Daily Forex market overviews by MasterForex.com

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285

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

Euro Continued Its Fall

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

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

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

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

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

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

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

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

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

By MasterForex Company

286

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

New Zealand Dollar Strengthened Its Positions Before RBNZ Meeting

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

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

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

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

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

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

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

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

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

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

By MasterForex Company

287

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

The Pound Sterling Increased Amid Unemployment Rate

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

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

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

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

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

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

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

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

By MasterForex Company

288

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

The US Dollar Dropped Amid Retail Sales

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

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

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

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

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

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

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

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

By MasterForex Company

289

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

Australian Dollar Dropped Amid RBA Meeting Minutes Release

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

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

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

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

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

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

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

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

By MasterForex Company

290

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

The U.S. Dollar Dropped Amid FOMC Meeting Results

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

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

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

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

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

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

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

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

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

By MasterForex Company

291

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

Australian Dollar Rockets

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

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

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

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

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

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

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

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

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

By MasterForex Company

292

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

The Main Events of the Coming Week

On Friday 4th July the US dollar strengthened its positions vs. most major currencies, having added 0.1% to the dollar index. The euro was traded downwards amid weak German Factory Orders.

On Friday the US dollar continued its growth after the US Non-Farm Payrolls, released on Friday. The calendar was almost empty, the 4th of July was celebrated in the USA and market activity was low. Market participants continued to estimate strong Non-Farm Payrolls released the previous day. In June the situation at the American Labor Market notably improved, which is confirmed by economy recovery continuation.

The US Non-Farm Employment Change jumped in June by 288,000 in comparison with upwardly revised 224,000 in May – which appeared to be considerably more than expected 212,000. Unemployment Rate reduced in June from 6.3% to 6.1% - the lowest rate since July 2008, whereas no changes were expected. According to CME, possibility of interest rates increase during FOMC Meeting in June 2015 after the release of Employment Change Report increased to 57%. The previous day the chances for interest rates increase in June 2015 composed 51%, and 43% a month ago.

The euro was traded downwards amid decrease of German Factory Orders, which dropped more than it was expected. Geopolitical risks brought pressure on confidence in the largest Europe’s economy. German Factory Orders dropped in May by 1.7% m/m against the expectations of decrease by 1.1%. In April growth of the reading by 3.4%, but not by 3.1% as it was stated earlier was noted. Increase was the highest since June 2013.

German Construction PMI dropped in June to 15-month low, which was mainly connected with the fall of new orders. ECB’s Noyer stated that ECB is ready to take all necessary measures for achieving inflation rate of 2%. Asset Purchase program oriented both to state-owned assets and private assets may be launched for these purposes. Euro course is overcharged vs. the US dollar, if taking into account the growth of the European economy. Strong euro pressurizes economical activity and inflation, and euro weakening vs. the US dollar would be reasonable.

According to the results of the week the US dollar strengthened its positions vs. most major currencies, having added 0.31% to the dollar index. Strong US Non-Farm Payrolls supported the US dollar, and increased the possibility of earlier interest rates rise. Most of all the US dollar increased vs. the yen and the Australian dollar. Only the pound sterling and the Canadian dollar managed to increase vs. the US dollar. The pound sterling received support from strong BBA Mortgage Approvals, Manufacturing PMI, and Construction PMI in the UK.

The most important event of the week will be the release of the last FOMC Meeting on Wednesday. These are very few data in the USA this week: on Tuesday JOLTS Job Openings and NFIB Small Business Index will be released; on Thursday – Wholesales Inventories and Wholesale Trade Sales; and on Friday – Monthly Federal Budget Balance. On Tuesday 8 July American companies quarterly report period of the 2nd quarter will start and will last till the middle of August.

On Monday Euro-Zone Sentix Investor Confidence will be released; and on Thursday – Monthly ECB Report. German Industrial Output will be released on Monday; and in France and Italy – on Thursday – low growth rates of Industrial Output are expected in May. French Inflation Rate will be released on Thursday; and in Germany and Spain on Friday. On Tuesday in Germany Trade Balance will be released.

On Tuesday in the UK Industrial Output will be released (acceleration of annual growth rate in May is expected), and on Thursday – Trade Balance. On Thursday BOE Monthly Meeting results will be announced, no policy changes are expected. On Tuesday in Japan Trade Balance and Current Account will be released; on Thursday – Core Machinery Orders. On Wednesday in China Inflation Rate will be released; and on Thursday – Trade Balance.

On Tuesday in Australia NAB Business Confidence will be released; on Thursday – Labor Market Report; and on Friday – Home Loans. In New Zealand NZIER Business Confidence will be released; on Wednesday – Electronic Cards Retail Sales; and on Thursday – Business NZ Manufacturing Index and REINZ House Price Index. On Monday in Canada BOC Business Outlook Survey, building Permits, and Ivey PMI will be released; on Wednesday – Housing Starts; on Thursday – New House Price Index; and on Friday – Labor Market report.

By MasterForex Company

293

Overview of the main economical events of the current day - 08/07/2014

Canadian Business Activity Dropped To Semiannual Low

On Monday 7 July the US dollar was traded slightly downwards vs. most major currencies, having lost 0.06% to the dollar index amid absence of any significant macro statistics in the USA. The Australian dollar strengthened its positions amid positive Labor Market and Construction Activity in Australia.

The US dollar strengthened its positions in the beginning of the day, but then it decreased. The decrease of 10-Year US Treasury Yield, which dropped on Monday from 2.64% to 2.62%, negatively influenced the US dollar. Meanwhile, Conference Board Employment Trends Index (ETI) continued its growth in June for the second month in a row and increased to 119.62. May reading was revised upwards from 118.58 to 119.03. Seven out of ten components of the index made a contribution to the growth if the index in June. According to Conference Board, fast ETI growth in recent months lets suppose that strong growth of new job places will possibly continue in summer.

The euro inconsiderably increased after 4 days of decrease amid growth of Euro-Zone investors Climate which improved after 2 months of decrease, which was due to new ECB measures of economy stimulation and improvement of expectations in terms of world economy. Euro-Zone Sentix Investor Confidence strengthened its positions in July to 10.1 p. in comparison with 8.5 p. in June (semiannual minimum) against the expectations of decrease. Expectations increased for the first time after four months of decrease.

At the same time, German Industrial Output dropped in May by 1.8% m/m against the expectations of growth, which appeared to be the largest decrease for over 2 years. Industrial production in Germany reduces for the third month in a row, though the Department of Economic Affairs noted that decrease of industrial production is a temporary factor. ECB’s Nowotny announced that low interest rates are right measures and will help Europe to return to economy growth. The pound sterling was traded downwards on Monday before the Tuesday release of the UK Industrial production.

The Australian dollar strengthened its positions amid positive Labor Market. ANZ Job Advertisements increased in June by 4.3% after the May decrease by 5.6%. Australian June Labor Market is to be released on Thursday. Australian AiG Construction Index jumped in June to 7-month high of 51.8 p. in comparison with 46.7 p. in May, having risen above 50 for the first time this year.

The New Zealand dollar was also traded upwards before the release of Business Confidence. However, Business Confidence decreased from 20-year high to the lowest rate for over a year. NZIER business Confidence dropped in the 2nd quarter to 32 in comparison with 52 in the 1st quarter.

The Canadian dollar dropped after the release of weak Chinese Business Activity, which decreased the previous month to semiannual low. Canadian Ivey PMI dropped in June to 46.9 p. from 48.2 p. in May against the expectations of growth. The index decreases for the 4th month in a row. At the same time Canadian Building Permits jumped by 13.8% in comparison with April, having demonstrated the highest growth rate for over 10 months. The hike was due to growth of demand for houses, storage capacities, and retail outlets.

BOC Business Outlook Survey in the 2nd quarter demonstrated that there are some inspiring signs for economy prospects, but some uncertainty amid strong competition still hold growth rates. High competition in the sphere of Retail Sales limits the growth of prices and holds Inflation expectations at low level. According to the results of the survey, companies’ expectations in terms of sales and loan plans weakened positions in comparison with the results of the survey in the 1st quarter; indicator of capacity rate lack decreased. Results of the survey pointed that BOC will possibly save neutral position at the Meeting on 16 of July, and will continue expressing concerns about low inflation.

By MasterForex Company

294

Overview of the main economical events of the current day - 14/07/2014

The Canadian Dollar Sharply Dropped Amid Labor Market

On Friday 11 July the US dollar was traded mixed, having added 0.07% to the dollar index. The Canadian dollar sharply dropped after the release of weak Canadian Labor Market.

The US dollar slightly changed vs. most major currencies amid absence of any significant macro statistics in most of countries. Trades passed in a tight range. According to the results of the week the US dollar decreased vs. most major currencies, having lost 0.12% to the dollar index amid release of softer than expected FOMC Meeting Minutes. Most of all the US dollar decreased vs. the New Zealand dollar and the yen for over a week. The US dollar managed to increase only vs. the pound sterling and the Canadian dollar.

The most important statistics was released in Canada on Friday. The Canadian dollar sharply dropped to 2-week low vs. the US dollar, having lost 0.8% after the release of weak Canadian Labor Market. Such a sharp response was entailed by oncoming BOC Rates Meeting, which will take place next Wednesday. Canadian Unemployment Rate increased in June to semiannual high at the level of 7.1% from 7% in May, whereas no changes were expected. Unemployment Rate increases for the second month in a row.

Canadian Employment Rate reduced in June by 9,400 against the expectations of growth by 20,000. At that Part Time Employment Change reduced by 43,000, whereas Full Time Employment Change increased by 33,500. Employment favors for unappropriated facilities of the country’s economy, which may provoke the Bank of Canada to continue keeping neutral position and save deliberate position in its final announcement of the Meeting results on Wednesday.

On Friday the Australian dollar was traded slightly upwards; however, it decreased after the speech of RBA’s Stevens, having closed with a slight decrease vs. the US dollar. Stevens announced that RBA has no definite opinion in terms of expectations of interest rate decrease, and he expects considerable decrease of the Australian dollar in the nearest future. The New Zealand dollar also slightly decreased according to the results of the day.

The euro had almost no changes according to the results of the day amid ECB’s Nowotny speech, in which he announced that at the moment there is no need in asset purchase program, because the last package of ECB measures didn’t manage to affect the market. Though some positive results are obvious already – like softening of financing terms, and cessation of common European currency’s growth.

According to final data, German Inflation annual rate growth increased June to 1%, whereas in Spain it decreased to 0.1%. Despite recent growth of concerns in terms of one of the largest Portuguese banks, according to the results of the week the euro had almost no changes and saved its positions around $1.36. The pound sterling slightly decreased on Friday amid weak UK Construction the volume of which dropped in May by 1.1% m/m against the expectations of growth.

Meanwhile, FOMC Member Plosser announced on Friday that FOMC should prepare the markets to the upcoming increase of rates, which may occur earlier than it was expected. According to Plosser, FOMC approaches to its policy targets, and he wished that ill the end of the year the key interest rate would compose 1%. At the same time, FOMC Member Lockhart stated that it’s too early to signal about the rates, and he would like to save the rates near zero till the middle of 2015 or more.

By MasterForex Company