18.03.2014 - Tension decreases on the markets
Major U.S. indexes ended the trading session with growth. Markets reacted positively to a peaceful situation during the referendum in Crimea, and the risks associated with this event were already in prices last week. Bulls were also supported by limited sanctions against Russia. Statistics on industrial production in the U.S. has shown growth in the sector by 0.6%, which is 3 times better than was expected. Despite this investors are looking with fears at the housing market in China, where prices rose in February by 8.7% per year, against 9.6% in January. Foreign direct investment in China in February showed an increase of 10.4% per annum, compared to 16.1% in January.
The euro has continued to grow after consolidation near 1.39. One of the growth drivers was a decline in inflation in the euro area to 0.7%, against expected rate 0.8%. Today the course of trading will be affected by data on trade balance and the business sentiment of the Eurozone (10:00 GMT). We should also, pay attention to the number of housing starts in the U.S. (12:30 GMT). We expect continued growth of the euro in the medium term with a target at 1.40, but keep a long-term negative outlook.
In the absence of important macro data, the price of the British pound continues to consolidate above the strong level of 1.66. Increase in volatility is possible after the speech of Governor of the Bank of England Mark Carney. In general, traders are not in a hurry to gain position before tomorrow's publication of data on unemployment in the UK. In case of better indicators, we expect the growth of quotations. We maintain a long-term positive outlook for the British pound.
Reducing tensions around the Crimean peninsula in the weakening demand for the yen, which is considered a defensive asset. At the same time growth was corrective and now the price is consolidating below 102.00. Tomorrow will be held the speech of the Bank of Japan, and will be published data on the trade balance and PMI of Japan. On this background we expect increased volatility and keep medium and long-term positive outlook for USD/JPY.
The price of the Australian dollar once again achieved the strong resistance at 0.9100, but could not overcome it. The reasons for the decline were technical factors, as well as publication of the minutes of the meeting of the Reserve Bank of Australia stating that the Bank reserves the rate at the same level, and retains the possibility of further easing of the monetary policy in order to support economic growth and to fight the high rate of the national currency. On this background, we affirm medium and long term. Positive outlook for the Australian dollar. Tonight (23:30 GMT), we should pay attention to the index of leading economic indicators in Australia.
Growth of quotations of the New Zealand dollar paused against the publication of the minutes of the Reserve Bank of Australia. Despite strong growth of price in recent weeks, there is a high probability of price correction in the coming days. We maintain a positive outlook for the medium-term. In the long term dynamics of prices will depend on the economic performance of the country's largest trading partner - China. At 21:45 GMT, will be released the data on the country's balance of payments for the 4th quarter of 2013.
Light Sweet crude oil prices continued to decline due to lower tension around the Crimean peninsula, besides investors expect a decline in oil demand due to warming in the U.S. and a slowdown in the industry the world's second oil consumer - China. The demand for oil in 2014, according to various organizations should increase, but the growth in production probably will be larger than the increase in consumption.
After reaching 1390 dollars per troy ounce the price of gold has corrected significantly and reached the mark in 1360. Correction was caused by a decrease in concerns about the possible escalation of the conflict in Crimea and fixing the profits. We expect further correction, with following consolidation and the resumption of growth in the medium term. We maintain a long-term positive outlook for gold. Among the events that may affect the dynamics of the price of gold will be a meeting of the FOMC of the Fed (March 18-19), which will decide the future of quantitative easing program.