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165

Overview of the main economical events of the current day - 20/09/2013

UK Retail Sales Fell Unexpectedly

US dollar trade was mixed on Thursday and it made attempts of correction after prior day significant weakening and amid good US statistics. The dollar grew against the yen, the pound and Australian and Canadian dollars and slightly weakened against the yen, franc and New Zealand dollar. The Fed didn’t reduce asset purchase program, which led to a sharp decrease of the dollar across the whole market.

US Existing Home Sales rose by1.7% m/m in August to 5.48 million at an annual rate – the highest level since May, 2010 – while a drop to 5.25 million was expected. Potential buyers hurried to close deals before mortgage rates rose even higher. Philadelphia Fed Manufacturing Index rose from 9.3 p. in August to 22.3 p. in September, the highest level since March, 2011. A growth only up to 10 p. was expected. The index is above zero which has been showing conditions improvement for 4 months in a row.

Conference Board Leading Index rose by 0.7% m/m in August having exceeded the expectations of growth by 0.6% - which may signal of increasing economic activity rate in the nearest time. The US Current Account Deficit dropped by 5.7% in the second quarter to $98.9 billion having reached the lowest level for almost four years, which was favoured by exports increase and a larger income account surplus.

Initial Claims rose considerably less than expected last week to 309 thousand – while a growth to 330 thousand was forecasted. 4-Week Moving Average of Initial Claims continues falling having dropped by 7 thousand by the end of the last week to 314.75 thousand – the lowest level since October, 2007. Meanwhile, the data released a week ago still were not revised in a proper way due to programming problems.

[B]Initial Claims and 4-Week Moving Average of Initial Claims[/B]

The pound fell after a weak retail sales report which dropped unexpectedly by 0.9% m/m in August after three months of growth. The indicator was expected to grow by 0.4%. At an annual rate retail sales growth slowed down to 2.1% from 3% prior month against the expected growth by 3.3%. Meanwhile, CBI Industrial Order Expectations rose significantly in September having reached the level of 9 – such reading was only in August, 2007 before the crisis. The reading exceeded zero level for the first time in 2.5 years, which can indicate that the economy continues recovering.

Swiss franc grew amid Swiss National Bank meeting where the monetary policy and also EURCHF floor limit were kept unchanged. The central bank raised the GDP growth outlook for the current and 2014 years. The government of Switzerland also raised GDP growth outlook and lowered unemployment outlook in 2013-2014 years. The yen weakened on Thursday amid Japanese stock index Nikkei growth to almost 2-month heights and also weak Japanese trade balance data.

[B]Annual GDP growth of New Zealand and the USA[/B]

New Zealand dollar was supported by GDP data which turned out better than expected. The country’s economy grew by 0.2% in the second quarter in comparison with the prior quarter despite agricultural production decrease, which met the expectations. At an annual rate the GDP rose by 2.5% Vs expected growth by 2.3%. Besides, first quarter data were revised upwards.

By MasterForex Company

166

Overview of the main economical events of the current day - 23/09/2013

The Main Events of the Week

The US dollar slightly grew Vs Canadian and Australian dollars on Friday and almost didn’t change Vs other major currencies amid no any significant US statistics. Canadian dollar was traded downwards amid the release of inflation report which showed inflation permanence in August – while it was expected to grow by 0.1% Vs the prior month.

Dollar slightly stabilized on Friday and made attempts of growth after FOMC member Bullard’s statement that a small reduction of bond purchases was possible already at the next FOMC meeting at the end of October. He said that the Fed was close to start tapering off QE in September but there was no reason for bond purchase reduction as macroeconomic data were not so good. The decisions on monetary policy always depend on the data and are not carried out according to a predetermined course.

By the end of the week the dollar considerably dropped to all major currencies (except the yen) having shown the second weekly decrease in a row after an unexpected decision of the Fed which declared on Wednesday that it wouldn’t start bond purchase reduction referring to slow economic growth. The dollar fell according to the dollar index by 1.10% having shown the lowest weekly decrease since early July. The result of the FOMC meeting will keep the dollar under pressure till the end of the year, according to the UBS.

According to the Barclays, Deutsche Bank and Goldman Sachs QE tapering off will be announced only in December when the Fed updates its economic outlooks and makes a press conference. The Bank of America considers that it won’t happen this year. BNP Paribas is also sure that the start of asset purchase tapering off will be only in January or March, 2014.

According to PIMCO, we won’t see QE reduction this year and it advises investors to buy euro at any downturn after the elections in Germany. According to Barclays, asset purchase program will be totally tapered off only by the end of June, 2014 and according to Goldman Sachs, it will happen only by September – both outlooks are moved three months back than the previous expectations of the banks.

In the euro-zone Flash Manufacturing PMI & Flash Services PMI of France, Germany and the whole euro-zone will be released on Monday; on Friday – Confidence Indexes from the European commission. ECB president Mario Draghi will make a speech on Monday in the European Parliament about economy and on Friday – in Italy. In Germany IFO Business Climate will be released on Tuesday, on Wednesday - GfK Consumer Climate and on Friday – preliminary inflation data. Confidence and Sentiment indexes are expected to grow, which will again indicate euro-zone economic recovery after coming out of the recession in the second quarter.

In Great Britain BBA Mortgage Approvals will be published on Tuesday; on Wednesday – CBI Realized Sales; on Thursday – Current Account for the second quarter and Final GDP for the second quarter; and on Friday - GfK Consumer Confidence and Index of Services. In Japan Consumer Price Index will be released on Friday.

In New Zealand Trade Balance will be published on Wednesday and on Friday - ANZ Business Confidence. Retail Sales in Canada will be released on Tuesday. In RBA Financial Stability Review will be published on Wednesday.

In the USA Chicago Fed National Activity Index and Flash Markit Manufacturing PMI will be released on Monday; on Tuesday - S&P/Case-Shiller Home Price Index and CB Consumer Confidence; on Wednesday - Durable Goods Orders and New Home Sales; on Thursday – Final GDP for the second quarter and Pending Home Sales; and on Friday - Personal Income and Spending and Revised U. of Michigan Consumer Sentiment.

By MasterForex Company

167

Overview of the main economical events of the current day - 24/09/2013

ECB President Mario Draghi Is Ready to Deploy Another Round of LTRO

The US dollar was traded slightly downwards on Monday to most major currencies amid no important US macrostatistics, stock markets decrease and euro-zone ambiguous statistics. The yen grew on the back of stock markets decrease and the euro was negatively affected by euro-zone manufacturing PMI decrease and also ECB President Mario Draghi’s speech. The Australian dollar looked better, which was favored by Chinese Manufacturing PMI growth.

US Flash Markit Manufacturing PMI dropped to 52.8 p. in September from 53.1 p. in August against the expected growth to 54 p. The decrease happened mainly due to the reduction of new orders and worsening of employment situation. The dollar couldn’t support Chicago Federal National Activity Index which exceeded the expectations in August and grew to +0.14 compared with -0.43 in July after having been at the negative territory for five months. Three month average of the index rose to -0.18 from -0.24.

Fed member William Dudley said on Monday that the economy was not yet so strong that the Fed could start reducing stimulation. Another Fed member Dennis Lockhart making speech on Monday also said that it would be difficult for the Fed to find a reason for tapering off QE at the nearest meeting on October as published economic data are ambiguous. Recently the dollar has been pressed by the political debate over government spending, which may have a negative effect on the US economic growth. Past Friday US president Barack Obama announced that if the Congress didn’t vote for raising the upper threshold of the public debt, another financial crisis may come into the country.

The euro was traded downwards despite the initial reaction to the landslide victory at the parliamentary elections in Germany on Sunday of the ruling party headed by Merkel who actually may have problems with forming a ruling coalition. Flash Manufacturing PMI of France, Germany and the whole euro-zone dropped in September although it was expected to rise. Euro-zone Manufacturing PMI dropped for the first time after 5-month growth – to 51.1 p. in September from 51.4 p. in August.

Meanwhile, the same Service indexes rose and turned out better than expected. Euro-zone Composite PMI grew to 52.1 p. – the highest reading since July, 2011 in comparison with 51.5 p. prior month. Some pressure on the dollar was put by the ECB President Mario Draghi’s speech in European Parliament where he said that the central bank was ready to use any instrument including LTRO if needed. Another round of the unlimited loans can weaken the euro.

Australian dollar was traded upwards after the release of HSBC Flash Manufacturing PMI which grew to 6-month high 51.2 p. in September against the August reading of 50.1 p. having exceeded the expectations and continued the growth for the second month in a row. China is the largest trade partner of Australia. Chinese economy will accelerate growth rates till the end of 2013, according to the world largest investment company BlackRock. Earlier the Bank of America, UBS and ING raised Chinese economic growth estimate for 2013 after Chinese industrial output statistics data in August showed the most significant growth for past 17 months.

By MasterForex Company

168

Overview of the main economical events of the current day - 25/09/2013

German Business Climate Growth Slowed Down

The US dollar was traded slightly upwards on Tuesday to most major currencies amid German Business Climate growth that fell out of expectations and amid the decrease of US Consumer Confidence from more than 5-year high.

S&P/Case-Shiller Home Price Index for 20 US megalopolises almost met the expectations and grew by 12.4% in July at an annual rate. FHFA House Price Index turned out a little better and rose by 1% in July; and it was forecasted to grow by 0.8%.

CB Consumer Confidence in the USA dropped from the highest reading since early 2008 of 81.8 p. in August to 79.7 p. in September against the expected decrease to 79.9 p. Current Assessment has risen slightly but the Expectations have considerably fallen in comparison with the prior month. Richmond Manufacturing Index also fell in September to 0 compared with +14 in August while it was forecasted to fall a little.

FOMC member William Dudley said on Tuesday that the Federal Reserve could start QE tapering off till the end of the year but it would depend on the economic situation. Meanwhile, according to the Goldman Sachs Janet Yellen may be named a new Fed chair next week.

The euro was traded downwards after the release of IFO report which showed that German IFO Business Climate rose to 107.7 p. in September from 107.6 p. in August while a growth to 108.4 p. was forecasted. IFO Expectations grew a little better than forecasted while IFO Current Assessment considerably dropped despite the expected growth. ECB Governing Council member Ewald Nowotny confirmed on Tuesday Draghi’s words that LTRO was discussed in the Executive Board and it is important that the ECB showed all its instruments.

The pound was traded downwards amid BBA Mortgage Approvals release that increased in August less than forecasted – to 38.2 thousand against the expected growth to 38.6 thousand. At the same time it is the highest reading for almost three years – from December, 2009.

The Bank of England representative David Miles making speech on Tuesday said that recent positive signals in the British economy don’t indicate a possible early key interest rate increase. Besides, investors are too optimistic about the fact how quickly unemployment rate would fall.

Canadian dollar had almost no reaction to retail sales data and by the end of the day it slightly fell. Retail sales rose in July by 0.6% in comparison with the prior month, which met the expectations. Core Retail Sales rose by 1% having exceeded the expectations (+0.6%) but prior month data were revised downwards.

By MasterForex Company

169

Overview of the main economical events of the current day - 26/09/2013

The USA will Reach National Debt Upper Limit Before October, 17

The US dollar dropped on Wednesday Vs most major currencies after four days of correctional growth amid the concerns of raising US national debt ceiling. The euro and the pound rose after the publication of positive statistics on German Consumer Confidence growth and UK Retail Sales. New Zealand and Australian dollar looked worse amid New Zealand trade balance deficit growth to many years’ heights.

As U.S. Secretary of the Treasury Jacob Lew said in the letter to the Speaker of the House of Representatives John Boehner - by October, 17 the U.S. Department of the Treasury would have exhausted the possibilities which allowed the country to avoid debt growth higher than the prohibited level. It was the first time when a deadline was marked by which the politicians will have to come to agreement about raising debt upper limit from the current reading $16.7 trillion.

US statistics released on Wednesday generally met the forecasts and didn’t have any significant impact on trading. Durable Goods Orders showed a weak growth in August as demand for aircraft and military equipment has declined. The orders grew in August by 0.1% while no changes were expected but prior month indicator was revised for the worse. Durable Goods Orders Ex Transportation fell by 0.1% against the forecasted growth by 1%. US New Home Sales rose by 7.9% in August to 421 thousand homes while a growth to 420 thousand was forecasted.

The euro rose after the publication of German Consumer Sentiment. GfK German Consumer Climate rose to 7.1 p. in October having exceeded the forecast of 7.0 p. September index was also revised upwards by 0.1 p. to 0.7 p. The reading in October became the highest one since September, 2007. Italian Consumer Confidence Index grew to 101.1 p. in September – the highest level since June, 2011 against 98.4 p. in August. At the same time Business Confidence Indicator of France dropped in September after four months of growth to 97 p. from 98 p. prior month.

The pound reached 4-day high against the dollar after the release of CBI Realized Sales. CBI Realized Sales reached +34 in September, the highest reading since June, 2012 against +27 in August while it was expected to fall. Consumer Confidence continues to strengthen in the country. The Bank of England announced on Wednesday that housing market recovery was gathering pace and its Financial Policy Committee was ready to act in case of risks for stability.

New Zealand fell to the lowest level for a week against the US dollar after the release of a weak trade balance report although then partially recovered its losses. New Zealand trade balance deficit was 1.19 billion New Zealand dollars in August having considerably exceeded the deficit expectations of 0.70 billion. The data turned out the worst for the past 5 years. The exports dropped by 13.5% in comparison with the prior month and reached the lowest level within the year.

By MasterForex Company

170

Overview of the main economical events of the current day - 27/09/2013

UK GDP Growth in the Second Quarter Disappointed Investors

The US dollar was traded upwards to most major currencies amid American labour market strong data, annual rates decrease of the UK economic growth, weak euro-zone data and political instability in Italy.

US Unemployment Claims are still near 6-year low – and decreased by 5 thousand last week to 305 thousand while a growth to 325 thousand was forecasted. Initial Jobless Claims - 4 Week Average continues falling and dropped by 7 thousand more last week to 308 thousand. These data are especially important before Non-Farm Payrolls which will be released next week.

[B]US Unemployment Claims[/B]

The Final Estimate of the US GDP growth for the second quarter was kept unchanged at 2.5% at an annual rate – which turned out slightly less than forecasted 2.6%-2.7%. Consumer spending growth was also unchanged – 1.8% Vs the forecast up to 1.9%. The exports and private investment were revised for the worse. However, American economic growth accelerated in the second quarter in comparison with 1.8%-growth by the end of the first quarter.

The dollar partially lost its positions after the release of housing market data. According to the National Association of Realtors (NAR) - Pending Home Sales Index, a leading index of real estate market, fell by 1.6% m/m in August to 107.7, which turned out a little more than expected decrease by 1%. Pending Home Sales have been falling for three months in a row.

The pound dropped after the release of UK Final GDP for the second quarter which turned out weaker than preliminary estimates. Country’s GDP growth estimate in the second quarter was kept unchanged at 0.7% in comparison with the prior quarter. But at an annual rate the reading was lowered to 1.3% from earlier announced level 1.5%, no changes were expected then. Revised Business Investment fell by 2.7% q/q Vs preliminary estimated growth by 0.9%. Current Account deficit for the second quarter also turned out worse than forecasted.

The euro was traded downwards amid euro-zone record loan decrease rates which have been falling for 16 months in a row. Private Loans dropped by 2% in August in the euro-zone in comparison with the same period last year. It is the lowest decrease in Private Loans from the moment of euro zone creation in 1999. During this year there were record loan decrease rates. According to new data the process is accelerating. Retail Sales fell by 0.3% in Italy while a drop only by 0.1% was expected.

The yen fell on Thursday after four days of strengthening on the back of Japanese stock market growth which maintained on speculation in corporation tax decrease and pension reform in Japan. Corporation tax decrease must smooth a negative economic effect from sales tax increase. Government Pension Funds can raise risky assets in their portfolios. Prime Minister of Japan is expected to announce an economic stimulus package on October 1 along with the decision on sales tax increase.

By MasterForex Company

171

Overview of the main economical events of the current day - 30/09/2013

The Main Events of the Week

The US dollar was traded downwards on Friday against most major currencies (except commodity ones) amid US Consumer confidence decrease and uncertainty about the budget and national debt ceiling. U. of Michigan Consumer Sentiment dropped in September to the lowest reading for five months 77.5 p. from 82.1 p. prior month. The data turned out worse than forecasted decrease to 78 p.

Negotiations on the budget and US national debt are still an important factor for all financial markets. Their failure can lead to the suspension of the government’s work which in case of duration for 3-4 weeks will decrease US GDP in the fourth quarter by 1.4% according to the forecast of Moody’s. The dollar was also negatively affected by the words of FOMC member Charles Evans who said that he wouldn’t be surprised if bond purchase reduction wasn’t started even in October. FOMC member William Dudley also said that the economy wasn’t strong enough yet to start tapering off QE.

The euro reached 8-day high on Friday Vs the dollar amid euro-zone economic sentiment growth. Euro-Zone Economic Confidence from the European Commission exceeded the forecast (96 p.) and grew in September to the highest reading since August, 2011 amounting to 96.9 p. against 95.3 p. prior month. The pound also rose after the Bank of England governor Mark Carney had said on Friday that he saw no reasons for further quantitative easing.

By the end of the week the dollar lost 0.24% according to the dollar index having closed the third week by decline. The dollar fell against the Japanese yen (-1.04%), British pound (-0.86%) and Swiss franc (-0.47%); it almost didn’t change Vs the euro and Canadian dollar; it rose Vs New Zealand dollar (+0.98%) and Australian dollar (+0.82%). According to the end of September, till the end of which only one day is left, the dollar significantly weakened having lost almost 1.9% according to the dollar index. Monthly decrease risks becoming the lowest for almost two years.

The first week of the month as always will be saturated with important events. There will be three central banks meetings, PMI, retail sales, inflation and labour market data. In euro-zone there will be a release of preliminary inflation data on Monday, on Thursday – manufacturing PMI and unemployment data, on Wednesday – ECB decision on rate and Mario Draghi’s press conference (the meeting is moved for one day due to the holiday on Thursday in Germany) and on Thursday – Service PMI and retail sales. In Germany retail sales data will be published on Monday, on Tuesday – labour market and on Friday – Producer Price Index.

In the UK Mortgage Approvals will be released on Monday and Manufacturing, Construction and Service PMI will be published from Tuesday to Thursday. A further index growth is expected except the service sector where the index is unchanged. In Japan industrial output and retail sales will be released on Monday, on Tuesday – Tankan quarterly report and on Friday the results of the Bank of Japan meeting will be announced.

In Australia retail sales will be released on Tuesday and RBA will announce the results of its meeting on rates, no changes are expected. JPMorgan forecasts another rate decrease in November and it can be insinuated already at this meeting. The markets consider 50%- probability of the rate decrease by 0.25% by the end of this year. On Wednesday Australian trade balance and building permits will be published on Wednesday. In China official Manufacturing PMI will be released on Tuesday and Service PMI – on Thursday. In Canada GDP will be released on Monday and Ivey PMI – on Friday.

In the USA Chicago PMI will be released on Monday, on Tuesday – ISM Manufacturing PMI and Construction Spending; on Wednesday - ADP Employment Change; on Thursday – ISM Service PMI and Factory Orders. Fed governor Bernanke will make a speech at St. Louis Fed conference on Wednesday. And finally, the week and probably the month will be finished on Friday by a key report of the whole week - Non-Farm Payrolls. About 180 thousand of new jobs are expected against 169 thousand prior month - and a constant unemployment rate 7.3%.

By MasterForex Company

172

By midnight today the Americans have to find a way to adjust their debt ceiling, or go technically into default. So all in all we can expect a week of action and good chances of making some extra money. But there are as many perils, so keep you stop losses tight and never forget that you need to have fun in trading to be successful.
The GBP and the JPY should offer plenty of opportunities today, keep an eye on those markets.
pipdragons.com

173

Overview of the main economical events of the current day - 01/10/2013

The US Government Can Shut Down for the First Time in 17 Years

On Monday the markets were not dominated by macroeconomic indicators but by a political crisis in Italy and a fiscal crisis in the USA. The US dollar had fallen a little to most major currencies by the end of the day amid aroused concerns that a failure of negotiations on the US budget for a new financial year could weaken economic growth of the country.

According to the evening of September, 30 two houses of the US Congress didn’t manage to bring their positions on budget issues closer, which may threaten the US government with the first shutdown in 17 years. This factor is putting pressure on the dollar and this issue is still dominating macroeconomic releases. Chicago PMI turned out better than expected (54 p.) and rose to 55.7 p. in September in comparison with 53 p. in August.

The euro opened with a fall amid aggravated political crisis in Italy. The leader of the Conservative Party Berlusconi withdrew his support from the government coalition last Saturday. Italian Prime Minister said that he would demand a vote of confidence on Wednesday to prevent government shutdown. The Fitch published statements about the situation in Italy warning that if Enrico Letta’s government didn’t get a vote of confidence on Wednesday, financial goals of the country may get in jeopardy.

The euro leveled all its losses after the news that some members of Berlusconi’s party may quit the party and support the Prime Minister in order to prevent the collapse of the Italian government. Euro-zone inflation dropped to the lowest reading in September for 3.5 years – 1.1% at an annual rate, which is significantly lower than the target ECB level. Inflation will not make any obstacles for further economic stimulation if the ECB decides it is necessary to support economy.

The pound updated a monthly height on Monday and reached almost 9-month high Vs the dollar amid positive housing market data. The pound showed the highest growth for September in per cent for more than three years. According to the Bank of England Mortgage Approvals rose to 62.2 thousand in August against 60.9 thousand prior month, which became the highest reading since March, 2008. Hometrack House Prices rose by 0.5% in September, which became the highest monthly growth since May, 2007.

The Australian dollar had almost no reaction on HSBC Final Manufacturing PMI decline for September, which was revised to 50.2 from preliminary reading of 51.2 – however, the result turned out slightly better than the reading in August 50.1. New Zealand dollar was traded upwards amid Business Confidence growth in the country to the highest readings for more than 14 years. ANZ Business Confidence rose to 54.1 in September against 48.1 in August – which has become the highest reading since March, 1999.

Canadian dollar also had almost no reaction to July economic growth data which turned out better than forecasted. Canadian GDP rose by 0.6% in July against the expected growth by 0.5% having shown the highest increase rates for 2 years. The yen reached a monthly height against the dollar but then lost all its growth on the back of correctional bounce of stock markets in the second half of the day.

By MasterForex Company

174

Overview of the main economical events of the current day - 02/10/2013

Fed QE Tapering Off May Be Not in October

The US dollar fell in the first half of Tuesday after the news about partial shutdown of the US government due to the disagreements over the budget bill in the Congress. But then the dollar partially recovered its losses amid the release of US Manufacturing PMI which grew despite the forecasts.

The markets seem to believe that government shutdown is unlikely to last long and economic damage may be limited (0.1%-0.2% from GDP per week). A larger concern is aroused by the problem of the US national debt ceiling increase which must be solved till October, 17.

The budget for a new financial year which comes October, 1 in the USA hasn’t been approved yet. The democrats and republicans in the Congress didn’t manage to agree even on a stopgap budget. For the first time in 17 years the USA is left without budget and the work of some federal institutions is suspended, so called ShutDown.

Publication of almost all indicators of statistics, which are released by governmental state institutions, may be delayed including Non-Farm Payrolls on Friday. All this can lead to the fact that the decision on QE3 tapering off may be not taken even at October meeting.

ISM Manufacturing PMI rose to 56.2 p. from 55.7 p. prior month while a drop to 55 p. was expected. The index has been growing for four months in a row. Inventories, production, employment and prices also have risen while new orders have decreased.

The euro reached the highest level since February, 6 Vs the dollar but then lost all its growth. Some pressure was put by German Employment report which showed unemployment growth in September by 0.1% to 6.9% while no changes were expected. German Unemployment Change rose by 25 thousand in September against expected decrease by 5 thousand. Euro-zone final Manufacturing PMI coincided with the preliminary estimate 51.1 p. against 51.4 p. in August (26-month height). However, the data of certain countries (Germany, Italy, and Spain) turned out worse than expected.

The pound reached its high since the beginning of the year but then also fell. UK Manufacturing PMI fell unexpectedly after 6-month growth while its continuation was forecasted. PMI dropped in September to 56.7 p. from 57.1 p. prior month (the highest reading for 2.5 years).

Australian dollar rose to 8-day high after the Reserve Bank of Australia had kept the key interest rate unchanged and published generally neutral statement according to which further rate decrease was unlikely. Other data were also positive. Retail sales in August rose more than expected - by 0.4% against the forecast +0.3%. HIA New Home Sales rose by 3.4% in August Vs prior month.

The yen was traded upwards after the Prime Minister of Japan Shinzo Abe had announced on Tuesday sales tax increase up to 8% from 5%, which will be followed by a stimulus package of 5 trillion yen to prevent economic slowdown because of a negative impact of tax increase. Tankan Large Manufacturers Index rose to its high for almost six years in the third quarter: 12 p. from 4 p. in June with the forecasted growth up to 7 p.

By MasterForex Company

175

Overview of the main economical events of the current day - 03/10/2013

Euro Reached 8-Month High Vs Dollar

The US dollar fell significantly on Wednesday and showed the lowest decrease for two weeks amid weak labour market data, continuation of the US government shutdown and unsolved budget issues and national debt limit increase. The euro rocketed on the back of the ECB governor Mario Draghi’s press conference and political tensions decline in Italy after Italian government got a confidence vote in the upper house of the parliament.

The White House and congressmen prepare for a long battle over the budget and continue exchanging accusations due to the shutdown of federal institutions without having started real negotiations on a compromise over the budget. According to The Wall Street Journal, the fact that lawmakers and the White House show no rapprochement increases the probability that the present crisis can turn into a more profound confrontation around the US national debt limit increase.

Due to the shutdown of statistical offices the only source of macroeconomic data in the USA became nongovernmental agencies. On Wednesday ADP data were released which showed a considerably smaller growth of employment change than expected, - which reduces the probability of QE3 tapering. FOMC Member Eric Rosengren also said on Wednesday that stimulus measures shouldn’t be tapered off prematurely.

ADP Employment Change rose to 166 thousand in September with the forecasted growth to 180 thousand. Prior month data were significantly revised downwards from 176 thousand to 159 thousand. ADP Non-Farm Payrolls on Wednesday, which is often considered a leading indicator of the official report, drew a greater attention of the market because of the fact that on Friday the official report of the Labor Department probably will not be published.

The ECB left the key interest rate on Wednesday unchanged at 0.5% per annum as it was expected. The euro had rocketed and reached 8-month high Vs the US dollar after the press conference of the ECB president Mario Draghi – investors regarded his comments as a sign that the central bank wouldn’t perform extra stimulation of the region’s economy which could put pressure on the euro. Draghi answered the question whether the euro rate was too high that the exchange rate was not a policy tool. The government of Italian Prime Minister Enrico Letta got a vote of confidence on Wednesday in the upper house of the parliament after the former Prime Minister Berlusconi decided to support the ruling coalition.

The pound was traded upwards despite a slight decrease of Construction PMI in the UK. Construction PMI dropped to 58.9 p. in September from the record reading for 6 years 59.1 p. seen in August against expected growth to 59.5 p. Meanwhile, Residential Construction reached the highest level since November, 2003 – 64.8 p. MPC Member Paul Fisher said on Wednesday that providing monetary policy Forward Guidance favored UK economic recovery.

New Zealand dollar rose after a tough statement of the Reserve Bank of New Zealand Governor Wheeler who said that in order to restrain inflation pressure and housing price increase – official interest rate could rise by 2% during 2014 – 2016. Interest rate can be raised even more significantly if the rules of mortgage lending don’t slow down housing prices.

Australian dollar was traded downwards on Wednesday amid weak macrostatistics data. Building Approvals in Australia fell by 4.7% m/m in August, which turned out considerably higher than forecasted decrease by 0.5%. Australian Trade Deficit in August fell less than expected to 0.815 billion AUD while its decrease to 0.4 billion AUD was expected.

By MasterForex Company

176

Overview of the main economical events of the current day - 04/10/2013

Shutdown Can Lead the USA to Default

The US dollar continued falling on Thursday against most major currencies for the fifth session in a row amid contradictory statistics and the US government shutdown. The dollar dropped against the euro, franc and yen and grew against the pound – having fallen a little according to the dollar index. Unemployment Claims turned out better than expected but the US Service PMI fell significantly. The euro rose on the back of strong retail sales data and euro-zone Service PMI growth. The pound decreased after a slight drop of the UK Service PMI.

There is no progress yet in budget and US national debt issues, government shutdown has been going on for three days in a row. The USA president Barack Obama said that the Shutdown could lead the country to default. Last week Treasury Department also said that the Congress could lead the country to default if it didn’t raise the debt limit till October 17.

According to the Bloomberg, next week republicans intend to offer the US president Obama to raise the USA national debt limit in exchange for accepting their suggestions on changing expenditure budget in particular healthcare program financing. Meanwhile, a famous business magnate and investor Warren Buffett believes that the US Congress will solve the question of debt ceiling increase before this problem starts hurting American economy seriously.

The US Unemployment Claims last week rose only by 1 thousand to 308 thousand although a growth by 8 thousand was expected. The claims rate is still about 6-year low. Initial Jobless Claims - 4 Week Average which smoothes the volatility of weekly data dropped by 3.75 thousand last week to 305.5 thousand – the lowest reading since May 2007. The data become more important because Non-Farm Payrolls is unlikely to be published on Friday.

The dollar fell on Thursday after ISM data release according to which Non-Manufacturing PMI dropped considerably in September to the lowest reading in three months 54.4 p. from the historical height of 58.6 p. in August. A decrease only to 57 p. was expected. Employment and PMI decreased most of all. FOMC member Williams making speech on Thursday said that mild monetary policy would be required for a rather long period of time. FOMC Member Dennis Lockhart also said that a long government shutdown made QE tapering in October less possible.

[B]ISM Manufacturing and Non-Manufacturing PMI[/B]

The euro continued rising amid rather strong data that prove EU economic recovery. Euro-zone retail sales rose by 0.7% m/m in August against the expected increase by 0.2%. Prior month data were also revised upwards from 0.1% to 0.5%. Euro-zone Final Service PMI rose a little more than expected – to 52.2 p. against the preliminary estimate of 52.1 p. In France and Italy the index turned out better than expected while it was worse in Germany and Spain.

The pound was traded downwards on the back of a slight decrease of Service PMI from almost 7-year high reached a month ago. The UK Service PMI fell to 60.3 p. in September against 60.5 p. in August while no changes were expected. But all three September indexes released this week – Manufacturing, Construction and Services – turned out worse than expected. Halifax House Price Index turned out a little worse than forecasted – it rose by 0.3% m/m in September while a growth by 0.5% was forecasted.

By MasterForex Company

177

Overview of the main economical events of the current day - 07/10/2013

The Main Events of the Week

The US dollar rose on Friday against most major currencies after five days of decline and recovered almost all its weekly losses according to the dollar index – amid the expectations that American authorities will manage to solve the US budget problems in the nearest days. Non-Farm Payrolls report wasn’t released on Friday and its publication is postponed indefinitely.

According to the results of the week the dollar lost 0.15% to the dollar index falling for four weeks in a row. The dollar dropped against the Australian dollar (-1.29%), Japanese yen (0.73%), New Zealand dollar (0.57%), euro (-0.25%) and Canadian dollar (-0.12%) – but it rose against the British pound (+0.76%) and Swiss franc (+0.15%). The dollar got under pressure last week amid aggravated budget and debt crisis in the USA, government shutdown and difficulties in negotiations between republicans and democrats in the Congress on budget issues and coming national debt ceiling increase term.

Despite the fact that no compromise between the White House and the Congress is reached, the first encouraging signs of confrontation overcome appeared on Friday – the representatives of the Republican Party in the US Congress started to soften their position towards ObamaCare and now they are more inclined to a more comprehensive agreement on budget which would include debt ceiling increase.

According to the Goldman Sachs a compromise on both key issues: budget and debt – will be not made before the end of this week and both problems will be solved with a single package deal. The most possible term is close to October 17. In the past the shutdown of the US public institutions financing happened 17 times for the last 40 years and continued from one day to three weeks. The last crisis was in late 1995 – early 1996 and was record long -21 days.

This week the markets will wait for the US fiscal budget settlement and a lot of US statistics published by state institutions are unlikely to be released. These are Trade Balance (Tuesday), Wholesale Inventories (Wednesday), Import Prices (Thursday); Retail Sales and Producer Price Index (Friday). Only nongovernmental agencies and also Federal Reserve data will be released. The main event will be the publication of FOMC Meeting Minutes on Wednesday. On Tuesday NFIB Small Business Optimism and IBD/TIPP Economic Optimism will be released; and on Friday - Preliminary U. of Michigan Consumer Sentiment. Tuesday, October 8 is the start of American companies Earnings Season for the third quarter which will last till the middle of November.

In the euro-zone the Final GDP for the second quarter and Sentix Investor Confidence will be released on Monday and ECB Monthly Bulletin- on Thursday. In Germany Trade Balance and Factory Orders will be released on Tuesday and on Wednesday – Industrial Output. Also Industrial Output will be released in France and Italy on Thursday. Industrial Output and Factory Orders growth is expected in Germany in August in comparison with weak July data.

The Bank of England publishes the results of its monthly meeting on Thursday; no changes in the policy are expected. Industrial output and trade balance of the UK will be released on Wednesday. In Japan Trade Balance and Current Account will be released on Tuesday, on Wednesday – BoJ Meeting Minutes from September 4-5 and on Thursday - Core Machinery Orders. Chinese Trade Balance will be released on Saturday.

In Australia labour force data are due on Thursday, on Tuesday - NAB Business Confidence, on Wednesday - Westpac Consumer Sentiment. In New Zealand NZIER Business Confidence will be released on Tuesday and on Thursday - Business NZ Manufacturing Index. In Canada Building Permits will be released on Monday, on Tuesday – Trade Balance, on Thursday – New Housing Price Index and on Friday – labour market report.

By MasterForex Company

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Overview of the main economical events of the current day - 08/10/2013

The USA Has No Budget for a Week, the Dollar Is Falling

The US dollar was traded moderately downwards on Monday to most major currencies amid no progress in fiscal crisis in the country. Most of all the dollar dropped against the yen on the back of continuing decline of Japanese stock market. The US government has been partially shut down for seven days. The US situation puts pressure on the dollar. Both parties on negotiations continue taking tough positions and don’t make compromise, which may jeopardize economic growth of the world’s largest economy.

Republicans still don’t intend to bring up for vote an issue about renewal of the government financing and national debt limit increase in the House of Representatives until the White House comes to terms in health insurance reform. The disagreements between the democrats and republicans seem to have intensified over the weekend. The leaders of the republicans increasingly insist on linking the attempts to resolve budget stalemate with the efforts to prevent debt default.

On Sunday the speaker of the House of Representatives John Boehner said that he couldn’t admit financing of the government or debt limit increase without negotiations on a wide cutdown in spending. The U.S. Secretary of the Treasury Jacob Lew said that the Congress was playing with fire if it didn’t raise debt ceiling till October 17. President Obama urged the Republicans to allow a free vote in the House of Representatives on spending bill. He believes that there can be enough votes in the House of Representatives for the bill to pass.

One of the largest banks of the USA, Bank of America lowered its forecast on US economic growth on Monday amid government shutdown. The forecast is lowered in the third quarter to +1.7% against +2.5% in the second quarter. The forecast for the fourth quarter is lowered to +2.0% from +2.5%. The analysts of the bank expect the Fed to start QE tapering off only in January 2014. Japan, the second largest holder of U.S. Treasuries, expressed its hope on Monday for a quick resolution of the US budget stalemate which can lead to a default on the national debt.

There were no significant macrostatistics data on Monday that could influence the markets. Sentix Investor Confidence fell unexpectedly in October to 6.1 p. from 6.5 p. in September although its growth to 10.9 p. was expected. According to the National Bureau of Statistics of Canada Building Permits slumped in August from a record reading of July – by 21.2% to 6.34 billion Canadian dollars against the expected decrease only by 2.4%. It is the lowest decrease of Building Permits since April, 2011.

The pound was traded upwards amid UK Economic Optimism growth which reached 17-year high in the third quarter, which proves the strength of British economy. According to the CBI and PwC opinion poll – companies of the UK financial service sector became more optimistic about the business outlook since 1996.

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Overview of the main economical events of the current day - 09/10/2013

Janet Yellen Will Be a New Chair of the Fed

The US dollar almost didn’t change on Tuesday by the end of the day amid still uncertain situation of the US fiscal crisis resolution. There is almost no progress in budget debates between democrats and republicans; government shutdown has been going on for eight days. The dollar strengthened a little on Tuesday against Canadian dollar and the yen. Trade deficit of Canada has widened. Factory orders in Germany also turned out worse than expected.

Tensions around budget problems in the USA that threaten with default continue growing but still there are no signs of active negotiations between the republicans and the White House on crisis overcoming. Some legislators’ initiatives intended to find a way to a compromise don’t get a wide support. Besides, the White House says that president Obama is still not ready for negotiations on Obamacare tapering in exchange for concessions of republicans about federal government financing.

The speaker of the U.S. House of Representatives republican John Boehner continued putting pressure on president Obama and the democrats on Tuesday. He said that he wouldn’t admit the US debt limit increase without concessions of the democrats and president Obama. The president risks leading the country to default if he doesn’t start realistic negotiations, said Boehner.

The democrats plan to hold a vote till the end of the week on the measures that would allow Obama to increase debt ceiling. On Thursday Finance Minister Jacob Lew will make a speech in the U.S. Senate Committee about finance issues and national debt limit. The US default on national debt can have more unpredictable consequences for financial markets than investment bank Lehman Brothers collapse in 2008, said Mohamed El-Erian, CEO of PIMCO.

The US data of nongovernmental agencies turned out worse than expected. NFIB Small Business Optimism dropped to 93.9 p. in September – the lowest reading for three months in comparison with 94.1 p. in August although its growth was expected. IBD/TIPP Economic Optimism fell by 16.5% in October to 38.4 p. compared with 46 p. in September. This IBD/TIPP index is a good leading indicator for U. of Michigan Consumer Sentiment which will be released on Friday.

Meanwhile, the White House says President Obama intends to nominate Federal Reserve Vice Chairwoman Janet Yellen to chair the Federal Reserve. The Wall Street Journal also says that the Fed’s vice chair, Janet Yellen would replace Ben Bernanke. If this information is confirmed, Yellen will be the first woman to head the U.S. central bank.

The Canadian dollar was traded downwards amid Canadian foreign trade weak data. Trade deficit in August rose to 1.31 billion Canadian dollars from 1.19 billion in July – while a decrease of deficit to 0.70 billion was expected. The imports rose by 2.1% m/m and considerably exceeded the expectations.

The euro also couldn’t show a stable growth on the back of unexpected decrease of Factory Orders in Germany which fell in August for the second month in a row. Factory Orders in the largest economy of the euro-zone fell by 0.3% m/m due to a sharp decrease of foreign orders while a growth by 1.1% was expected. German Trade Balance n.s.a. for August and Current Account also turned out worse than forecasted.

By MasterForex Company

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

The Pound Fell After Weak Industrial Output Data

The US dollar rose to most major currencies before the publication of September FOMC Meeting Minutes where it was decided not to taper off QE – and reached 3-week high according to the dollar index. British pound dropped at weak industrial output data and trade balance; the euro also fell. Japanese yen weakened amid Japanese stock market growth which showed the best growth since late September. Canadian dollar reached a monthly low according to the US dollar, AUD and NZD looked slightly better.

FOMC Meeting Minutes showed that FOMC members who voted against QE3 reduction explained their decision with weak economic statistics, worsening financial conditions and fiscal risks. However, many Fed leaders still would like to start QE3 tapering off by the end of the year and finish this program by the middle of 2014. The decision to put off QE reduction was taken be a few votes. It increases the possibility of bond purchase reduction within next several months.

President Obama said on Wednesday about the nomination of Janet Yellen for the Fed chair. According to The Wall Street Journal the budget conflict and the republican opposition can delay the appointment of a new Fed chair. Meanwhile, the US conflict between the white House and the republican opposition is still going on; state institutions still don’t work and there are no signs of exit from this situation yet. President Obama announced that the American economy risked going into a deep recession if the Congress didn’t agree to a government financing recovery and didn’t increase debt limit – and he urged the opponents to refuse from blackmailing.

The pound fell on Wednesday to 3-week low Vs the dollar after the release of weak industrial output data and UK trade balance. Industrial output decrease rate turned out the highest for almost a year. Industrial output unexpectedly fell by 1.1% Vs the prior month, manufacturing production – by 1.2% while its growth was expected. Although Total Trade Balance Deficit fell in August from 3.4 billion pounds to 3.3 billion but it turned out worse than expected decrease to 2.1 billion.

The euro followed the pound and updated October lows having no reaction to German industrial output data that turned out a little better that forecasted due to car production increase by 13.6%. German industrial output rose by 1.4% in August in comparison with the prior month against the expectations of growth by 1%. The decrease in July was less than reported before. Bundesbank marks that extremely good consumer sentiment supports German economy.

apanese yen and Swiss franc weakened on Wednesday against the dollar amid the nomination of Janet Yellen as a Fed chair. Yellen is famous for her adherence to a mild monetary policy and her support of further measures on economy stimulation can favor the growth of risk assets and decrease the demand for safe-haven assets such as the yen and franc.

By MasterForex Company

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Overview of the main economical events of the current day - 11/10/2013

USA: Breakthrough in the Stalemate

The US dollar rose on Thursday Vs the yen and slightly changed Vs other major currencies having added about 0.16% according to the dollar index amid the first signs of the US fiscal crisis resolution. The yen weakened significantly on the back of the decrease of defensive assets demand and the growth of inclination to risk. The pound and euro almost didn’t change by the end of the day amid the finished meeting of the Bank of England and weak industrial output data in France and Italy.

There appeared the first signs that the US lawmakers are moving towards an agreement on national debt limit increase. On Thursday it was announced that republican leaders in the House of Representatives were going to introduce an offer to the U.S. President Barack Obama about temporary debt limit increase for six weeks amid a more extensive plan of budget discussion. It may become a breakthrough in the stalemate which led to a partial shutdown of the government and put the USA on the brink of a debt default.

Meanwhile, on Thursday weak statistics on US labor market was released. Unemployment Claims rocketed by 66 thousand last week to 374 thousand although its growth by 4 thousand was expected. Weekly growth is the largest for almost a year. However the data were not quite true-to-life – it was influenced by government shutdown and a failure of computer systems. Labor Department announced that about a half of new claims was due to California which shifts to a new computer system and two previous weeks it gave incomplete data. And only 15 thousand of claims were aroused by government shutdown.

The pound and the euro almost didn’t change by the end of the day. The Bank of England, as it was supposed, kept the key interest rate and Asset Purchase Facility unchanged. French industrial output in August reached the forecasts and rose only by 0.2% against the expected growth by 0.5%. Italian industrial output fell by 0.3% in August while its growth by 0.6% was expected. ECB President Mario Draghi making speech on Thursday in New York said that the ECB would follow mild policy to help the recovery.

The yen weakened significantly on Thursday amid stock indexes and risk inclination growth and decrease of demand for defensive assets. DJIA rose by 2.18% having shown the highest growth since this January. Core Machinery Orders in Japan rose by 5.4% m/m in August and reached the highest level for almost 5 years, which favored Japanese stock market growth. The Bank of Japan will do everything that is required to overcome deflation, said the head of Japanese central bank, Haruhiko Kuroda in New York. However, he refused discussing extra measures of reaching this goal.

Australian dollar was traded downwards after the release of labor market mixed data but then recovered its losses. Despite unexpected decrease of unemployment rate in September from 5.8% to 5.6% - employment rate rose only by 9.1 thousand and didn’t reach the forecast of 15 thousand. Participation Rate reached its low for almost 7 years – 64.9% of labor force against 65% in August.

New Zealand dollar fell slightly amid Business Manufacturing Index decline to 3-month low. Business NZ Manufacturing Index dropped to 54.3 p. in September in comparison with 57.5 p. prior month.

By MasterForex Company

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Overview of the main economical events of the current day - 14/10/2013

The Main Events of the Week

The US dollar was traded on Friday moderately downwards Vs most major currencies amid US consumer sentiment decrease to the lows of the beginning of this year. The euro rose moderately while the pound fell insignificantly amid the UK construction activity decrease. The yen continued weakening having fallen to almost 2-week low Vs the dollar. The Canadian dollar rose after the labor report of Canada which showed an unexpected fall of unemployment rate to its low since December, 2008.

Preliminary U. of Michigan Consumer Sentiment fell in October more than expected (76 p.) to 75.2 p. compared with 77.5 p. in September. Current assessment was kept almost unchanged while economic outlook index fell significantly. Consumers are more pessimistic about economic outlook in terms of unsolved budget problems and the US national debt limit increase issues.

By the end of the week the dollar had risen by 0.3% according to the dollar index having shown the first weekly growth after four weeks of decrease. The dollar rose Vs the Japanese yen (+1.13%), Canadian dollar (+0.55%), Swiss franc (+0.53%), British pound (+0.34%) and the euro (+0.11%). The dollar dropped only against Australian dollar (-0.35%) and New Zealand dollar (-0.06%).

The dollar was supported by FOMC Meeting Minutes published last week which showed the intentions of most FOMC members to start QE tapering off by the end of this year; and also a seemed exit from the US fiscal crisis. Opposed parties started negotiations although no real results are reached yet.

This week the markets will still pay attention to the USA where the negotiations between the democrats and republicans on budget issue resolution and the US debt limit increase are going on. A bowling point comes on October 17 and quite probably the agreement between the parties will be reached at the very last moment. This week there will be a release of RBA Meeting Minutes; inflation data (UK, euro-zone, New Zealand, Canada, China); retail sales (UK and China), labour market (UK); and a large Chinese information block at the end of the week.

Monday is a day off in the USA (and Canada). On Tuesday Empire State Manufacturing Index is released, on Wednesday - NAHB Housing Market Index and Fed economic survey Beige Book, on Thursday - Philadelphia Fed Manufacturing Index and on Friday - CB Leading Index. Consumer Price Index will be released on Wednesday; Industrial Output, Building Permits and Housing Starts are unlikely to be published on Thursday.

In euro-zone industrial output will be released on Monday, on Wednesday – final Consumer Price Index and Trade Balance, and on Thursday – Current Account. On Tuesday euro-zone and German ZEW Economic Sentiment is released – investor sentiment seems to stay almost unchanged in October amid political tensions in the USA and Italy.

In the UK on Tuesday there will be a release of Producer and Consumer Price Index, on Wednesday – labour market data, and on Thursday – retail sales. In Australia on Tuesday there will be a release of the Reserve Bank of Australia Meeting Minutes and New Motor Vehicle Sales, and on Thursday - NAB Quarterly Business Confidence. Consumer Price Index of New Zealand will be released on Wednesday, and on Friday – of Canada. In China on Monday there will be also a release of inflation data, and on Friday – a large information block (GDP, industrial output, retail sales, fixed asset investment).

By MasterForex Company

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Overview of the main economical events of the current day - 15/10/2013

Industrial Output Rate Reached 2-Year High in the Euro-Zone

The US dollar was traded moderately downwards Vs most major currencies amid broken hopes for a progress in negotiations of lawmakers on budget and national debt which again came to the deadlock on weekend – three days before the debt ceiling is reached. The euro was supported by the euro-zone industrial output data which turned out a little better than expected. New Zealand dollar rose on the back of positive housing market and service sector data. Japanese yen lost all its growth amid stock markets bounce.

During the weekend the U.S. President Obama didn’t manage to come to an agreement with the republican majority in the House of Representatives. The leaders of the parties in the Senate held their own negotiations but they also couldn’t reach any progress. The U.S. present debt ceiling will be reached soon after October 17. The US federal government works in a reduced volume since October 1 due to the lack of budget, which has a more clearly negative impact on the economy.

The dollar reduced its losses at the end of the day amid new hopes that the lawmakers would manage to reach a progress in the crisis resolution. The U.S. Senate leaders said that an agreement on debt limit increase and the recovery of the government work was coming. The White House put off the meeting of President Obama with lawmakers to give the Congress leaders more time to work out an agreement.

According to The Wall Street Journal the Fed will probably continue stimulating economy by quantitative easing to cover losses from the US government shutdown and intense debates over debt limit increase. According to the results of the last poll of economists held by WSJ last week, none of 46 respondents expect QE tapering off at the meeting on October 29-30. 37 of 46 economists expect QE tapering in December or in January. However, many say that the Federal Reserve can escape it even till the end of the first quarter 2014 or probably even longer. Meanwhile, the analysts of many leading banks decrease its estimates of the U.S. dollar rate Vs major currencies by the end of the year.

The euro rose moderately on Monday, which was favored by published industrial output data of the euro-zone which turned out a little better than expected. Industrial output grew by 1% m/m in August having covered the same 1% decline which was recorded in July. A growth only by 0.8% was forecasted. Monthly growth became the largest for two years although it became possible due to a sharp decline in July. At an annual rate industrial output dropped by 2.1% against the expected decrease by 2.5%.

The Australian dollar opened with a decrease after the release of Chinese trade balance data on Saturday which showed a fall of Chinese trade balance surplus, the main trade partner of Australia. But then AUD covered its losses and even closed with an increase amid weak dollar and risk inclination growth. Chinese trade balance surplus fell to $15.2 billion in September from $28.5 billion prior month having exceeded the expectations considerably. The exports fell by 0.3% at an annual rate against the expected growth by 5.5%.

Weak economic data on Chinese exports in September aroused concerns about GDP for the 3d quarter in China which will be released on Wednesday. Chinese inflation accelerated in September while New Yuan Loans exceeded expectations. Consumer Price Index rose by 3.1% in September from 2.6% in August having exceeded the expected growth by 2.8% - which turned out the highest growth rates for 7 months. Chinese inflation growth can limit central bank of China in actions aimed at stimulation of economic growth.

New Zealand dollar reached almost 3-week high on Monday Vs the US dollar amid positive statistics. Housing prices continued growing - REINZ Housing Price Index rose by 0.8% in September Vs August. REINZ House Sales rose by 19% at an annual rate. Housing market in New Zealand revived before the introduction of mortgage limits announced by the Reserve Bank of New Zealand. Performance Services Index on New Zealand increased to 55.6 p. in September compared with 53.3 p. in August.

By MasterForex Company

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Overview of the main economical events of the current day - 16/10/2013

Dollar Strengthened Amid Hopes for Political Stalemate Resolution

The US dollar strengthened on Tuesday amid the hopes for an agreement in Washington which would allow overcoming a political stalemate and recovering federal government work – but then it lost a part of its growth after a shutdown of negotiations in the Senate. The euro weakened on the back of German mixed ZEW economic confidence data. Swiss franc also reached almost 4-week low Vs dollar. The pound was supported by inflation and housing market data and the Australian dollar was supported by the Reserve Bank of Australia Meeting Minutes.

The Senate leaders are coming to an agreement which will help to move a default threat for the US and recover a normal financing of the government – an appropriate bill may be approved by the senators in the nearest time. The dollar lost some positions at the end of the day after the negotiations in the Senate had been suspended – until the republicans in the House of Representatives become certain about future actions and introduce their own budget plan. The Senate and the House of Representatives work at different budget proposals.

Besides, the Fitch Ratings announced on Tuesday about a possible revision of the US credit rating “AAA” after the negotiations on debt limit increase and a stop of government shutdown came to a standstill – which according to the agency can harm the US dollar’s role credibility. Meanwhile, Empire State Manufacturing Index slumped to 5-month low against forecasted growth. Empire State Manufacturing Index dropped to 1.52 p. in October from 6.29 p. in September while a growth to 7 p. was forecasted. The decrease was due to a worsening situation with employment and prime costs.

The euro fell after the release of uncertain German ZEW economic confidence data. German ZEW Economic Sentiment rose in October to its high from April, 2010 – to 52.8 p. while the indicator was forecasted to stay unchanged at September level 49.6 p. German ZEW Current Situation fell to 29.7 p. in October compared with 30.6 p. in September – against expected growth to 31 p. Euro-Zone ZEW Economic Sentiment also didn’t reach the forecasted reading 59.4 p. and grew to 59.1 p. in October from 58.6 p. in September.

The pound also dropped but then recovered its loss, which was favored by Consumer Price Index which turned out better than expected and by official House Price change data. Consumer Price rate remained unchanged in September in comparison with August. Consumer Price Index rose by 0.4 m/m and 2.7% y/y having exceeded the expected growth by 0.3% m/m and 2.6% y/y respectively. ONS House Price Index increased by 3.8% in August having shown the highest price growth since October, 2010. The growth accelerated from July reading 3.3% and it was more significant than forecasted 3.4% growth. House Price Index reached a record level in the country’s history.

Australian dollar was traded upwards on Tuesday and reached the highest reading Vs dollar for almost four months – after the publication of RBA Meeting Minutes which turned out well-balanced. Though the Reserve Bank of Australia said that it didn’t exclude the possibility of further rate decrease, it marked that there was no urgent necessity in rate decline now.

By MasterForex Company