09.04.2014 - The market's attention is focused on the minutes of the Fed
Major U.S. stock indexes ended the trading session with growth. The reason for optimism was the resumption of growth in high-tech companies including Google, Facebook and EBay. Optimism index rose in a small business together with warming and made 93.4, against an expected growth to 92.3. Small and medium size business is the employer for a considerable part of the population and improvements in this sector indicates the prospects for reducing unemployment. The number of vacancies in the labor market with the exception of the agricultural sector in February rose to 4.17 million against the forecast of 3.99 million. Because of corporate reporting season the market growth can resume, but we still maintain a long-term negative outlook.
The price of euro has reached the level of 1.3810, but could not overcome it. The reason for growth was the expectation that quantitative easing in the euro area will not be launched in the near future. This conclusion can be drawn from the statements of representatives of the ECB, which pointed to low inflation, but see no reasons to start quantitative easing right now. Today the course of trading will be affected by data on the mortgage lending (11:00 GMT) and wholesale inventories in the U.S. (14:00 GMT). The focus of investors will be on publication of the minutes of the previous meeting of the Federal Open Market Committee of the U.S. Federal Reserve, which can help to determine when will end the quantitative easing program and will be increased the interest rates. We maintain a long-term negative outlook for the euro.
The price of the British pound rose sharply on the background of strong industrial production data in the UK, which grew by 0.9%, vs. forecast of 0.3%. The IMF has raised its growth forecast for the UK economy for the second time in 6 months. According to analysts, the country's GDP is expected to grow by 2.9% in 2014 and by 2.5% in 2015. On this background we keep long-term and medium-term positive outlook for the British pound. The course of trading today will be affected by trade balance data of the country (8:30 GMT).
The price of USD/JPY fell heavily amid positive data on the current assessment of the economic situation in Japan, which rose to 57.9, against the forecast of 54.1. At the same time the Bank of Japan announced that they keep the monetary policy unchanged and predict a rise of the monetary base by 60-70 trillion per year. We expect renewed growth in of the pair and maintain medium and long term positive outlook.
The Australian dollar continued to strengthen against the growth in iron ore prices, the weakening of the U.S. dollar and positive data on consumer confidence in Australia, which in April rose by 0.3%, compared with a decline of 0.7% in March. Tomorrow will be published data on the labor market in Australia. We expect the price correction in the near future.
The price of the New Zealand dollar has reached a strong level of 0.8700 due to the increase of the Australian dollar and weakening of the U.S. dollar. The focus of investors remain on statistics from China, where is expected the release of data on the new lending, the monetary base and China's trade surplus. After strong growth, we expect a price correction. To continue the upward movement, traders will need a new stimulus.
Oil prices have risen due to the increase of tensions between Russia and the West after the riots in the eastern regions of Ukraine. On the other hand the oil quotations are under the pressure of opening two ports for exporting oil in Libya, as well as progress in the signing of an agreement between Iran and the West, which will cancel the sanctions on oil exports to the world market. According to evaluations of APÐ, oil inventories rose by 7.1 million barrels, gasoline inventories fell but by 3.7 million barrels. Today the course of trading will be affected by data on oil and petroleum products in the U.S. from the Energy Information Administration (EIA). We maintain a long-term negative outlook for oil.
The price of gold continues to rise gradually on the weakening U.S. dollar and anticipation of the publication of minutes of meetings of the Federal Open Market Committee of the Fed. Rising tensions in the eastern regions of Ukraine has increased the demand for risky assets. Demand for gold from investment funds and consumers in Asia remains weak. We reserve the medium and long term positive outlook for gold.