03.04.2014 - Mario Draghi can start to fight deflation

Major U.S. indexes finished the trading session with a slight increase on the background of statistics on the labor market and factory orders. Thus, the number of non-farm payrolls in the U.S. increased by 191 thousand, which is 1 thousand worse than the forecast, but 13 thousand better than the previous month. The volume of factory orders increased in February by 1.6%, against the forecast 1.3%. Also yesterday, was published data on mortgage applications which fell by 1.2%. The S&P500 is at its all-time highs and will probably continue to increase in case of positive data on the labor market which will be published on Friday.

The price of euro fell on the background of negative data on GDP growth in the euro area in the 4th quarter of 2013. Indicator grew by 0.2%, against the forecast of growth by 0.3%. Today, the focus will be on the ECB's decision on interest rates (09:00 GMT) and the press conference of the head of the ECB Mario Draghi (12:30 GMT) at which can be announced new measures to fight deflationary risks that grow in recent periods. In case of the announcement of new incentive measures, we expect decrease in quotations of euro. We maintain a long-term negative outlook for the euro.

The price of the British pound consolidates above the level of 1.66. Growth of quotations stopped amid falling of an index of business activity in the construction sector of the UK by 0.1 to 62.5 against the forecast 63.1. Thus, the report showed that builders are hiring staff at the fastest pace in four months. Considering stable development of the UK economy we maintain medium and long term positive outlook for the pound. The course of trading today may be affected by the report on the credit market of the Bank of England and services PMI of the country (8:30 GMT).

The price of USD/JPY has reached the target level of 104.00after consolidation. Further movement of the pair will depend on the data on the U.S. labor market, which will be released tomorrow. Growth of quotations connected with the beginning of the new fiscal year and the start of the period when Japanese corporations investment in their overseas offices. Considering strong growth in the previous days, there is a high probability of price correction, after which we expect continued growth. We maintain our medium-and long-term positive outlook for the pair.

The price of the Australian dollar continues to consolidate above the support line at 0.9215. Despite the growth in retail sales in Australia for 0.2% against the forecast 0.4%, the decline of the Australian dollar has stopped, due to the fact that the trade surplus totaled 1.2 billion against the forecast 0.80 billion. Negative impact on the price of the Australian dollar had data on reduction of non-manufacturing PMI in China, which fell to 54.5, against 55.0 in February. We maintain a medium-term negative outlook for the Australian dollar.

The New Zealand dollar continued to decline on weak data from China and the fall of the Australian currency. We predict the fall of quotations of currency to slow down near 0.8520. Further price movement will depend on the data on the U.S. labor market, which will be released tomorrow. We expect growth of the New Zealand dollar and price recovery after the end of correction.

Fall in oil prices slowed against decrease in oil reserves by 2.3 million barrels, and the positive statistics on factory orders and the labor market in the United States. Despite this, distillers inventories increased by 0.55 million barrels on the background of warming in North America, which should lead to a further decline in oil demand. We maintain a long-term negative outlook for oil.

The price of gold stopped falling and began to grow. Investors consider the current levels attractive enough for buying. Gold prices are also supported by rising demand from Chinese consumers. Further progress will depend on labor market data. In case of positive, the dollar will strengthen, what will prevent further growth in gold prices. We maintain a long-term positive outlook for gold.

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