03.03.2014 - Investors' attention is focused on the situation in Ukraine
U.S. stock indexes finished last trading session of the month with mixed dynamics. The focus of investors was on statistics on U.S. GDP growth, which in the 4th quarter of the previous year grew by 2.4%, which is 0.2% worse than analysts had expected. Besides, the manufacturing PMI of Chicago increased to 59.8 against the forecast of 54.6, the index of consumer confidence in the U.S. at the same rose to 81.6. On Friday was also published statistics from the Eurozone, where the unemployment rate has remained at 12.0% and the consumer price index also remained unchanged at 0.8%.
On this background, the euro strengthened greatly and reached the level of 1.3810. A strong fundamental factor is needed to fix above this level. We expect that further progress will be below the level of 1.38. Today, the course of trading will be affected by data on manufacturing PMI of the Eurozone (09:00 GMT) and the U.S. (13:30 GMT). Also, we should pay attention to personal spending and income of consumers in the U.S. (13:30 GMT) and the speech of ECB President Mario Draghi. Investors are closely watching the situation in Ukraine, where Russia has sent troops. Ukraine declared mobilization and military conflict can lead to serious consequences for the whole world.
The British pound continued a gradual increase. The reason of an increase in quotations was the weakening of the U.S. dollar and positive statistics in the UK. Thus, the index of consumer confidence in the UK remained unchanged at -7 in February, the highest level since September 2007. Index pointed a significant improvement since last February, when the index reached -26. The housing price index rose by 9.4% per annum, after increasing 8.8% in January. Economists had expected growth in February at 9 %. Further growth will require strong fundamental factors. We maintain our positive long-term outlook for the pair GBP/USD. Today the course of trading will be affected by data on manufacturing PMI on the UK, as well as data on mortgage lending (09:30 GMT).
Positive statistics from Japan, published on Friday, stimulates the strengthening of the national currency. Despite the loose monetary policy of the Bank of Japan, the growth of indicators such as retail sales and industrial production have led to the strengthening of the yen. We maintain a long-term positive outlook for the USD/JPY, but in the short and medium term the price of pair according to our estimates will decline. Tonight (23:50 GMT), we should pay attention to data on the monetary base in Japan.
The price of the Australian dollar continues to decline gradually. Falling paused on positive statistics on the manufacturing PMI which grew to 48.6 in February, compared to 46.7 in January, as well as increased sales of new homes by 0.5%. At the same time, investors do not hurry to accumulate positions in anticipation of the statement of the Reserve Bank of Australia and the data on the balance of payments of the country. We maintain our negative medium and long term outlook for the Australian dollar.
The price of the New Zealand dollar declined after rising in the previous days. Now the quotes are near the strong level of 0.8350. This week is not expected the release of important macroeconomic data and price movement will depend on external news. At the same time the data on the growth of manufacturing PMI in China by 0.2 to 48.5 did not strongly influence the course of trading on the New Zealand dollar. We expect that the price of NZD/USD will continue to move within the corridor 0,82-0,84 in the medium term. In the long term quotes of pair will probably decline.
The price of Light Sweet crude oil continues to trade near levels of 102-103 dollars per barrel. Despite the expected drop in oil demand associated with the temporary stoppage of oil refineries in order to change to the spring mode prices remain at high levels. Bulls are supported by rise tense concerning conflict in Ukraine in connection with which Russia faces sanctions. Several countries, including the United States, has recalled its ambassadors from Moscow for consultations. We recall that the Russian Federation is one of the largest oil producers in the world. We expect the settlement of the conflict and decline in oil prices in the medium and long term.
The price of gold opened the trading week with strong growth amid tensions over Ukraine. Moreover it is worth noting that investors still fear a decline of stock markets and prefer to invest in defensive assets. Reserves of "gold" investment funds continue to grow gradually. We keep medium and long term positive outlook for gold.