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245

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

The Main Events of the Week

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

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

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

By MasterForex Company

246

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

Activity in the US Manufacturing Sector Decreased

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

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

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

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

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

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

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

By MasterForex Company

247

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

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

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

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

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

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

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

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

By MasterForex Company

248

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

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

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

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

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

By MasterForex Company

249

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

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

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

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

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

By MasterForex Company

250

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

The Markets Expect the Speech of the New Federal Reserve Chair

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

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

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

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

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

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

By MasterForex Company

251

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

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

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

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

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

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

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

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

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

By MasterForex Company

252

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

The Eurozone Economy Grows for the Second Quarter in a Row

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

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

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

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

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

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

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

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

By MasterForex Company

253

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

The Main Events of the Week

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

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

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

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

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

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

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

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

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

By MasterForex Company

254

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

The Euro Reached the Highs of the Beginning of the Year

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

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

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

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

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

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

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

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

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

By MasterForex Company

255

Overview of the main economical events of the current day - 21/02/2014

China’s HSBC Flash Manufacturing PMI Dropped to 7-Month Low

On Thursday February, 20 the US dollar strengthened its positions Vs. most major currencies amid controversial statistic data in the USA. The euro decreased amid the Eurozone Manufacturing PMI decrease. The Australian dollar dropped after the release of Chinese Flash Manufacturing PMI decrease data.

The US dollar strengthened its positions by 0.1% to the dollar index amid controversial statistic data. Inflation and Unemployment Claims data in the USA crossed the line of the expectations. Philadelphia Fed Manufacturing Index sharply decreased in February to -6.3 p. (annual low) comparing with 9.4 p. in January, having dropped lower than zero point for the first time over 9 months. At the same time U.S. Markit Flash Manufacturing PMI rocketed in February almost to 4-year high at the level of 56.7 p. from 53.7 p. in January.

The euro dropped amid the Eurozone Manufacturing PMI decrease to 2-month low. All Flash Manufacturing PMI and Non-Manufacturing OMI in France, Germany, and Eurozone appeared to be worse than predicted, except for German Non-Manufacturing PMI. Final Eurozone Manufacturing PMI decreased in February to 2-month low of 52.7 p. from 52.9 p. in January against the expectations of growth. Producer Price Index in Germany, Consumer Price Index in France, and Euro-zone Flash Consumer Confidence appeared to be worse than it was expected as well.

On Thursday the pound sterling was traded downwards amid lower Factory Orders growth. CBI Industrial Order Expectations increased in February to +3 against -2 in January, whereas growth to +5 was expected. Bank of England’s Martin Weale announced on Thursday that interest rates are likely to be increased in spring 2015.

The Australian dollar sharply dropped after the release of Chinese Manufacturing PMI decrease to 7-month low, but then it gained back all the losses. HSBC Flash Manufacturing PMI suddenly dropped in February to 48.3 p., comparing with 49.56 p. in January, whereas decrease only to 49.4 p. was predicted. Weak readings might be caused by the Lunar New Year celebration. The index is being decreased for the second month in a row, and it is above 50 indicates industry expansion, below indicates contraction.

The yen increased after the release of weak Trade Balance data in Japan and Manufacturing PMI in China, but then it lost all the growth amid positive Stock Markets dynamics. Trade Balance deficit in Japan in January appeared to be record high – 2.79 trillion yen, which is twice more than the December level. The deficit growth was expected to reach only 2.79 trillion yen. Export increased only by 9.5% comparing with the reading of the previous year, whereas import increased by 25% y/y amid energy import increase.

By MasterForex Company

256

Overview of the main economical events of the current day - 25/02/2014

Commodity Currencies Were Leaders on Monday

On Monday February, 24 the US dollar was traded slightly downwards Vs. most major currencies amid weak statistic data in the USA. The pound sterling strengthened its positions Vs. the US dollar amid growth of Sentiment in the UK Services sector. Commodity currencies increased amid staple prices growth.

The US dollar dropped VS. the pound and major commodity currencies, and had almost no changes Vs. the euro and the yen – having lost about 0.1% to the dollar index. One more series of weak data was released in the USA, though it was not so important. Markit US Flash Services PMI dropped in February to 52.7 p. (4-month low) against 56.7 p. in January, whereas growth was predicted.

Dallas Fed Manufacturing Activity dropped in February to 9-month low at the level of 0.3 p. against 3.8p. in January, having considerably exceeded the expectations of decrease to 3 p. Chicago Fed National Activity Index decreased in January to 6-month low at the level of -0.39, comparing with -0.03 in December (revised from +0.16) – decrease to -0.20 was predicted.

The euro increased to year highs after the release of IFO Business Survey in Germany, which are still at its highs since the middle of 2011, but then it decreased after the release of Inflation data. German Business Climate increased in February to 111.3 p. from 110.6 p. in January, whereas no changes were predicted. Assessment of Business Situation considerably exceeded the expectations, whereas Business Expectations decreased.

Though annual Eurozone Inflation Rate in January composed 0.8% having no changes in comparison with December, and having exceeded preliminary estimations at the level of +0.7% - at monthly rate Inflation dropped in January by 1.1% m/m, which appeared to be the highest decrease rate since 2001, when its current practice account began.

The speech of ECB’s Mario Draghi negatively influenced the euro – after G20 Draghi announced that he is ready to act, if the price forecast will become worse, though he doesn’t notice signs of the Eurozone deflation. ECB will have full set of information necessary for decision making – till the meeting of March, 6 – he added. ECB’s Visco also announced the possibility of interfering negative deposit stake will be discussed at the March meeting of the ECB.

The pound sterling strengthened its positions on Monday amid the growth sentiment in the UK Services Sector. The last CBI survey demonstrated that the climate among the UK companies improved to very high level over the recent 3 months. The comments of BOE’s Marc Carney supported the pound sterling as well – he noted that the Central Bank will support the UK economy recovery, which is close to the moment of interest rate increase.

Commodity currencies increased amid risk appetite increase and staple prices growth. The biggest increase Vs. the Us dollar was demonstrated by the Australian dollar. S&P 500 on Monday reached intraday historical high. Oil refreshed 4-month high amid demand increase in the USA, which is connected with weather conditions, and Supplies risks. Gold prices on Monday considerably increased, having reached the level of the end of October 2013.

By MasterForex Company

257

Overview of the main economical events of the current day - 27/02/2014

US New Home Sales Reached More Than 5-Year High

On Wednesday February, 26 the US dollar increased Vs. almost all major currencies amid US New Home Sales Increase to 5.5 years high. The US dollar demonstrated the highest growth for almost a month, having strengthened its position to the dollar index by more than 0.3% - before the speech of Fed Chair Janet Yellen on the Semiannual Monetary Policy Report before the Senate Banking Committee, which will take place on Thursday.

The US New Home Sales in January suddenly rose by 9.6% m/m – to 468 000 of houses comparing with upwards revised December reading of 427 000. Decrease of sales to 400 000 was predicted. New Home Sales overcame the peak at the level of 452 000, and increased to the highest rate since July, 2008. Nonetheless, previously released indicators pointed the weakness of the House Market. So, Existing Home Sales, where there are the majority of deals – dropped in January to the lowest rate foe over the last 18 months.

FOMC Member Fisher announced on Wednesday that there are no delays predicted for the QE3 – and it will continue even at considerable Stock Market correction. At the same time FOMC Member Eric Rosengren pointed that QE3 may be corrected according to economy growth situation.

The euro dropped on Wednesday to almost 2-week low Vs. the US dollar after not being able to overcome yearly high Vs. the US dollar a bit lower than $1.38. Negative influence to the euro was caused by renewed speculation on the case of possible interest rate decrease in the face of forthcoming ECB Meeting, and situation of strain in Ukraine.

German Consumer Confidence is still at high levels of the middle of 2007; however, this data had no significant influence. GfK Leading Consumer Confidence Index rose in March to 8.5 p. Against 8.3 p. in February having exceeded the expectations.

The pound sterling insignificantly decreased after 2-day growth amid revised UK GDP data for the 4th quarter. The UK economy growth in the 4th quarter composed 0.7% comparing with the previous quarter, which coincided both with preliminary data, and expectations.

However, annual growth rate of the UK economy for the 4th quarter were reduced to 2.7%, whereas according to preliminary estimations they composed 2.8%. BOE’s Spenser Dale announced on Wednesday that the Central Bank doesn’t plan to increase interest rates in the nearest future, in spite the recent improvement of the British economy situation.

The Australian dollar dropped amid ironstone prices decrease to almost 8-month low. Ironstone is the most important Australian export item. The prices may continue to decrease further, because its world resources are at a high level, and steel prices have dropped.

House building data in Australia also appeared to be worse than expected – Construction Work Done for the 4th quarter dropped by 1% comparing with the 3rd quarter, whereas increase by 0.4% was predicted. It adds concerns of possible weak country’s GDP in the 4th quarter of 2013. The Australian data will be released on March, 5.

By MasterForex Company

258

Overview of the main economical events of the current day - 28/02/2014

US Dollar Drops on Janet Yellen’s Testimony

On Thursday February, 27 the US dollar decrease Vs. most major currencies, having lost slightly less than 0.2% to the dollar index. The US dollar was strengthening its positions in the first half of the day, but dropped during FOMC Chair Janet Yellen’s speech in the Senate Banking Committee. The New Zealand dollar strengthened its positions most of all Vs. the US dollar – amid positive New Zealand Trade Balance data.

The report of FOMC Chair Janet Yellen in the US Senate distinguished itself from the previous report in the US House of Representatives two weeks ago, but this report seemed to be gentler. Yellen announced that in case of considerable change of economy prospects, FOMC may revise QE3 tapering. She also does not see necessity in Fedreserve balance reduction for policy tightening. Yellen admitted the influence of severe weather to recently released economic data, which point out weaker consumer spending.

Released US data appeared to be different, and did not cause much attention – Durable Goods Orders appeared to be better than it was expected, whereas Unemployment Claims increased. Durable Goods Orders decreased in January by 1%, which appeared to be less than expected decrease by 1.7% .The decrease was mainly caused by aircraft orders reduction. Durable Goods Orders Ex Transportation increased by 1.1% against the expectations of decrease and demonstrated the highest growth since May, 2013.

The US Initial Claims increased last week by 14 000 to 348 000 from downwards revised 334 000, which appeared to be worse than expected 335 000. Unemployment Claims appeared to be the highest for the last 4 weeks. Four-Week Moving Average of Initial Claims remained flat – 338 250. Poor weather conditions in the USA weakened the recovery process of Labor Market and Housing Market, which will probably slow down economy growth rate during the first month of this year.

The yen and the Swiss franc were in demand on Thursday as save heaven currencies amid aggravation of tension in Ukraine, which also lead to the euro sales. The Swiss franc increased Vs. The euro to the highest rate since April, 2013; it ignored weak GDP and Employment Level data in Switzerland. Swiss economy growth in the 4th quarter slowed down to 0.2% q/q from 0.5% in the previous quarter, against the expectations of growth by 0.4%, which was caused by export decrease by 1.7% q/q. Employment rate dropped in the 4th quarter to 4.19 million from 4.20 million in the 3rd quarter, whereas growth to 4.22 million was predicted.

The euro decreased in the first half of the day amid controversial statistics, but then it increased. German Inflation data appeared to be worse than expected, which especially essential before the Eurozone Inflation data release on Friday. Annual inflation rate in Germany slowed down in February to 1.2% from 1.3% in January, whereas no changes were predicted. Consumer Confidence in France decreased as well.

At the same time, German Labor Market and Eurozone Economic Confidence data appeared to be better than expected. Unemployment Change in Germany decreased in February by 10 000. German Unemployment Change stays at 6.8% level, which is close to 2 decades low, for the third month in a row. Eurozone Economic Sentiment Indicator increased in February to 101.2 p. (the highest rate since July, 2011) from 101 p. in January, against the decrease expectations. Confidence indices, except Consumer Confidence Index, increased.

The New Zealand dollar strengthened its positions amid positive Trade Balance data in New Zealand. Trade Balance proficit in January increased to 306 million of New Zealand dollars, which appeared to be better that the predicted 230 million. Fonterra, the largest world milk products exporter, stated the increase of payments to farmers-shareholders, and this fact also supported NZD growth.

The Australian dollar dropped on Thursday after weak Investment data in Australia, but then it gained all the losses. Private Capital Expenditure in Australia reduced in the 4th quarter by 5.2% q/q, whereas decrease by only 1% was predicted. The drop was the most considerable for almost 5 years.

By MasterForex Company

259

Overview of the main economical events of the current day - 04/03/2014

The US Dollar and the Yen Strengthened Its Positions on Monday

On Monday March, 3 the US dollar was traded upwards Vs. most major currencies amid ISM Manufacturing PMI growth in the USA. Markit PMI, Personal Income, and Personal Spending data appeared to be better than expected. The yen strengthened its positions due to the demand for save heaven currencies amid heightening of tension in Ukraine.

Personal Income increased in January by 0.3% comparing with the previous month, having exceeded the expectations of growth by 0.2% - whereas personal Spending strengthened its position by 0.4% m/m, which appeared to be more than forecasted +0.1%. Report confirms the last data pointing that Americans start overcoming the results of severe winter. ISM Manufacturing PMI in February increased to 53.2 p. from 51.3 p. in January, having considerably exceeded the expectations of growth to 52 p.

[B]ISM Manufacturing PMI in the USA
[/B]

Final Markit Manufacturing PMI also appeared to be better in February, and increased to 57.1 p. comparing with preliminary estimations at the level of 56.7 p. and January reading of 53.7 p. According to Markit, PMI signaled the most significant improvement of doing business terms for over 45 months.

The yen increased to its monthly high Vs. the US dollar due to the demand for save heaven currencies – amid escalation of tension in Ukraine on the weekend, when the President of Russia Putin got obtained admittance from the Parliament to use military forces in this country. Interference of Russia into Ukrainian events sparked concern about the big international conflict. On Monday gold prices increased to its high for over the last 4 months. Light Sweet Crude Oil (WTI) futures increased to the highest rate for more than 5 months.

The euro dropped on Monday from 2-month highs Vs. the dollar amid heightening tension in Ukraine – though ECB’s Draghi announced than economic influence of Ukraine to the Eurozone is limited, and commercial relations are not significant. Final Eurozone Manufacturing PMI decreased in February to 53.2 p., comparing with 54 p. in January, though it appeared to be better than preliminary estimations at the level of 53 p. German and Italian PMI decreased, whereas French and Spanish increased.

The pound sterling also decreased, having almost no reaction to the British data of manufacturing sectors, which appeared to be slightly better than expected. Manufacturing PMI increased in February to 56.9 p. comparing with 56.6 p. in January, whereas reduction was expected. According to Bank of England, Mortgage Approvals increased in January to its high for over more than 6 years – 76 900 against the expectations of growth to 73 500, but lending volume goes on reducing.

The Australian dollar gained back all the losses of the beginning of the day amid Non-Manufacturing PMI in China to 3-month high. Official Chinese Non-Manufacturing PMI increased in February to 55 p. comparing with 53.4 p. in January. Other data was also not so bad. ANZ Job Advertisements in February demonstrated the highest growth rate for over 2 years. AIG Manufacturing Index increased in February to 4-month high. The New Zealand dollar also negated part of losses amid Terms of Trade Index in New Zealand in the 4th quarter by 2.3% q/q to 40-years high.

By MasterForex Company

260

Overview of the main economical events of the current day - 06/03/2014

The US Non-Manufacturing Activity Dropped to 4-Year Low

On Wednesday March, 5 the US dollar decreased Vs. most major currencies after the release of weak US Non-Manufacturing Activity, but the reduction was moderate. ADP Employment Change also appeared to be worse than expected. The Canadian dollar strengthened its positions amid Bank of Canada Meeting. The Australian dollar increased amid strong Australian GDP data.

ISM Non-Manufacturing PMI suddenly dropped in February to its low since February 2010 at the level of 51.6 from 54 in January – whereas just slight decrease to 53.5 was expected. The largest decrease was demonstrated by Employment Index, which dropped in February to 47.5 from 56.4, having fallen lower than 50 for the first time for over 2 years - which is especially jittery before the release of Non-Farm Payrolls in the USA on Friday.

According to Automatic Data Processing (ADP), the US Non-Farm Employment Change increased in February by only 139 000, which appeared to be considerably worse than expected 160 000. Employment growth in January was also considerably revised downwards - to 127 000 from initial reading of 175 000. ADP data precede Non-Farm Payrolls key report of the US Department of Labor, which will be released on Friday, and it is frequently considered to be preliminary.

[B]The US ADP Employment Change and Non-Farm Payrolls[/B]

The euro had almost no changes according to the results of the day before the ECB Meeting on Thursday – the euro had almost no reaction to Retail Sales growth and Services PMI of the Eurozone. ECB’s inflation forecast for the nearest years will attract attention on Thursday, as well as the press-conference of ECB’s Draghi. The markets wait for the ECB to take some actions to monetary policy easing. Barclays wait for interest rate reduction, whereas others believe that we may observe some liquidity injection.

Final Services PMI of the Eurozone increased in February to 52.6 p. comparing with 51.6 p., having exceeded preliminary estimations. Flash Manufacturing PMI and Services PMI rose in February to 53.3 p. from 52.9 p. in January, against the expectations of decrease – the highest rates since June, 2011 are still left. The Eurozone Retail Sales increased in January by .6% after decrease by 1.3% in December, having twice exceeded the expectations of growth.

The pound sterling strengthened its positions before the Bank of England meeting on Thursday, at which no policy changes are predicted. Services PMI decreased in February slightly less than it was expected – to 58.2 p. from 58.3 p. in January, which appeared to be better than predicted decrease to 58 p. Though it is the lowest rate since June, 2013, Services PMI activity growth for more than a year, Employment Change growth also accelerated.

The Australian dollar increased to its weekly high Vs. the US dollar amid strong country’s GDP data. Quarterly Economic Growth Rate in Australian in the 4th quarter composed 0.8%, having exceeded the expectations of growth by 0.7% q/q. Annualized GDP of the 4th quarter increased by 2.8% against growth by 2.4% in the previous quarter – having exceeded the expectations of growth by 2.5%. GDP growth acceleration happened mainly due to Export growth, which in 2013 increased by 6.5%, which was mainly promoted by AUD weakening.

The Canadian dollar strengthened it positions to 2-weeks high Vs. the US dollar amid Bank of Canada Meeting, where the policy was left unchanged, and it was also announced that inflation goes on strengthening its positions, but downward risks are still considerable. Time limits and course of further interest rate change depend on the influence of the new risk balance information - the Central Bank noted.

By MasterForex Company

261

Overview of the main economical events of the current day - 07/03/2014

The US Dollar Dropped In Expectation of Non-Farm Payrolls

On Thursday March, 6 the US dollar dropped Vs. most major currencies in anticipation of weak Non-Farm Payrolls, which is going to be released on Friday. US Factory Orders also appeared to be worse than expected. The euro increased after ECB’s Meeting Minutes release, at which new measures of monetary policy easing were not announced.

The US dollar lost 0.5% to the dollar index, having dropped to the lowest rate since October, 2013 according to DX – before the release of Non-Farm Payrolls on Friday. The data appear to be weaker than expected at the level of 150 000 working places – this is implied by the growth of average weekly Unemployment Claims during February. The largest growth Vs. the US dollar was demonstrated by the Australian dollar, which strengthened its positions amid positive statistics in Australia.

The US Initial Claims last week decreased by 26 000 to 3-month low at the level of 323 000, from 349 000 of the previous week - it appeared to be better than expected 336 000. 4 weeks average Initial Claims was decreasing for the second week in a row to 336 500 - from 338 500 last week. However, in February average weekly Initial Claims increased by 3 500 comparing with January, when it was created only 113 000 working places.

The US Factory Orders also appeared to be worse than expected – orders dropped in January by 0.7% against the expectations of decrease by 0.4%. This is one more mark of recent Manufacturing Index in the USA. Previous month’s data was also revised downwards – decrease of Factory Orders in December composed 2% m/m, but not 1.5% as it was reported earlier.

The euro sharply rose and opened above $1.38 to the dollar for the first time since October, 2013 – after the ECB left interest rates unchanged despite the Eurozone bottom inflation. New measures of monetary policy easing were not announced. According to Draghi’s comments, aggressive measures are excepted in the nearest future. ECB increased the Eurozone economy growth predictions in 2014 to 1.2% from December 1.1% - but decreased Inflation estimation from 1.1% to 1%. In 2015 the Eurozone GDP will increase by 1.5%, and inflation rate will accelerate to 1.3%, as it was expected in December. In 2016 GDP growth will compose 1.8%, and inflation rate – 1.5%.

The pound sterling slightly strengthened its positions amid Bank of England decision to leave the key interest rate and the stake purchase program without changes. Housing Market data supported the pound sterling – according to Halifax, House Prices in the UK increased in February by 2.4% having demonstrated the highest growth rate for over 5 years. But the prices are still 10% lower than the peak of August 2007. Housing Price acceleration takes place amid country’s economy recovery which supports demand for real estate.

The yen dropped to 5-week low Vs. the US dollar after Japanese Advisory Group announced on Thursday that the largest Government Pension Investment Fund GPIF has no need to focus investments to local bonds taking into consideration country’s inflations rate acceleration. GPIF should look for investment possibilities which may bring large profit. Increase of investments to foreign holdings may lead to further weakening of the yen.

The Australian dollar increased on Thursday to the highest rate Vs. the US dollar for almost three months - after positive statistic release in Australia. Retail Sales in January increased by 1.2% m/m, having exceeded the expectations of growth by 0.5%, and having demonstrated the highest monthly growth rate for almost a year. Trade Balance proficit increased in January to 1.43B AUD from 0.59B in December against the expectations of decrease. The proficit increases for the third month in a row, and appeared to be the highest for over 2.5 years.

The Canadian dollar strengthened its positions amid Ivey PMI growth to 4-month high. Building permits growth rate in Canada also exceeded the expectations and appeared to be the highest for over half a year.

By MasterForex Company

262

Overview of the main economical events of the current day - 11/03/2014

The Australian Dollar Dropped Amid Weak Chinese Data

On Monday March, 10 the US dollar increased vs. the pound sterling, the Australian dollar, and the Canadian dollar, having almost no changes vs. other major currencies amid absence of any significant macro statistics in the USA. The pound sterling decreased before Inflation Report Hearings, which will take place on Tuesday. The Australian dollar dropped amid weak data in China. The Canadian dollar got under the pressure amid fall of commodity prices.

The Australian dollar dropped amid weak data in China released last weekend and on Monday. Chinese Trade Balance deficit in February composed $23B, whereas balance proficit was expected at the level of $14.5B. At that the export dropped by 18.1% comparing with the similar period of the previous year (the highest decrease since 2009), against the expectations of growth by 5% y/y – at that import has almost no changes. Export from China is considered to be the gauge of global commodities demand. At the same time the data might be wrenched due to more early celebration of the Lunar New Year this year.

Annual growth rate of Consumer Price Index in China decreased in February to 13-month low at the level of 2% from 2.5% in January, against the expectations of decrease to 2.1% - which increased concerns about slow down of economy growth rate of PRC. New Loans in China in February decreased more than it was predicted and dropped more than twice comparing with January. New Yuan Loans reduced to 645B from 1320B in January – whereas decrease only to 730B yuans was predicted.

The yen increased at the beginning of the day amid weak Japanese data and decrease of Japanese stock market, but then negate the whole increase. According to final data, Japanese GDP annualized growth rate in the 4th quarter was decreased to 0.7%, against preliminary estimation of 1% and growth by 1.1% in the 3rd quarter. Current account deficit in Japan in January reached record high 1.589 trillion yuans. Import increased in January by 30.3% comparing with similar period of the previous year, due to energy source import price growth, entailed by falling in price yen.

According to the results of the two-day Meeting of the Bank of Japan, monetary policy was left without changes, as well as general economy assessment. It is a sign of confidence of the Central Bank that the economy is able to survive the forthcoming increase in sales tax in April. Bank of Japan decreased the estimation of export, but increased the estimation of capital investment and industrial production.

The euro had almost no changes according to the results of the day. Industrial Production in France appeared to be worse than it was expected, whereas in Italy it appeared to be better. Eurozone Sentix Investor Confidence in March appeared to grow slightly worse than expected, to 13.9 from 13.3 in February, and it still stays at 3-years highs. Bank of France left the estimation of country’s GDP growth for the 1st quarter without changes at the level of 0.2%. ECB’s Christian Noyer announced on Tuesday that he is not satisfied with the euro’s strength. ECB is open for all types of instruments and is ready to act if risks are revealed. ECB’s Sabine Lautenschlager also announced that ECB is open to the idea of negative rates and stake in purchase if necessary.

The pound sterling dropped on Monday before Inflation Report Hearings which will be held on Tuesday, and during which the Head of the British Central Bank Marc Carney will testify. BOE Deputy Governor Charles Bean announced that further pound’s growth may harm country’s export and economy overbalance from internal expenditures to foreign trading. Another negative factor according to Citigroup is investor quit of long positions of pound sterling, which previously were opened relying on growth connected with deal between Vodafone and Verizon, which finished in the end of February.

By MasterForex Company

263

Overview of the main economical events of the current day - 13/03/2014

Reserve Bank of New Zealand Was the First among Major Central Banks to Increase the Key Interest Rate

On Wednesday March, 12 the US dollar decreased vs. most major currencies before the release of Retail Sales report on Thursday. The New Zealand dollar increased vs. the American currency most of all – after the Reserve Bank of New Zealand (RBNZ) increased the Official Cash Rate (OCR) by 0.25%.

The New Zealand dollar sharply increased and refreshed the highs of the year vs. the US dollar after the RBNZ increased Official Cash Rate (OCR) by 0.25% to 2.75% as it was expected. But the tone of the announcement was stricter, and the rate forecast was higher. RBNZ’s Wheeler noted the impulse of the economy growth in New Zealand and strengthening of inflation pressure on the part of high prices and Housing market boom.

Further increase of OCR will depend on data and inflation. Thought RBNZ announced that the course of New Zealand dollar is overcharged, he didn’t point that OCR growth rate will be changed due to this fact. Wheeler expects that interest rates will increase by 1.00-1.25% this year, and by 2.00% during next two years. RBNZ was the first bank among the Central Banks of developed countries, which settled down the course of interest rates increase. The rate was not increased almost four years, and was at the level of 2.50% for three years, when in March, 2011 RBNZ decreased the rate due to the earthquake in New Zealand.
The sales of the US dollar were resumed on Wednesday at the American session amid absence of significant macro statistics in the USA. According to the results of Wednesday the US dollar index lost a bit more than 0.2%. The euro increased again above the mark of $1.39 vs. the US dollar, which he was reaching in the end of the last week.
The euro had almost no reaction to the Eurozone Industrial production data, which suddenly dropped in January. Industrial production decreased in January by 0.2% m/m against the expectations of growth by 0.2%. Data of the previous month was revised upwards. At the same time annualized data appeared to be better – industrial production increased by 2.1% y/y, having exceeded the expectations of growth by 1.9%.

The euro was given support by the testimony of ECB’s Coeure, who announced that there is no deflation in the Eurozone, and stimulation measures of additional liquidity inflow to the banking system are not necessary. German Finance Minister Wolfgang Schaeuble also noted on Wednesday that interest rates in the Eurozone are too low in mid-term, and he doesn’t notice deflation in the Eurozone.
The Australian dollar on Wednesday interrupted its three-day growth and increased before the Australian Labor Market report – thought it decreased in the first half of Wednesday after the release of weak Australian Consumer Sentiment which dropped to 10-month low. Home Loans and Investment Lending also appeared to be worse than predicted. The Australian dollar sharply increased to 4-day high vs. the US dollar – after the release of Australian Labor Market report on Thursday. Employment in Australia in February increased by 47 300 and thrice exceeded the expectations of growth by 15 000.

By MasterForex Company

264

I’m waiting for the break through on EUR/USD and think the dollar is going to weaken hugely against the year