17.04.2014 - Corporate earnings pleases investors

Major U.S. stock indexes ended the trading session with growth on the background of positive corporate reports and macro statistics on industrial production. In March, industrial production increased by 0.7% compared with an expected rise by 0.5%. At the same time housing data have been mixed. The number of building permits fell to 0.99 million, while the number of housing starts increased to 0.95 million, against the forecast of 0.97 million. Index of requests for mortgage lending grew by 4.3% against the previous decline of 1.6%. The head of the Fed Janet Yellen noted the need to fight low inflation, and in the Beige book was recorded the economic growth in most regions, as well as growth in retail sales amid improved weather.

The price of euro continues to consolidate above 1.3810. An attempt of growth was neutralized by positive data on industrial production in the United States. Moreover the trade surplus of Eurozone narrowed to 21.9 billion in February against 25.4 billion in January. Core CPI fell to 0.7% yoy, against the forecast of 0.8%. The course of trading today will be affected by data on the number of unemployment claims in the U.S. (12:30 GMT). We expect low volatility during the session

The price of the British pound rose sharply amid positive data on the labor market in the country. Thus, the unemployment rate fell to a five-year low of 6.9% vs. expected 7.2%. At the same time, the number of unemployed fell by 30.4 thousand people. Employment growth in the country confirms the assessment of the IMF, which previously stated the most rapid growth of the UK economy among the developed countries. We maintain our positive medium and long term outlook for the British pound.

The price of USD/JPY continued to grow after the statements of the Bank of Japan on its intention to do everything necessary to achieve the inflation target of 2.0%. Industrial output in February fell by 2.3%, as expected. Growth of quotations may stop in case of worsening of situation in Ukraine, which can lead to increased demand for protective assets like the yen. We expect growth of pair in the medium and long term, as well as recommend holding long positions.

The price of the Australian dollar continues to move within the local downstream channel. Today in Australia is a day off, but released macro statistics has led to a slight decrease in quotations of the national currency. For example, new car sales in March fell by 0.3%, while business activity index fell to 6 in the first quarter of 2014 compared to 8 in the previous period. We expect low activity until Tuesday of the next week in connection with the celebration of Easter and maintain a medium-term negative outlook for the Australian dollar.

The price of the New Zealand dollar is corrected upwards within the local downstream channel. The reason for the growth was the data on increase of foreign direct investment in the Chinese economy by 5.5% in March. Today in New Zealand as a holiday, and therefore, we expect the low activity of traders and the absence of strong movements until Tuesday. We maintain a positive medium-term outlook for the pair.

Volatility in oil prices rose on data on fuel inventories in the U.S. Thus, oil inventories increased by 10.0 million barrels, gasoline inventories and distillates reduced by 0.15 million and 1.28 million respectively. High oil prices are supported by strong tensions between the West and Russia over the situation in Ukraine, where in the eastern regions continues the antiterrorist operation. Further developments will depend on the outcome of negotiations between Russia, Ukraine, the USA and the EU, which will be held today. We anticipate stabilization of the situation in the medium term and maintain a long-term negative outlook for oil.

The price of gold is consolidating near the level of $ 1,300 per troy ounce. Previous fall was caused by fixation of positions and activating the stop losses. According to many experts, in case of a stable situation in Ukraine, the gold price would have been lower. Demand for the metal in the Asian markets remains weak. At the same time, the World Gold Council, predicts the growth in demand for the metal in China by 25% to 1,350 tones within four years. The growth in metal consumption will be mostly due to the growing prosperity of the population of country. We maintain our positive medium and long term outlook for gold.

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