19.03.2014 - Traders are waiting for the decision on quantitative easing

Major U.S. stock indexes rose after the speech of the President of Russia Vladimir Putin, in which he assured that the Russian Federation is not going to send troops to the mainland of Ukraine, which calmed investors. Yesterday also was published the data on consumer price inflation, which in February increased by 0.1% as expected. The number of permits issued for construction of new homes in the U.S. rose to 1.02 million, against the forecast of 0.97 million, the number of housing starts was 0.91 million, 0.01 million worse than the forecast of analysts.

Euro continues to consolidate above the level of 1.39. Central news this week will be the Fed's statement in which will be announced next steps of the regulator concerning the quantitative easing program. We expect that the volume of purchases of assets will fall to $ 55 billion a month, and the interest rate will remain lower than 0.25%. We should also pay attention to the data on balance of payments. Today, we expect an increase in vol.

The price of the British pound fell below strong support level of 1.66. Investors are awaiting the release of data on the labor market in the UK (09:30 GMT) and the U.S. Federal Reserve’s decision on further actions on economic stimulus. In case of another improvement in the labor market, we expect renewed growth of quotations of pound. We forecast that the price of GBP/USD will continue to move within the channel and maintain a long-term positive outlook.

The price of USD/JPY continues to trade near 101.50. Price movement depends on geopolitical tensions in the world, amid which the demand for yen as a defensive asset has increased significantly in recent time. Into the hands of bulls played the negative trade balance of Japan, deficit of which totaled 1.13 trillion., contrary to expectation 0.89 trillion. At the same time, the business activity index in Japan rose in January by 1.0%, which is 0.3 lower than was forecasted. From a fundamental point of view, on the background ultra soft monetary policy of the Bank of Japan and the reduction the quantitative easing program, we expect the growth of quotes in the medium and long term and recommend to open long positions with the targets at 102.70 and 103.50.

The price of the Australian dollar has reached the level 0.9130 but failed to continue its upward movement. Despite the statements of the Reserve Bank of Australia, the index of leading economic indicators continues to fall. So, in January indicator showed a decline of 0.1%. Further movement of the pair will depend on the decision of the Fed and the market reaction on the steps of the U.S. regulator. We maintain a negative outlook in the medium and long term and recommend to open short positions with target prices at 0.9000 and 0.8925.

The growth of price of the New Zealand dollar accelerated due to decline of current account deficit of the country in the 4th quarter to 1.43 billion against 4.88 billion in Q3. Today at 21:45 GMT, will be published data on GDP growth in Q4. Experts predict a slowdown in growth to 1.0% against 1.4% in Q3. Despite the expectation of correction, the price dynamics of the pair will depend on GDP data and U.S. Federal Reserve decision. We maintain a positive medium-term outlook for the New Zealand dollar.

Prices of U.S. benchmark Light Sweet crude oil rose on data on the U.S. housing market, which showed stabilization of the situation and indicated a possible activation of the construction sector due to warming. The rise in prices was also triggered by a new round of confrontation in Libya. Today, the price dynamics will be affected by data on oil and petroleum products' inventories in the U.S. We maintain a long-term and medium-term negative outlook for oil prices and expect the resumption of decline soon.

The price of gold continues to consolidate above the level of 1352 dollars per troy ounce. The reason for the fall of prices in recent days has become a lowering of tensions over the situation in Crimea. The growth in demand for defensive assets could resume in case of new sanctions against Russia. The growth of volatility is expected today after the announcement of the Fed's future plans on U.S. monetary policy. We keep medium and long term positive outlook for gold.

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