10.12.2013- Markets are afraid to grow
U.S. stock indexes finished trading day slightly above the previous close. Yesterday in the U.S. was not released any important macro data. President of the Federal Reserve Bank of St. Louis, James Bullard said that the positive labor market data raised the possibility of reducing the quantitative easing program on the results the U.S. Federal Reserve meeting that will be held on 17-18 December. Let us recall that in November, the U.S. unemployment rate fell to a five-year low of 7.0%. At the same time, Mr. Bullard said that cutting down will be slow and in the case of low inflation, the Fed can interrupt the reduction of the program. On this background a wide U.S. stock market index S&P 500 closed the day near the upper border of the side channel 1810. The trading day in Europe have passed on positive territory. The reason for optimism was the strong data on China's trade surplus. The surplus was 33.8 billion dollars, as exports grew by 12.7% and imports only by 5.3%. This growth is the highest in last 4 years. The statistics on industrial production in Germany, which fell in October by 1.2% against expectations of growth by 0.8% disappointed the bulls. On this background, as well as due to a better than expected trade balance in Germany (19.1 billion versus predictions of 16.8 billion euro), quotes of EUR continued to grow inside the rising channel and reached its upper limit. We expect a correction within the channel. The nearest target prices are at 1.3660 and 1.3620. In case of continuation of growth the price can reach 1.3820. The British pound continued to rise after the correction and had overcome local maximum of 1.6440, which served as a resistance level. Investors are awaiting the release of data on the trade balance of industrial production the UK in October (09:30 GMT). Strong support level is at 1.6320. After the release of data on the growth of GDP, the price of USD/JPY returned inside the rising channel. Thus, Japan's economy in the third quarter grew by only 0.3% vs. expected 0.4%. Growth of the economy remains uncertain. We expect the Bank of Japan to continue loose monetary policy. Now the price is consolidating near the level of local maximum 103,30 which serves as a strong resistance level. Support lines are at 102.10 and 101.90. Index of business confidence in Australia was worse than the previous figure of 6 points and made only 5 points in November. Now the quotes of AUD/USD are traded in the corridor 0.9100 - 0.9140. Due to Bank's monetary policy aimed at the depreciation of the Australian dollar, we maintain our negative outlook. The nearest targets in case of further decrease will be 0.90 and 0.89. Prices for U.S. benchmark crude oil WTI (Light Sweet crude oil) continue to consolidate near the level of 97.50 dollars per barrel. The course of trading today can be affected by the data on the change of crude oil inventories in the U.S. (21:30 GMT). Growth is possible up to 98.60. Support is at 95.20. The North Sea oil standard - Brent, weakened its positions yesterday after the publication of data on the reduction of industrial production in Europe's largest economy. We keep our negative outlook for oil prices in the long term. Fundamentally prices are pressured by several factors, including the growth of production in the U.S. thanks to new production technologies, as well as the increase in oil exports from Iran due to the removal of trade sanctions. Investors are also closely watching after the future of quantitative easing program. Stocks of the world's largest exchange-traded fund backed by gold (ETF) SPDR Gold Trust updated minimum again of 2009 and decreased by 3 tons to 835.71 tons. Since the beginning of this year, the price of gold decreased by more than a quarter (about 27%). It can be explained by the growth in risky assets. In case of a trend change of the stock markets, we expect investors to turn again to a "safe haven". Demand for the metal before the New Year in China supports the price of gold. Now the price is in the corridor 1220-1250 and is likely to remain there until the U.S. Federal Reserve decision on bonds buyback program. In case of further decline, the targets will be 1200 and 1180.