of the current day - 23/10/2013

Dollar Slumped after Weak Non-Farm Payrolls

The US dollar slumped on Tuesday Vs all major currencies after Non-Farm Payrolls for September turned out much worse than forecasted despite the fact that unemployment rate dropped. According to the statistics the US economic growth is not steady enough. Weak labour market data will not allow the Fed to start QE tapering at the nearest meetings.

According to the Labour Department Non-Farm Payrolls grew in September only by 148 thousand while growth by 180 thousand was forecasted. Unemployment rate decreased to 7.2% while the reading was forecasted to stay unchanged at 7.3% since August. Despite the revision of August Non-Farm Payrolls upwards – from 169 thousand to 193 thousand – general revision for two months amounted only to +9 thousand of new jobs. Average Hourly Earnings last month also grew less than expected – by 0.1% - while its growth by 0.2% was forecasted.

The US Unemployment Rate in September turned out lower than forecasted but Non-Farm Payrolls grew less than expected. The released data continued the trend of three recent months when unemployment rate is falling but Non-Farm Payrolls turn out lower than forecasted. Unemployment rate decrease is the result of a stronger growth of Non-Farm Payrolls in the first half of the year and also reflects work force retirement.

In the nearest months employment rate decrease can be expected due to a negative influence of government shutdown and worsening market conditions already marked in September, which will be in favor of keeping the US economic stimulus program. The Reuters spread the results of the poll of Primary Dealers; and 9 of 15 expect the start of QE tapering in March, 2014. JPMorgan and Goldman Sachs also moved the terms of QE3 tapering to the next spring. HSBC analysts estimate the chances of QE3 reduction in December at 50%.

The euro updated its annual height Vs the dollar on Tuesday and reached the highest level for almost two years. Swiss franc rose to 19-month height to the dollar, and the pound – to almost 3-week. The UK budget deficit reduction in September exceeded expectations due to tax revenues growth. Public Sector Net Borrowing ex Interventions – budget deficit indicator – amounted to 11.1 billion pounds sterling compared with 12.1 billion pounds for the same period last year. Economic data prove the UK economic recovery. Swiss Trade Surplus exceeded the forecast in September and amounted to 2.5 billion Swiss franc compared with the expected surplus of 2 billion Swiss franc.

Canadian dollar rose on Tuesday to 4-week high Vs the US dollar before the Bank of Canada decision on rate on Wednesday having almost no reaction to retail sales data. Retail sales grew by 0.2% in August Vs prior month while a growth by 0.3% was expected. Prior month data were also revised downwards. At the same time Retail Sales ex Autos grew by 0.4% having exceeded forecasted growth by 0.2%.

By MasterForex Company

189

Overview of the main economical events of the current day - 24/10/2013

On Wednesday China Was in the Spotlight

The US dollar rose on Wednesday to the pound and commodity currencies and almost didn’t change to the euro and weakened Vs the yen and Swiss franc. Risk inclination fell on Wednesday amid the reports about interest rates sharp increase in China and rising bad loans write-offs by Chinese banks – which aroused the growth of yen and franc and the decrease of risk-sensitive AUD and NZD. Canadian dollar dropped after a mild BOC Rate Statement in which it refused its inclination to raising interest rate.

On Wednesday compared with the prior day China was in the spotlight. Rates growth at the local interbank market turned out the highest since July and it was recorded as the People’s Bank of China didn’t start injecting funds into the market on Wednesday. Seven day Repo Rate in China which indicates the availability of funds in the bank system rocketed by 42 basis points – to 4%. The central bank of China is concerned about too fast growth of real estate prices in the country. Chinese banks also have problems. Five largest banks of China increased loan write-offs by 2.9 times in the first half of 2013 to 22.1 billion yuan ($3.65 billion) in comparison with 7.65 billion yuan last year.

Worsened liquidity situation which is the main growth driver of risk assets led to risk inclination decrease, stock markets fall and the growth of yen, franc and dollar. Japanese Nikkei fell by 2% and finished the session with a significant fall since October 2. The yen rose to its high for two weeks. New Zealand dollar dropped at the fastest rate for two months, Australian currency also weakened. Though at first AUD rose on Wednesday amid the news about higher than expected inflation rate in the third quarter. Consumer Price Index rose by 1.2% Vs prior quarter while a growth only by 0.8% was expected.

Canadian dollar fell to almost 2-week low Vs the dollar after BOC Rate Statement in which it refused an inclination to interest rate increase and lowered its forecast on GDP growth for the nearest several months. The Bank of Canada left its interest rate unchanged but marked economic slowdown. Bank of Canada governor Poloz said that more negative data would make them think again about the probability of rate decrease.

The euro almost hadn’t changed by the end of the day. Germany’s economics ministry raised its economic growth projection for 2014 to 1.7% from 1.6% referring to a high employment rate, strong home economy and investment growth. Euro-Zone Flash Consumer Confidence grew from -14.9 in September to -14.5 in October. The index has been at the highest level since July, 2011 for two months in a row. According to the monthly statement of the Bank of Spain economic growth has been recorded for the first time since 2-year recession. In the third quarter of 2013 Spanish GDP grew by 0.1% compared with the second quarter when its fall by 0.1% was recorded.

The Bank of England Meeting Minutes published on Wednesday showed that the central bank could start raising interest rates earlier than expected – after Monetary Policy Committee had admitted that unemployment rate in the UK would fall in the second half of the year faster than assumed. The economy will also grow in the second half of the year faster than expected. The data indicate a stable economic recovery of the UK. After the publication of meeting minutes the expectations that the UK central bank could raise interest rates much earlier than in 2016, strengthened.

By MasterForex Company

190

Overview of the main economical events of the current day - 25/10/2013

EURUSD Above 1.38 for the First Time for Almost Two Years

The US dollar was traded on Thursday slightly downwards against the euro and the pound; it almost didn’t change Vs the yen, Swiss franc and Australian dollar; and it rose against Canadian and New Zealand dollars. Unemployment claims and Manufacturing PMI in the USA turned out worse than expected. The euro and the pound rose despite the decrease of euro-zone PMI and Factory orders in the UK. Australian dollar was supported by Chinese Manufacturing PMI growth.

Unemployment claims in the US fell less than expected last week – by 12 thousand to 350 thousand against the expected decrease to 340 thousand. The indicator has been falling short of market expectations for three weeks in a row. An average number of claims for past four weeks rose to 348.25 thousand from 337.5 thousand. The U.S. Flash Markit Manufacturing PMI dropped more considerably in October than expected – from 52.8 p. in September to 51.1 p. against the expected decrease to 52.5 p. PMI growth rate in October turned out the weakest for the past year.

At the same time Trade balance and job openings in the USA turned out slightly better than forecasted. The US Trade deficit in August grew by 0.4% to $38.8 billion from $38.6 billion in July, which turned out a little better than expected deficit growth to $39.4 billion. The exports fell by 0.1% while imports remained almost unchanged. The US Job Openings rose considerably in August by 1.8% to 3.88 million in comparison with 3.81 million in July.

The euro again updated its annual height having hit 1.38 Vs dollar for the first time since November, 2011 despite some decrease of Purchasing Manager Indexes which are worse than expected – except German Manufacturing PMI. Euro-Zone Composite PMI fell to 51.5 p. in October from 2-year highest reading 52.2 p. prior month while index growth to 52.4 p. was expected. However, the index has been above 50 for four months in a row already, which indicates economic growth.

Spanish Unemployment Rate fell lower 26% for the first time in a year. Unemployment rate fell to 25.98% in the third quarter of this year from 26.26% in the second quarter. Unemployment decrease to 26.10% was forecasted. ECB’s Yves Mersch said on Thursday that another 3-year LTRO might not be necessary as the ECB soft monetary policy shows its effectiveness.

British pound recovered its losses at the end of the day which was after the release of weak CBI Industrial Order Expectations. CBI Industrial Order Expectations dropped to -4 in October against +9 in September. At the same time companies’ optimism increased reflecting economic recovery acceleration from the beginning of this year. Bank of England governor Mark Carney said on Thursday that the central bank would facilitate the provision of liquidity to banks if the financial system seemed unstable.

Australian dollar was supported by Chinese manufacturing PMI growth data. HSBC Flash Manufacturing PMI rose to 50.9 p. in October, the highest reading for past seven months against 50.2 p. in September – which says about the acceleration in manufacturing sector of the world’s second largest economy. The index is above important level of 50 p. for three months in a row. New Zealand dollar was traded downwards despite a significant trade deficit decrease. Canadian dollar also continued falling under the pressure of BoC Rate Statement published on Wednesday that the central bank refused its inclination to raise interest rate.

By MasterForex Company

191

Overview of the main economical events of the current day - 28/10/2013

The Main Events of This Week

The US dollar almost didn’t change by the end of Friday’s trade Vs the euro, pound and yen – and continued growing to commodity currencies. The US statistics released on Friday mostly turned out worse than expected. US consumer confidence dropped in October to 10-month low amid budget debates and government shutdown. Revised U. of Michigan Consumer Sentiment fell to 73.2 p. in October against the preliminary October reading of 75.2 p. and the final September reading of 77.5 p.

Durable Goods Orders in September exceeded expectations and grew by 3.7% while 2.3% was forecasted – but the growth exceeded mainly due to aircraft orders growth (+57.5%). Such orders are volatile and as a rule don’t reflect the demand in the US economy. The key demand indicator - Core Durable Goods Orders Ex Transportation – fell by 0.1% while a growth by 0.5% was forecasted; they have been falling for three months in a row.

The euro slowed down its growth on Friday amid Business Climate decrease in Germany in October from 1.5-year high – which happened for the first time in 5 months. German Ifo Business Climate fell to 107.4 p. in October while a growth to 108 p. was forecasted. The pound had almost no reaction to preliminary GDP for the third quarter which met the expectations. The UK GDP grew by 0.8% in the third quarter in comparison with the second quarter, and by 1.5% at an annual rate. Quarterly economic growth rate in the third quarter turned out the highest since the second quarter, 2010.

By the end of the week the dollar had lost a little more than 0.5% according to the dollar index having been under pressure after the U.S. labour market weak report. The US dollar dropped Vs the Swiss franc (-1.06%), euro (-0.91%) and Japanese yen (-0.37%); it almost didn’t change to the British pound – and rose Vs New Zealand dollar (+2.55%), Canadian dollar (+1.62%) and Australian dollar (+0.95%).

One of the most important events of the week may be FOMC meeting on October 29-30; its results will be announced on Wednesday. It is supposed that asset purchase as QE will be left unchanged – which was also favored by a weaker labour market report for September. October ADP Non-Farm Employment Change report will be released on Wednesday.

A lot of US important data will be published including delayed ones because of government shutdown. On Monday there will be a release of Industrial Output and Pending Home Sales data; on Tuesday - Producer Price Index, Retail Sales, S&P/Case-Shiller HPI and CB Consumer Confidence; on Wednesday - Consumer Price Index; on Thursday - Chicago PMI; and on Friday – ISM Manufacturing PMI. Non-Farm Payrolls will be released on November 8.

In the euro-zone Euro commission business confidence will be released on Wednesday; and on Thursday – unemployment rate and preliminary inflation data. Spanish preliminary GDP for the third quarter will be released on Wednesday. In Germany – labour market and inflation reports; and on Thursday - GfK German Consumer Climate and Retail Sales. European countries will shift to Daylight Saving Time on Sunday, October 27.

In the UK CBI Realized Sales report will be released on Monday; on Tuesday - BoE Monetary & Financial Statistics; on Thursday - GfK Consumer Confidence and Nationwide HPI; and on Friday - Manufacturing PMI. In Japan retail sales data and Household Spending will be published on Tuesday; on Wednesday – preliminary industrial output; and on Thursday - BoJ Interest Rate Decision, no changes are expected.

In Australia Building Approvals, Private Sector Credit, quarterly Import Prices report will be released on Thursday; and on Friday – quarterly report on Producer Price Index. RBA governor Glenn Stevens will make a speech at a conference in Sydney on Tuesday. On Thursday RBNZ Interest Rate Decision will be announced and also Building Consents and ANZ Business Confidence will be released. In China official Manufacturing PMI will be released on Friday. In Canada GDP will be published on Thursday.

By MasterForex Company

192

Overview of the main economical events of the current day - 29/10/2013

Dollar Grew Before the Start of 2-Day FOMC Meeting

The US dollar was traded upwards on Monday before 2-day FOMC meeting which starts on Tuesday amid inconsistent statistics. The US industrial output growth exceeded expectations – at the same time pending home sales dropped at the fastest rates for more than two years. The pound fell after a weak CBI Distributive Trades Survey.

The US industrial output in September rose by 0.6% compared with the prior month while a growth by 0.4% was forecasted. The indicator has been growing for two months already. The growth in September returned industrial output to its average of 2007 for the first time since recession. Capacity Utilization Rate increased to 78.3% in September, the highest level since this February – in comparison with 77.9% in August and the forecast of 78%.

Pending home sales declined for the fourth consecutive month in September due to higher mortgage interest rates, higher home prices and budget uncertainty. The Pending Home Sales Index fell by 5.6% in September to 101.6 from a downwardly revised 107.6 in August – which has become the lowest reading since December, 2012. At an annual rate the index fell by 1.2%, which became the first annual decrease for 29 months.

The pound fell after a weak CBI Distributive Trades Survey, the euro also slightly fell. According to the CBI, Realized Sales slumped unexpectedly in October from more than a year height 34 to 4-month low of 2 while a decrease only to 31 was expected. At the beginning of the day the pound rose after Hometrack Housing Prices which showed price growth in October for nine months in a row – by 0.5% at a monthly and by 3.1% at an annual rate.

Bank of England member Miles warned on Monday against premature interest rates increase having called it catastrophic despite recent signs of economic growth. Bank of England Meeting Minutes published last week raised expectations of an earlier start of interest rates increase than in 2016. BOE Chief Economist Spencer Dale also said that the Bank of England wouldn’t raise interest rates until unemployment rate fell significantly in the UK.

Meanwhile, Italian Business Confidence rose to its high in October for more than two years despite weak domestic demand. The index grew to 97.3 from 96.8 in September while index decrease to 96.3 was forecasted.

By MasterForex Company

193

Overview of the main economical events of the current day - 30/10/2013

Australian Dollar Fell After RBA Governor Stevens’ Speech

The US dollar grew on Tuesday Vs all major currencies amid 2-day FOMC meeting and bipolar US statistics. House prices rose more than expected but consumer confidence and retail sales in the USA decreased. Australian dollar dropped after RBA governor Glenn Stevens’ speech as he said that Australian dollar’s rate wasn’t supported by macroeconomic indicators.

On Tuesday 2-day FOMC meeting started and on Wednesday evening the central bank will announce monetary policy statement. In spite of the fact that the Fed is expected to keep its stimulus program unchanged the Fed can make a hint that it would start tapering this year in December already.

A positive moment was real estate price growth in American 20 largest cities - S&P/Case-Shiller Home Price Index grew by 12.8% in August at an annual rate in comparison with the expected growth by 12.5%. The indicator’s growth became the strongest since 2006. At the same time the US consumer confidence in October dropped to its low for half a year - CB Consumer Confidence fell to 71.2 p. against 80.2 p. in September while a decrease only to 75 p. was expected.

Retails sales fell by 0.1% in September while no changes were expected. However, the decrease occurred mainly due to auto sales fall by 2.2% - Retail Sales ex Autos rose by 0.4%, which met the expectations. September auto sales data could be distorted due to Labor Day celebration at the beginning of the month.

The euro rocketed after the speech of ECB member Nowotny but then slumped. Nowotny said that there were signs of euro-zone economic recovery and the ECB was unlikely to lower interest rates more. A negative deposit rate is unrealistic. And though the euro growth doesn’t make the central bank happy – it doesn’t require any correction from its side and, besides, the ECB doesn’t have funds to struggle with it. However, he added that the monetary policy should stay mild.

The pound also fell having ignored Mortgage Approvals growth in the UK up to the height since February, 2008. Mortgage Approvals rose to 66.7 thousand in September against 63.4 thousand in October while a growth only to 66 thousand was expected. The data indicate a further recovery at the housing market which is gathering pace. At the same time consumer lending data turned out worse than expected.

Australian dollar fell significantly on Tuesday having dropped to its low for more than two weeks against the US dollar after the speech of RBA governor Glenn Stevens who said that the Australian dollar wasn’t supported by macroeconomic indicators and probably would be considerably lower in future. This statement showed central bank’s concerns over the recent strengthening of Australian currency.

Canadian dollar continued falling. Raw Materials Price Index fell by 1.5% in September while its decrease only by 0.5% was expected. Besides, BoC governor Stephen Poloz in his speech on Tuesday again repeated his recent statement about the refusal of inclination to raise interest rates.

By MasterForex Company

194

Overview of the main economical events of the current day - 31/10/2013

FOMC Didn’t Bring Any Surprise but Dollar Rose

The US dollar rose on Wednesday after the results of FOMC meeting although it was traded downwards all day before it. No changes in the monetary policy were made and almost nothing changed in the final statement in comparison with the former meeting – though the Fed marked some improvement in American economic state. Probably the market participants expected a milder statement considering government shutdown earlier this month.

The voting was over with the result 9-1and the estimate of economic state was almost unchanged. High market rates were not mentioned in the statement but housing market slowdown was marked. Although the Fed marked that the US economic recovery was still unstable, it also said about economic activity growth and weakening downward risks. Besides, the Fed didn’t exclude the possibility of QE tapering this year already.

The Fed again kept a low profile concerning bond purchase program wishing to see more evidence of economic situation improvement. The last employment report again showed a disappointing Employment Change growth in September. ADP Non-Farm Employment Change for October released on Wednesday turned out worse than expected. ADP Employment Change rose only by 130 thousand although a growth by 150 thousand was expected. Prior month data were revised for the worse by 19 thousand to 145 thousand. The indicator has been falling for 4 months in a row.

The euro was traded upwards at the beginning of the day but then it fell. German labour market data met expectations on the whole. Unemployment rate in October stayed at 6.9% and German Unemployment Change grew by 2 thousand while no changes were expected. According to the Reuters, 44 of 59 economists believe that the ECB would announce a new program of long-term refinancing operations. They think that interest rates will stay unchanged till early 2015.

Euro-Zone Economic Sentiment Indicator in October rose to 97.8 compared with 96.9 in September showing the highest reading since August 2011. Spanish economy went out of 2-year recession – in the third quarter the GDP of Spain grew by 0.1% in comparison with the prior quarter, which coincided with the released estimate of the Bank of Spain last week.

New Zealand dollar rose after the decision of the Reserve Bank of New Zealand to keep the key interest rate unchanged. RBNZ governor Wheeler said that rate increase could be necessary next year considering high house price inflation. But the terms and the scale of rate increase will depend on the housing market situation. Wheeler said that despite a high rate of New Zealand dollar was still a problem, it allowed the central bank to show a high flexibility regarding further rates increase.

By MasterForex Company

195

Overview of the main economical events of the current day - 01/11/2013

EURUSD: the Lowest Decrease for Half a Year

The US dollar rose significantly on Thursday according to the dollar index amid Chicago PMI growth but it was traded differently Vs major currencies. The euro fell after the release of weak unemployment and inflation reports in the euro-zone; and retails sales and consumer confidence in Germany. Canadian dollar grew after the release of strong GDP of Canada that exceeded the forecasts. The pound and Australian dollar were supported by housing market data.

The dollar rose significantly against the euro and Swiss franc; it fell against Canadian dollar, yen and New Zealand dollar; and almost didn’t change Vs the pound and Australian dollar. The US Unemployment Claims last week almost met expectations having dropped by 10 thousand to 340 thousand while a decrease by 12 thousand to 338 thousand was forecasted. The reading has been falling for three weeks in a row. At the same time 4-week average of claims rose by 8 thousand to 356. 25 thousand and considerably exceeded the number of claims for the last week.

Chicago PMI rocketed in October despite the forecasts to 2.5-year high 65.9 p. in comparison with 55.7 p. in September while a decrease to 55 p. was expected. The number of employees and new orders rose significantly. Chicago PMI is released not long before ISM Manufacturing PMI and it can be used for its forecasting. ISM Manufacturing PMI will be released on Friday.

The euro showed the lowest decrease on Thursday Vs dollar for 6 months having dropped to 2-week low amid a large number of negative statistics. Euro-zone inflation slowed down in October to 0.7% at an annual rate compared with 1.1% in September and turned out the lowest since November, 2009. Unemployment rate in the euro-zone returned to its record readings in September at 12.2%, September data were revised for the worse from 12.0% to 12.2%. Italian Unemployment Rate grew to 12.5% in September against the expected growth to 12.3%.

German retail sales fell by 0.4% in September; a growth by the same 0.4% was expected. Prior month data were revised for the worse. GfK Consumer Climate fell unexpectedly for the first time in 10 months having dropped to 7.0 p. in November after having reached 6-year high 7.1 p. in October. Index growth to 7.2 p. was expected.

Weak inflation and employment reports increased expectations of new monetary policy easing measures from the ECB. The ECB member Nowotny said on Thursday that the ECB would provide liquidity to euro-zone banks to avoid a “cliff” effect when 3-year term of LTRO expired. JPMorgan and BNP expect ECB rate decrease by 0.25% in December. According to Morgan Stanley European banks will decrease its offshore assets to accelerate the process of paying back their loans in the ECB, which may lead to the growth of euro.

Unlike the euro the pound almost hadn’t changed by the end of the day – it was supported by housing market data. Nationwide House Prices in the UK rose by 1% m/m in October having exceeded forecasted growth by 0.7%. At the same time UK consumer confidence fell in October after five months of growth. GfK Consumer Confidence fell to minus 11 p. in October from minus 10 p. in September when it was the highest for 5 years.

The yen rose insignificantly after a few days of fall amid the finished meeting of the Bank of Japan where monetary policy was kept unchanged. The Bank of Japan announced that it followed a positive forecast for inflation signaling that the probability of new monetary policy measures is low in the nearest time. Canadian dollar grew after the release of strong Canadian economic growth data. The GDP grew in August by 0.3% m/m having exceeded the forecasted growth by 0.1 three times.

The Australian dollar grew on the back of housing market positive statistics but then it lost all its growth. Building Approvals in September rose by 14.4% in comparison with August, which became the largest growth for more than a year. Exports and imports price growth also exceeded expectations. New Zealand dollar was traded upwards after RBNZ signaled about keeping the inclination to tough policy.

By MasterForex Company

196

Overview of the main economical events of the current day - 04/11/2013

The Main Events of the Week

The US dollar continued growing on Friday Vs most major currencies amid manufacturing PMI growth which is still at 2.5-years high. The pound fell after weak UK manufacturing PMI that didn’t meet the expectations. The euro continued falling amid the expectations of a possible rate decrease at the next several ECB meetings after the release of previously weak inflation data.

ISM Manufacturing PMI in the USA rose to 56.4 p. in October in comparison with 56.2 p. prior month while index decrease to 55 p. was expected. The growth happened mainly due to new export orders, prices and employment; while production, inventories and supplies dropped. The Final Markit Manufacturing PMI also fell in October less than forecasted to 51.8 p. while initially a decrease to 51.1 p. from 52.8 p. in September was reported.

[B]U.S. ISM Manufacturing and Non-Manufacturing PMI[/B]

By the end of the week the dollar grew almost by 2% according to the dollar index and showed the highest weekly growth for more than 4 months. Most of all it grew against the euro (+2.29%), Swiss franc (+2.18%), Australian dollar (+1.50%), British pound (+1.49%) and Japanese yen (+1.29%). The US dollar rose insignificantly only to New Zealand dollar (+0.16%) and fell only against the Canadian dollar (-0.25%).

The euro showed the lowest decrease to the dollar in points for almost 1.5 year. After euro-zone weak inflation data the expectations of possible rate decrease at the next several ECB meetings rose at the market; although nobody expects it at the nearest meeting on November 7. However, market participants will be very attentive to the ECB governor Mario Draghi’s press conference which will take place after the meeting on Thursday.

The dollar was supported after the Fed had slightly improved its estimate of American economy at the last meeting, which was proved by PMI of Chicago and of all country. According to the Bloomberg, economists worsened the forecast of the US GDP growth for the 4th quarter to 2% from 2.4% three weeks earlier because of the government shutdown for16 days in October. Besides, growth estimate for the 1st quarter of 2014 didn’t change (+2.6%).

GDP first release for the third quarter will be released on Thursday, November 7, with 8 days delay. Meanwhile, most leading banks didn’t change its forecasts on QE3 tapering and continue expecting it only next March-April. The Fed member Bullard announced on Friday that the situation at the labour market had a key value and if it continued improving, the central bank would be able to start QE reduction.

A very important event of this week will be Friday release of Non-Farm Payrolls for October. About 125-130 thousand new jobs and unemployment rate growth by 0.1% to 7.3% are expected. The data must show how the government shutdown influenced economic situation in the country. ADP data for October which are usually considered preliminary - indicated ADP Employment Change decrease to 130 thousand.

In the USA on Monday there will be a release of Factory Orders for August and September, on Tuesday - ISM Non-Manufacturing PMI; and on Friday – Personal Income and Spending and Preliminary U. of Michigan Consumer Sentiment. The USA and Canada shifted to Daylight Saving Time on Sunday, November 3.

In the euro-zone there will be a release of Manufacturing PMI on Monday and non-Manufacturing PMI – on Wednesday; on Tuesday – Producer Prices and on Wednesday – Retail Sales. In Germany Factory Orders will be released on Wednesday, on Thursday – Industrial Output and on Friday – Trade Balance. In France Industrial Output and Trade Balance will released on Friday.

The Bank of England will publish the results of its monthly meeting on Thursday; no changes in the policy are expected. In the UK construction PMI will be released on Monday, on Tuesday – Service PMI, on Wednesday – industrial output and on Friday – Trade Balance. The Bank of Japan will publish on Wednesday Meeting Minutes of October 3-4; and the BoJ governor will make a speech in Osaka and will hold a press conference.

In Australia retail sales will be released on Monday, on Wednesday – trade balance, on Thursday – labour market report and on Friday - RBA Monetary Policy Statement. Australian Reserve Bank meeting is traditionally held on the first Tuesday of the month and no changes in the policy are expected. New Zealand Employment Change will be released on Wednesday.

In Canada Building Permits and Ivey PMI will be released on Wednesday; and on Friday – labour market report. In China a large block of statistics will be released at the end of the week: trade balance – on Friday; and on Saturday – inflation, industrial output, retail sales and new loans.

By MasterForex Company

197

Overview of the main economical events of the current day - 05/11/2013

ECB Rate Decrease Is Possible but Unlikely

The US dollar was traded slightly downwards on Monday against most major currencies having been corrected after five days of growth. The US Factory Orders turned out slightly worse than expected. The pound rose amid the UK construction PMI increase which is at 6-year high. The euro also slightly strengthened on the back of a small growth of euro-zone manufacturing PMI. The Australian dollar grew after the positive statistics on Chinese Service PMI growth and Australian retail sales.

On Monday the US Factory Orders for two months were released. Factory Orders fell by 0.1% in August, which turned out worse than expected growth by 0.3%. Factory Orders in September rose by 1.7% after two months of decrease – which met the forecasts (+1.8%). However, the growth was mainly due to aircraft orders growth – Factory Orders ex Transportation fell by 0.2% in September. Capital Goods Orders that include machinery and electronics fell by 1.3%.

Fed member Bullard said that the probability of QE tapering in December still existed – at the same time inflation was too low for it. Meanwhile, Standard & Poor’s lowered the U.S. GDP growth forecast in the 4th quarter from 1.7% to 1.6% at an annual rate.

The pound was traded slightly upwards after the release of data that showed UK Construction PMI growth which is at 6-year high. The UK Construction PMI rose to 59.4 p. in October against 58.9 p. in September – while its decrease was expected. Construction continues growing in the UK but the sector accounts only for 6.3% of all economy.

The euro fell to its low for almost 7 weeks to the dollar but then recovered its losses and even strengthened a little by the end of the day amid euro-zone manufacturing PMI slight growth. Euro-zone Manufacturing PMI rose to 51.3 p. in October from 51.1 p. in September, which coincided with the preliminary estimates. German data turned out better than expected while the data of France and Italy were a little worse.

Sentix Investor Confidence exceeded expectations (6.2) and rose up to 9.3 in November compared with 6.1 in October still being at 2.5-year high. Meanwhile, rate decrease expectations are growing at the market and more banks forecast its decrease already this week. These are Bank of America, UBS and Royal Bank of Scotland. Surely, ECB rate decrease in November is possible but still is unlikely.

[B]Retail Sales Change (m/m) in Australia and the USA[/B]

Australian dollar rose after the release of retail sales strong data which showed a fast monthly growth for past seven months. Retail sales rose by 0.8% in September Vs prior month while a growth only by 0.4% was expected. AUD was also supported by Chinese Services PMI growth. Chinese Non-Manufacturing PMI released on Sunday grew to its high for 16 months 56.3 p. in October.

By MasterForex Company

198

Overview of the main economical events of the current day - 06/11/2013

UK Services PMI Reached 16-Year High

The US dollar was traded differently on Tuesday amid Services PMI growth – it grew against the euro, Swiss franc and Canadian dollar; weakened Vs the pound and New Zealand dollar; almost didn’t change Vs yen and Australian dollar. The pound strengthened on the back of Services PMI growth up to 16-year high, the euro weakened amid negative statistics. Australian dollar fell after RBA said a lower exchange rate will likely be needed to rebalance the mining-dependent economy but then it recovered its losses. New Zealand dollar continued getting support from RBNZ statement about keeping its inclination to tough policy.

The dollar strengthened after ISM data that showed Non-Manufacturing PMI growth. ISM Non-Manufacturing PMI rose to 55.4 p. in October from 54.4 p. in September while its decrease was expected. Most of all grew Employment Index, Business Activity Index and Imports – while new orders and prices fell. The data show that the government shutdown didn’t have so strong influence on economy. IBD/TIPP Economic Optimism also grew in November to 41.4 p. compared with 38.4 p. in September having exceeded the expected growth.

[B]ISM Non-Manufacturing PMI, Employment Index and Business Activity Index[/B]

The pound rose considerably amid UK Services PMI growth that reached the highest level since May, 1997 – which is a sign of strengthened economic recovery at the beginning of the 4th quarter. Services PMI rose to 62.5 p. in October from 60.3 p. in September while its decrease was expected. According to preliminary data GDP for the third quarter will show the highest growth rate for three years. Economic growth has been going on since January.

European commission raised its forecast of British GDP for the current year up to 1.3% from 0.6%, for the next year – to 2.2% from 1.7%. CBI that represents the interests of 240 thousand British enterprises improved the forecasts for British economy in 2013 to 1.4% against prior forecast +1.2%. Growth forecasts for the nearest two years are also raised. Recovery which started in service sector spread to industrial production and construction and looks larger – said CBI CEO.

The euro was traded downwards. Euro-zone Producer Price Index at an annual rate showed the fastest decrease rate in September since January, 2010. Producer Price Index fell by 0.9% compared with the same month last year while a decrease by 0.8% was forecasted. Spanish Unemployment Change increased by 87 thousand in October in comparison with the prior month having exceeded the expectations of growth by 31 thousand. The euro was negatively affected by European commission GDP growth estimate in 2014 that worsened to 1.1% from 1.2% and also increase of unemployment forecast to 12.2% from 12.1%. The forecast for 2013 about the economic decrease by 0.4% and unemployment rate of 12.2% stayed unchanged.

Australian dollar fell after the meeting of the Reserve Bank of Australia where the rate was kept unchanged as assumed. However, RBA governor Glenn Stevens said that Australian currency rate was still uncomfortably high and a lower level of AUD rate is likely to be needed to achieve balanced growth in the economy. The economy is likely to stay below trend and unemployment rate will rise – said Stevens.

Despite strengthened consumer and business confidence, consumer spending of Australia is still moderate and labour market is weak. However, RBA statement about a high rate of the national currency didn’t impress significantly market participants and AUD recovered all its losses. Amid improving Asian data and coming end of the year – reduction of short positions can help AUD to continue recovering.

By MasterForex Company

199

Overview of the main economical events of the current day - 07/11/2013

Dollar Started Weakening Anticipating GDP and U.S. Non-Farm Payrolls

The US dollar was traded downwards on Wednesday Vs most major currencies except yen – in anticipation of statistics on the US economic state. The pound grew on the back of the UK positive industrial output data; and the euro – amid euro-zone Final Services PMI and German Factory Orders. New Zealand dollar continued growing amid a positive labour market report and Australian dollar strengthened after trade balance data. Canadian dollar rose amid PMI growth and the yen weakened amid Japanese stock market growth.

Later this week there will be a publication of important statistics data on the US economic state: on Thursday GDP for the third quarter will be released (a growth by 2% after 2.5% growth in the second quarter is expected), and on Friday – Employment Change growth for October (+125 thousand are expected) and Unemployment rate (a growth by 0.1% to 7.3% is expected). On Wednesday there were no significant statistics data. CB Leading Index grew by 0.7% in September having exceeded the expectations a little.

The euro rose on Wednesday amid positive statistics. Final Services PMI amounted to 51.6 p. in October having exceeded preliminary estimates of 50.9 p. though it turned out lower than 52.2 p. in September. In Spain, France and Germany the index turned out better than expected – and only in Italy it turned out worse than forecasted. Final PMI Composite reached 51.9 p. in October also having exceeded preliminary estimates. German Factory Orders rose by 3.3% m/m in September exceeding the expected growth by 0.5% considerably. At the same time euro-zone retail sales for September fell more than forecasted – by 0.6% while a decrease by 0.4% was expected.

The pound continued rising on the back of UK industrial output which grew more than forecasted in September. Industrial output grew by 0.9% Vs prior month and manufacturing industry – by 1.2% having exceeded expected growth by 0.6% and 1.1% respectively. The UK housing prices growth, according to Halifax, grew by 0.7% in October, with annual growth 8.1%.

New Zealand dollar rose on Wednesday almost to 2-week high Vs dollar after the release of New Zealand labour market strong data. Employment Change in the third quarter rose by 1.2% in comparison with the prior quarter having significantly exceeded expected growth by 0.5%. Employment change growth has been going on for three quarters. Unemployment rate decreased to 6.2% Vs 6.4% prior quarter. Participation Rate increased to 68.6% against 68.1% in the second quarter.

Australian dollar also strengthened after Australian trade balance release. Trade deficit decreased to 284 million AUD in September while a large deficit of 500 million was expected. Canadian dollar rose amid PMI growth to 5-month high. In Canada Ivey PMI rose to 62.8 p. in October Vs expected growth only to 52 p. At the same time Building Permits in Canada grew less than expected.

By MasterForex Company

200

Overview of the main economical events of the current day - 08/11/2013

ECB Unexpectedly Lowered Key Interest Rate

The US dollar rose on Thursday Vs most major currencies except yen – after the release of stronger than expected GDP growth data. The euro dropped after the ECB had lowered key interest rate unexpectedly. The pound had almost no reaction to the Bank of England meeting results where the policy was kept unchanged. Australian dollar fell after a weak labour market report. The yen grew amid a considerable stock market fall.

Advance GDP for the third quarter showed that the US Gross Domestic Product (Annualized) accelerated to 2.8% from 2.5% in the second quarter – while a growth only to 2% was expected. The main growth factor was a change in private inventories which increase added 0.8% to GDP growth. At the same time Personal Consumption and companies’ investment slowed down. Personal Consumption which accounts for 70% of GDP grew by 1.5% having shown the smallest growth since 2011. Goldman Sachs decreased its forecast on the US GDP growth in the fourth quarter from 2.0% to 1.5%.

The euro slumped almost to 8-week low Vs dollar after a sudden decision of the ECB to lower the key interest rate by 0.25% to the record low of 0.25%. This decision was forecasted by only three of 70 economists polled by Bloomberg. ECB governor Mario Draghi expressed concerns during a press conference that low inflation in the currency block would be kept for a long period and again confirmed a promise made earlier to keep key interest rate at a low level.

Draghi said that interest rates may be lowered in future and the ECB technically is ready to lower deposit rate which is at zero level now in spite of the fact that the central bank didn’t change the rate on Thursday. German data also turned out worse than expected – industrial output fell by 0.9% in September while no changes were expected. At the end of the day the euro partially recovered its losses.

The pound had almost no reaction to the BoE meeting results, where the policy was kept unchanged, and by the end of the day it almost hadn’t changed. Next week on Wednesday Bank of England governor Carney will introduce BOE Inflation Report. The yen fell to 1.5-month low Vs the dollar but then rose amid a considerable decrease of stock markets. S&P 500 showed the lowest decrease for 2 months.

Australian dollar fell after a weak labour market report. According to Australian Bureau of Statistics, Employment Change rose by 1.1 thousand in October which turned out significantly less than the expected growth by 10 thousand. The growth was caused mainly by Part Time Employment Change – while Full Time Employment Change decreased by 27.9 thousand. Unemployment rate in October stayed at the revised upwards September level 5.7%. At the same time AIG Construction Index in October rose higher 50 – up to 54.4 for the first time in three years.

By MasterForex Company

201

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

The Main Events of the Week

The US dollar rose on Friday against all major currencies after positive Non-Farm Payrolls that showed acceleration of new jobs creation in October. According to the Labor Department Non-Farm Employment Change grew by 204 thousand while a growth only by 125 thousand was forecasted. The data showed that government shutdown in October didn’t influence the economy, which raised the probability of an earlier QE tapering.

Besides, two prior months data were revised upwards – total revision was +60 thousand. An average employment growth for the last three months is more than 200 thousand now corresponding to a strong growth of the beginning of this year. Unemployment rate grew up to 7.3% from September level 7.2% as expected. At the same time the US preliminary consumer sentiment fell in November to its low of 72 p. for almost 2 years from 73.2 p. prior month while its growth was expected.

By the end of the week the dollar had risen by 0.55% according to the dollar index showing a growth for two weeks and getting support after US strong GDP and Non-Farm Payrolls data. Most of all the dollar rose against the Swiss franc (+1.11%) and euro (+0.93%) amid unexpected ECB rate decrease. A smaller growth was shown Vs Australian dollar (+0.61%), Canadian dollar (+0.57%), Japanese yen (+0.48%) and New Zealand dollar (+0.25%). The dollar fell only against the British pound (-0.55%).

Monday is a day-off in the USA and Canada. On Tuesday Chicago Fed National Activity Index will be released. On Wednesday - Federal Budget Balance, on Thursday – Trade Balance and on Friday - Empire State Manufacturing Index, import prices and industrial output. On Thursday Fed governor Bernanke will make a speech about 100-anniversary of the Fed and there will be a hearing on the nomination of Janet Yellen for Federal Reserve chair. From Tuesday to Thursday the U.S. Treasury Department will sell long-term bonds and at the end of the week earnings season of American companies for the third quarter will be over.

The main event of the week in the euro-zone may be publication of preliminary GDP for the third quarter of major countries and the whole euro-zone on Thursday. Euro-zone economic growth is expected to continue at a slower rate than in the second quarter and will account for 0.1% q/q. The growth is likely to slow down significantly in Germany and France – Spain, on the contrary, will return to a moderate growth. On Wednesday in the euro-zone there will be industrial output data and on Friday – the Final Consumer Price Index.

In the UK there will be a release of Producer and Consumer Price Index, and on Thursday – Retail Sales. But the most important day may be Wednesday when a labour market report will be released and a little later the BoE will publish Inflation Report, and BoE governor will make a speech about new forecasts on unemployment, GDP and inflation. The labour market report is expected to show unemployment decrease, which may strengthen the expectations of an earlier rate increase by the Bank of England.

In Australia there will be a release of NAB Business Confidence and on Wednesday - Westpac Consumer Sentiment. In New Zealand on Wednesday RBNZ Financial Stability Report will be released and RBNZ governor Wheeler will make a speech before the Parliament; on Thursday there will be a retail sales report. Japanese GDP preliminary data for the third quarter will be published on Thursday. In Canada Trade Balance and New Housing Prices will be released on Thursday and on Friday - Manufacturing Sales.

By MasterForex Company

202

Overview of the main economical events of the current day - 12/11/2013

The Week Started Quietly: Euro Is Recovering

The US dollar fell against the euro and changed a little Vs other currencies at low-active trading on Monday amid no significant macrostatistics and day-offs in the USA, Canada and France. The U.S. state institutions were closed due to Veterans Day, debt market didn’t work but the trades at the stock market were held.

The euro rose Vs dollar on Monday partially recovering its losses after last week’s two-day significant fall which was caused by ECB rate decrease and strong U.S. Non-Farm Payrolls. On Sunday evening the coalition government of Greece managed to get the support of Parliament despite a vote of no confidence from the main opposition party.

Italian industrial output rose by 0.2% in September against prior month while a growth by 0.3% was expected. At the same time industrial output fell less than expected at an annual rate – by 3% while a drop by 3.6% was forecasted.

Australian dollar was traded downwards amid New Yuan Loans decrease. Chinese banks approved loans of 506 billion Yuan in October Vs 787 billion Yuan in September, which turned out less than expected 580 billion. October reading became the lowest for the whole current year. Chinese central bank took a tough line to restrain a quick lending growth and rising inflation.

At the same time Australian Home Loans in September rose more than expected – by 4.4% m/m while a growth by 3.5% was forecasted. On Friday Bank of Australia lowered its economic growth forecasts and left an opportunity for further interest rates decrease.

Chinese statistics released last Saturday showed that industrial output grew by 10.3% in October Vs last year, which is slightly more than 10.2% in September and higher than expected 10%. Chinese inflation accelerated last month up to 3.2% at an annual rate – the highest level for 8 months.

At the same time inflation turned out less than expected 3.2% and still is lower the target level of 3.5% fixed by Chinese Communist party for the current year – which lowers the probability of financial conditions tightening in China. On Tuesday the four-day Third Plenary Session of the 18th Congress of the Communist Party of China (CPC) Central Committee will be over and economic stimulus plan is expected to be prepared.

New Zealand dollar almost didn’t change on Monday amid positive statistics. Electronic Card Retail Sales in New Zealand grew by 1.4% in October having exceeded expected growth by 1.3%. At an annual rate the growth accounted for 7%. Finance Minister of New Zealand said that a good momentum is generated in the economy and New Zealand is on the way to budget surplus in 2014-15 fiscal year.

By MasterForex Company

203

Overview of the main economical events of the current day - 13/11/2013

The Pound Dropped After a Weak CPI

The US dollar grew on Tuesday Vs most major currencies but fell Vs the euro which continued recovering. The pound fell after a weak CPI. Australian dollar continued falling amid Australian Business Confidence decrease. Japanese yen weakened amid Japanese stock market growth.

Chicago Fed National Activity Index rose in September slightly less than expected – to 0.14 p. against expected growth to 0.15 p. NFIB Small Business Index fell from 93.3 p. in October to 91.6 p., the lowest reading for 7 months. Meanwhile, FOMC member Lockhart said on Tuesday that QE tapering was quite possible to start in December.

The euro continued growing for the second day. German Consumer Price Index dropped in October to the lowest level since April having confirmed preliminary estimates. ECB member Asmussen said on Tuesday that further actions towards interest rates were possible and they would depend on inflation – and he didn’t exclude the probability of deposit rate decrease that is at zero level now.

The pound dropped to 2-month low Vs the dollar after a weak CPI which annual rates reached almost 4-year low but then the pound recovered some losses. Annualized inflation slowed down in October to 2.2% from 2.7% on September – while its growth by 2.5% was expected. Core inflation grew by 1.7% against expected growth by 2%. Retail price inflation decreased to 2.6% y/y from 3.2% in September. RICS House Price Balance grew to 57 in October, the highest level since June, 2002 but turned out slightly worse than expected.

According to BNP Paribas a sharp fall of the pound after the publication of inflation data is a possibility to buy this currency before the release of BoE Inflation Report on Wednesday. This report may indicate some inclination of the central bank to tough monetary policy. The most important part of the report will be possible terms of reaching unemployment threshold of 7% which may be revised from the second quarter of 2016 to the fourth quarter of 2015.

Japanese yen fell to 2-month low Vs dollar amid Japanese stock market growth. Nikkei 225 rocketed by 2.2% up to almost 2-week high. Australian dollar continued falling amid Australian Business Confidence fall. NAB Business Confidence decreased from 2.5-year high of +12 points in September to +5 in October. NAB Business Conditions didn’t change in October but stayed at low -4 p.

New Zealand dollar fell after RBNZ Financial Stability Report. RBNZ governor Wheeler said that misbalances of housing market are the main threat for the financial system. The terms and volumes of interest rates increase are not determined and NZD rate is still overvalued.

By MasterForex Company

204

Overview of the main economical events of the current day - 14/11/2013

The Pound Was in the Center of Attention on Wednesday

The dollar fell on Wednesday Vs most major currencies amid no significant macrostatistics in the USA and before Fed Chairperson-Designate Yellen testifies on monetary policy before the Senate Banking Committee on Thursday. But the spotlight of Wednesday was the pound due to labour market and inflation report. The euro continued growing for the third day despite weak industrial output data in the euro-zone. Australian dollar grew after four days of decrease amid consumer confidence growth.

The dollar dropped even more at the end of the day after the publication of Yellen’s speech before the Senate. Janet Yellen made it clear that the Fed must support the economy by stimulus measures. Economic recovery support today is the best way for the Fed to return to normal policy and the Fed has a lot of to do to strengthen financial system – she said.

The pound grew considerably on Wednesday after the publication of positive unemployment forecast and following BOE Inflation Report. Claimant Count Change fell by 41.7 thousand in October although its decrease only by 30 thousand was expected. ILO Unemployment Rate fell from 7.7% in August to 7.6% in September, the lowest reading for more than four years. Claimant Count Rate in October fell to its low 3.9% since January 2009 compared with 4% in September.

In its Inflation Report the Bank of England signaled of a possible early interest rate increase. Key unemployment rate 7%, after which the first increase of interest rates may be made, may be reached with 50% probability by the third quarter of 2015, not by the second quarter of 2016 as it was considered before. GDP growth forecast for 2014 was raised from 2.5% to 2.8%. In the fourth quarter of the current year the GDP will rise by 0.9% after the growth by 0.8% in the third quarter.

The euro was traded downwards at the beginning of the day amid euro-zone weak industrial output data and it fell after ECB’s Praet’s statements – but then recovered its losses and even grew. Euro-zone industrial output fell in September more than forecasted – by 0.5% while a decrease by 0.3% was expected. ECB’s Praet said that negative deposit rate and asset purchases are potential options if needed to stimulate economy and ensure economic growth.

Australian dollar rose on Wednesday for the first time after 4-day decrease amid consumer confidence growth. Westpac Consumer Confidence Index rose by 1.9% in November after the decrease by 2.1% in October. Compared with last November the index rose by 5.8%.

By MasterForex Company