06.05.2014 - Chinese industry has disappointed markets
Major U.S. indexes ended the trading session on Monday with a slight increase. In the center of the attention of investors is still a tense situation in Ukraine. Beginning trading passed on negative mood due to lower the manufacturing PMI in China to 48.1 compared with a forecast growth to 48.4. A value below 50 for the fourth consecutive month indicates the slowdown in the sector. Despite this, services PMI in the U.S. rose to 55.0, vs. 54.2, which helped the bulls. We maintain a long-term negative outlook on the U.S. market and expect a decline in the near future.
The price of euro continues to consolidate around the level of 1.3880. European Commission lowered its forecast for GDP growth in the euro area in 2015 by 0.1% to 1.7% and inflation to 1.2%. Moreover, there was increased growth forecast for the Spanish economy in 2014 by 0.4% to 2.1%. Among the risks for the euro area remain deflation and geopolitical tensions. The course of trading today can be affected by the data on retail sales in the Eurozone (09:00 GMT), the number of unemployed in Spain (07:00 GMT) and the U.S. trade balance (12:30 GMT). We maintain a long-term negative outlook for the euro.
The price of the British pound has not changed much during yesterday's trading session due to a holiday in the UK and the low activity of traders. Today, the course of trading may be affected by the data on the services PMI of the country (8:30 GMT). Increase in volatility is expected on Friday after the release of data on the trade balance and industry. Considering the steady growth of the economy and reduction of unemployment, as well as a positive trade balance of the country, we maintain a long-term positive outlook for the pound.
The price of USD/JPY has corrected upwards after a sharp decline amid rising tensions in Ukraine, which led to increased demand for defensive assets. In Japan today, is a day off, but at 23:50 GMT will be published minutes of the previous meeting of the Bank of Japan, which may increase the volatility in the market. Considering the loose monetary policy of the Bank of Japan aimed at the growth of the monetary base by 60-70 trillion. per year and the targeted inflation rate at 2.0%, we maintain long-term and medium-term positive outlook for the pair.
The price of the Australian dollar increased slightly in anticipation of the statements of the Reserve Bank of Australia, despite the weak data on the country's trade balance and the unfavorable situation on the iron ore market. Thus, the trade surplus made 0.73 billion against the forecast of 1.1 billion. Also the course of trading this week may be affected by data on retail sales in March and the unemployment rate in April. Negative impact on the Australian currency has a slowdown in China's industrial and low inflation in Australia. We maintain a medium-term negative outlook for the AUD/USD.
The price of NZD/USD continued its strong growth, despite the weak data on the industry in China. To continue the upward movement and overcome the level of 0.8700, the New Zealand currency needs an additional incentive. Today at 22:45 GMT, will be published data on the unemployment rate of New Zealand, which will lead to increased activity of traders. We expect a correction in the near future, but keep a positive medium-term outlook for the pair.
The price of Light Sweet crude oil fell against worsening in the industry in China, which is the second largest oil consumer in the world, as well as growth in supply from Libya. Despite this, the prices remain high due to continued conflict in eastern Ukraine, where the anti-terrorist operation continues. We expect a decrease in tension in the country in the coming months and keep a long-term negative outlook for oil.
The price of gold continued to rise due to increased interest in defensive assets. The reason for the increase in gold positions was new clashes in Ukraine, which increase the risk of conflict escalation. Growing tensions in Ukraine is expected on May 8-11. It is worth noting a slight increase in demand for the metal from Asian consumers. We recommend opening long positions in gold of medium-term goals around 1330 and $ 1350 per troy ounce.