02.04.2014 - The markets are waiting tomorrow's statement of Mario Draghi
Major U.S. stock indexes closed the trading session with growth. The reason for optimism was the data on manufacturing PMI in the U.S., which rose in March by 0.5 to 53.7, but has not met forecasts of analysts. In addition, construction spending in February increased by 0.1% compared with a decline of 0.2% in January. It should be noted that the broad U.S. stock index S&P 500 reached historical highs and will likely continue the upward movement in the medium term.
The quotes of euro rose due to the dollar strengthening after data on manufacturing and construction spending in the U.S. In addition, the price of the euro was supported by data on the growth of industrial activity in Italy, Spain and France. Similar indicator in the euro area appeared unchanged. Positive for the market was the decline in the unemployment rate in the euro area to 11.9%. Today the course of trading will be affected by data on GDP growth in the Eurozone (09:00 GMT), non-farm employment change (12:15 GMT) and factory orders in the U.S. (14:00 GMT).
The central event of this week will be the ECB's decision on interest rates and the press conference of the head of the ECB (tomorrow 12:30 GMT) at which Mario Draghi may announce plans on further measures against deflation, which will lead to the depreciation of the euro. We maintain a long-term negative outlook for the euro.
The price of the British pound has corrected amid strengthening of the U.S. dollar and weak data on the manufacturing PMI of the United Kingdom, which in March fell to its lowest level since July of the last year - 55.3, against an expected growth to 56.7. Today, the focus of traders will be on statistics on the index of business activity in the construction sector of the UK (8:30 GMT). After completion of the correction, we expect renewed growth, thus, it is worth noting that the price dynamics will also depend on data on the U.S. labor market, which will be released this week. We maintain a long-term positive outlook for the British pound.
As was expected before, the price of USD/JPY has reached the upper limit of the upward channel and now is trading below 104.00. At the moment, there is a possibility of correction, to which contributes the decrease of the monetary base growth rate to 54.8% per annum against the forecast of 60.2%. Further movement will depend on the U.S. labor market. We keep medium and long term positive outlook for the yen.
The price of the Australian dollar continued to decline due to correction. The reason for the decline was the weak manufacturing data in Australia and China. The number of issued building permits in February fell by 5.0% against the growth of 6.9% in January. We expect an increase in volatility tomorrow at 00:30 GMT, after the release of data on retail sales and trade balance of Australia. Further price movement will depend on the statistics, which will be released this week in Australia and the USA.
The price of the New Zealand dollar fell after the release of the index of commodity prices, which is considered a leading indicator of changes in export prices. Indicator showed a decline by 0.1% vs. the previous figure 0.9%. Corrective movement may continue in the short term, but we keep the medium-term positive outlook.
The price of Light Sweet crude oil fell after the publication of a survey of analysts who predict a rise in U.S. oil inventories by 2.5 million barrels. In addition, traders negatively perceived weak manufacturing data in China. The course of trading today will be affected by data on oil and petroleum products in the U.S. (14:30 GMT). We keep medium and long term negative outlook for oil.
Gold prices continued to decline amid outflows from the "gold" funds. Reserves of the world's largest exchange-traded fund secured by gold (ETF) SPDR Gold Trust on Monday fell by 3.89 tons to 813.08 tons that appeared to be the biggest outflow of more than a month. Another reason for the decline was the withdrawal of Russian troops from the borders of Ukraine, which reduced geopolitical tensions in the region. We expect the stop of falling soon and the resumption of purchases and keep a long-term positive outlook.