08.05.2014 - Putin's statement lowered the price of gold
Major U.S. stock indexes were mixed. The reason for the growth of the market was the statement of Janette Yellen, who said about the need to support the economy in the United States due to the fact that unemployment and inflation have not yet reached target levels. Support for the market was the fact that 75% of companies from the index S&P500, which have already reported, showed better results than was expected. Despite this, we maintain a long-term negative outlook on the U.S. market.
After a strong growth the day before, the euro corrected downwards. Reason for the decline was the statement by Janet Yellen, who noted a significant increase in U.S. GDP in the second quarter. In addition, investors were disappointed by the weak data on industrial production in Germany (-2.8% in industrial orders) and France (-0.7% in industrial production). Today, the focus of traders will be on the ECB's decision on interest rates (11:45 GMT) and the press conference of Mario Draghi (12:30 GMT). We maintain a long-term negative outlook for the euro.
The British pound continued price correction after a strong growth, as well as due to the strengthening of the U.S. dollar. In addition, investors fix positions before the statement of Bank of England on monetary policy. The course of trading today may also be affected by the data on house price index in April (7:00 GMT). Despite the continuation of the correction, we expect the resumption of growth and maintain medium and long term positive outlook for the pound.
The price of USD/JPY started to correct upwards amid the statement of Janet Yellen on the need to support the U.S. economy and strong GDP growth in the second quarter. We expect growth of price of the pair to 102.00. Further price movement will depend on the index of leading economic indicators in Japan, which will be published tomorrow at 05:00 GMT. Considering loose monetary policy of the Bank of Japan, we keep positive long-term outlook for the pair.
The price of the Australian dollar, after correction, rose on statistics on increasing employment in April by 14.2 thousand against the forecast of 7.5 thousand, as well as data on the unemployment rate, which remained at 5.8% despite the forecasted increase to 5.9%. Positive for the traders as was the increase in the trade balance of China to 18.5 billion against the forecast of 15.2 billion. We expect growth of price of the Australian dollar in the medium term.
The price of the New Zealand dollar continued to decline after the statements of the Reserve Bank of New Zealand on the readiness of intervention to reduce the exchange rate of the national currency. Tomorrow the course of trading will be affected by data on inflation in China. We expect the resumption of growth of the New Zealand dollar in the medium term.
The price of the U.S. benchmark Light sweet crude oil rose on reducing inventories of crude oil by 1.7 million barrels. At the same time, gasoline inventories decreased by 1.6 million barrels. In addition, the prices were supported by the statement of the Fed’s chairman considering strong GDP growth in the second quarter, leading to an increase in demand for oil. Traders continue to monitor the situation in Ukraine, where continues the anti-terrorist operation. We maintain a long-term negative outlook for oil.
The price of gold has fallen sharply on the background of statement by Russian President Vladimir Putin, who called separatists in Ukraine to do not hold a referendum on the independence of the eastern regions on May 11 and called on the parties to the dialogue. An additional factor for the decline was the strengthening of the U.S. dollar. Demand for the metal in Asia rose slightly, but remains weak. We keep medium and long term positive outlook for gold.