13.03.2014 - Demand for gold continues to grow
Major U.S. indexes remained virtually unchanged yesterday. Market growth was restrained by several factors including decline in oil prices, the negative data from Japan on consumer confidence, reduction of industrial production in the euro area by 0.2% vs. expected 0.6% growth, tensions over the Crimea, as well as decrease in the index of requests for mortgage lending by 2.1%, compared with growth of 9.4% in the previous period.
On this background at the end of the day euro significantly strengthened and reached a strong level of 1.39. The reason for the growth is the lack of signals on new measures to stimulate the economy by the regulator. Today the course of trading will be affected by the data on labor market and retail sales (13:30 GMT) and inventories in the U.S. (14:00 GMT). In addition we should pay attention to monthly report of the ECB (09:00 GMT). We expect that the price of the euro will continue to move inside the rising channel, but keep a long-term negative outlook for the pair.
The price of the British pound continues to decline gradually. In the absence of important macro in recent days, traders do not accumulate new positions and are waiting for tomorrow's release of the quarterly report of the Bank of England on the economy (00:01 GMT), trade balance (9:30 GMT) and the index of leading economic indicators UK (10:00 GMT). We maintain a long-term positive outlook for the British pound.
The price of USD/JPY corrected to a strong level of 102.70. For the fixing below this level, will be needed a strong factor. Further price movement will depend on the minutes of the previous meeting of the Bank of Japan (23:50 GMT) and the data on industrial production in Japan in January (tomorrow 4:30 GMT). We expect the price to resume growth and reach the first objective 103,00. We maintain our positive medium and long term outlook for USD/JPY.
The price of the Australian dollar has reached the level 0.8925, but then resumed growth on the back of positive data on the labor market in the country. Thus, the number of people employed in Australia increased by 47.3 thousand against expected growth by 15.3 thousand. At the same time the unemployment rate remained at 6.0%. Loose monetary policy of the Reserve Bank of Australia, the slowdown in China and the reduction of quantitative easing program in the U.S. provide a basis for continued long-term negative outlook for the Australian dollar.
The price of the New Zealand dollar showed steady growth on the background of the interest rate increase by 0.25% to 2.75%. In addition, the head of the RBNZ said that the rate will be increased by about 200 points in the next two years, the economy is showing a significant increase and the inflationary pressure has grown. Despite this, for the national economy remained downside risks concerning economic growth in China and Australia. We expect continued growth of price of the NZ dollar in the medium term.
The price of U.S. oil benchmark Light Sweet continued to decline and reached $ 98 per barrel. The reason for the fall was the data on oil inventories, which increased by 6.18 million barrels. At the same time inventories of gasoline and distillates declined by 5.23 million barrels and 0.53 million barrels, respectively. Traders took a bearish stance due to lower demand of oil on the background of warming and record production volumes in the U.S. In this case quotations are supported by stressful situations in Libya, Iran, and Crimea. We maintain a long-term negative outlook for oil.
The price of gold continued to rise and reached a 6-month high. The reasons for the growth in demand for gold are concerns about corporate defaults in China, as well as the tense situation on the Crimean peninsula. In addition, investors expect the Fed meeting, which will be held on March 18-19. Investment funds backed by gold, in February received inflow of $ 500 million after 13 months of capital outflows. We expect a correction in the gold price, after which the price growth will resume. We reserve the medium and long term positive outlook for gold.