11.03.2014 - Chinese exports have disappointed investors

Major U.S. indexes finished the trading session with a slight decrease. Traders were upset by statistics from China, where the country's trade deficit in February was 23.0 billion against forecasted surplus at 13.2 billion. The Philadelphia’s Fed President Charles Plosser, said that he expects a reduction of unemployment to 6.2% by the end of this year, and that the worsening on the labor market in recent months was due to the unusually cold weather. According to his estimates the U.S. economy this year is expected to grow by 3%. Investors remain concerned about the further growth prospects of the U.S. stock market, but we maintain a positive outlook for the medium-term.

The price of euro stopped growing and now is consolidating around 1.3860. Investors yesterday were disappointed by data on reduction of industrial production in France by 0.2%, while the same figure in Italy increased by 1.0%. Index of investor’s confidence in the euro area rose to 13.9, against an expected growth to 14.3. Today the course of trading can be influenced by data on the trade balance of Germany (07:00 GMT) and wholesale inventories in the U.S. (14:00 GMT). We expect the decline of the euro in the medium term and keep a long-term negative outlook.

The price of the British pound fell sharply after a long consolidation on statements of the deputy head of the Bank of England, Charlie Bean. Mr. Bean said that rates will remain at current levels for a longer period if the pound will continue to grow. Strengthening of the national currency should lead to lower inflation, forcing the Bank to keep the current policy. Currently the quotes of GBP/USD are consolidating near the strong level 1.6640 and will probably resume growth in the near future. The course of trading today will be affected by data on the volume of industrial production in the UK, as well as news from the parliamentary session on inflation. We maintain our medium-and long-term positive outlook for the pair.

The price of USD/JPY is almost unchanged on the background of statements by the Bank of Japan on the preservation of the monetary policy. In addition, the monetary base in February increased by 4.0% against the forecast of 4.4%. Besides was unanimously decided to keep policy of increasing the monetary base in Japan on 60-70 trillion. per year, the target inflation also remained at 2.0%. Considering loose monetary policy of the country and the reduction the quantitative easing program, in the U.S., we expect a weakening of the Japanese yen in the medium and long term.

The price of the Australian dollar continues to decline. Thus falling slows even despite the negative data on the business sentiment in Australia, which fell by 2 points to 7 in February. Tonight (23:30 GMT) will be published data on consumer confidence in the country. Considering loose monetary policy of the country and the economic slowdown in China, as a major trading partner, we remain negative medium and long term outlook for the Australian dollar.

New Zealand Dollar continues to grow gradually, despite weak economic data from China and lower Australian dollar. Increase in volatility is expected on Wednesday night (20:00 GMT), when will be published a statement and report of the Reserve Bank of New Zealand on monetary policy. We maintain a long-term negative outlook for the price of NZD/USD.

Price of the futures on Light Sweet crude oil is consolidating near the mark of 101.00 dollars per barrel. Negative trade balance of China, which is the second largest consumer of oil has become one of the reasons why the quotations are falling. At the same time warming in the United States plays into the hands of the bears. Further decline in prices is constrained by the situation in Libya, where the government continues to struggle with rebels for control over the ports. We keep medium and long term outlook for oil.

The price of gold continues to move through the corridor 1330-1350 dollars per troy ounce. Interest in gold is heated by negative export data in China, mixed data on the U.S. labor market and the tensions in Crimea. Gold reserves in investment funds continue to grow due to rising geopolitical tensions and concerns about further growth on the stock markets of the world. We keep medium and long term positive outlook for gold.

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