14.03.2014 - U.S. labor market is improving

Despite the positive statistics, the major U.S. indexes finished the trading session lower. Thus, the number of unemployment claims in the USA dropped to its lowest level since November, 315 thousand, against analysts' forecast of 334 thousand retail sales increased by 0.3%, in line with the expectations of experts. The reason for the sales was the fact that positive data on the labor market may lead to a more rapid reduction of the quantitative easing program. We recall that the meeting of Federal Open Market Committee of the U.S. Federal Reserve, which will decide the future of the quantitative easing program will be held on March 18-19.

The quotes of euro fell strongly against data from the U.S., as well as statements by the head of the ECB on the preparation of additional measures to fight deflation in the euro area. At the moment, the euro price is consolidating above strong level 1.3860 and further progress will depend on the data on the level of employment in the Eurozone (10:00 GMT), producers price index (12:30 GMT) and the index of consumer confidence in the U.S. in February (13:55 GMT). We keep medium and long term negative outlook for the euro.

On Monday, the course of trading will be affected by data on consumer price inflation in the euro area and the industrial production in the United States. The main focus of investors will be focused on the reaction of the international community on the results of the referendum in the Crimea, which will be held on Sunday.

The quotes of the British pound fell to the psychological level of 1.66 on the background of positive statistics on the U.S. labor market, which may lead to a greater than expected, reducing of asset repurchase program. Today an increased volatility is possible on the background of data on the UK trade balance for January (09:30 GMT) and the index of leading economic indicators (10:00 GMT). We maintain a long-term positive outlook for the British pound.

Despite the strengthening of the US dollar, the USD/JPY showed a significant decline amid rising demand for the yen as a defensive asset. Moreover, the appreciation of the yen was supported by positive statistics on the volume of domestic orders for machinery, which grew by 13.4% in January, compared with an expected growth of 7.3%. Industrial production growth slowed in January to 3.8%, which was worse than expected growth by 4.0%. Further price movement will depend on the level of geopolitical tensions in the world that is growing in relation to the events in Crimea. In case of reducing the tension we will see a strong growth of quotations of USD/JPY. At the same time, we remain positive on the long-term outlook for USD/JPY.

The Australian dollar decline resumed after yesterday's growth due to positive statistics on the labor market in Australia. The reason for the decline was the strengthening of the U.S. dollar on the background of positive statistics from the United States, which may lead to a greater than expected, cuts in stimulating programs. On Monday, will be released the data on new car sales in Australia. We maintain a long-term negative outlook for the Australian dollar.

After reaching the level of 0.86, the price of the New Zealand dollar has corrected amid significant U.S. dollar strengthening. The index of business activity in the manufacturing sector of New Zealand fell in February by 0.1 to 56.2. On Monday, the price movement will depend on the data on consumer confidence index for the 1st quarter of 2014. Due to the tightening of monetary policy of the Reserve Bank of New Zealand, we maintain a medium-term positive outlook.

Negative data on industrial production in China that showed growth in February by 8.6% vs. expected figure 9.5%, as well as test sales of oil reserves in the U.S. have led to a decline in oil prices. Reduction in demand for oil is also due to warming in North America. The price for U.S. standard Light Sweet is consolidating around the level of 98 dollars per barrel and in the future will depend on the situation on sanctions for Russia in connection with the crisis in Crimea. We maintain a long-term negative outlook for oil.

Gold continues to consolidate around the level of 1370 dollars per troy ounce due to concerns about the further growth of stock markets, the future U.S. Federal Reserve meeting and geopolitical tensions in the world. In addition, investors are concerned about slower growth of industry in China. At the moment, there is a great probability of correction in gold prices. Despite this, we maintain a long-term and medium-term a positive outlook.

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