21.03.2014 - Volatility on the markets has fallen
Major U.S. indexes ended the trading session on Thursday with moderate growth. The reason for optimism was the data on the index of leading U.S. economic indicators for February, that increased by 0.5%, which is 0.2% better than expected. In addition, investors were pleased with statistics on the number of unemployment claims, which totaled 320 thousand, with an expected growth to 325 thousand, the existing home sales fell to 4.60 million, that is 50 thousand worse than the forecast, but this slowdown can be explained by bad weather conditions.
The price of euro after a minor correction resumed a decline and now is consolidating above $ 1.3750. Further price movement will depend on the balance of payments data for January (09:00 GMT) and the Eurozone consumer confidence index in March (15:00 GMT). The Fed statement on the possibility of a quicker rate hike and a reduction of the quantitative easing program will lead to reduction of prices of euro. We maintain a long-term and medium-term positive outlook for the euro.
On Monday will be released a large block of statistics on the service PMI of the Eurozone countries, as well as manufacturing PMI in China, the U.S. and the Eurozone. Investors' attention will remain focused on the situation in Crimea in the absence of conflicts over the weekend, investors will show bigger interest in risky assets.
In the absence of important macro the price of the British pound continued to decline and is now consolidating around 1.6500. On Tuesday in the UK will be published a block of statistics on inflation, and the next Friday - on GDP, balance of payments and business investment in the UK. Until that time, we do not expect increased volatility, and traders will continue to trade on the results of the Fed meeting. We expect the upward correction in the near future, and maintain medium and long term positive outlook for the pound.
The price of USD/JPY after the previous growth continues to consolidate below 102.50. In Japan today, is a day off, so we do not expect an increase in volatility of the pair. In general, the ultra soft monetary policy of the Bank of Japan, together with the reduction of stimulus in the U.S. leads to a further weakening of the Japanese yen. In addition, we expect lower demand for the yen due to the reduction of international tensions. We maintain long-term and medium-term positive outlook for the USD/JPY.
The Australian dollar corrected upwards after a sharp drop on the background of statements by the head of the Fed. Strengthening of AUD/USD continued despite the slowdown in the index of leading economic indicators in January to 0.2% from 0.8% in December. We recall that the price of the Australian dollar continues be under the pressure of the soft monetary policy of the Reserve Bank of Australia, the slowdown in industrial growth in China, as well as in commodity prices. We maintain a medium-term and long-term positive outlook, but in the short term we can see continued growth of quotations.
Due to the lack of new stimulus, the price of the New Zealand dollar continues to move along the level of 0.8530. Further progress will depend on the data on industry in China, which will be released on Monday, and the balance of payments of New Zealand, which will be published on Wednesday. After prolonged growth in the previous weeks, there is considerable potential for further correction.
Despite the positive U.S. data, the quotes of Light Sweet crude oil have corrected downwards and now are consolidating around the psychological mark of $ 100 per barrel. Further movement of prices will depend on the political relations between Russia and the West, and the growth dynamics of oil production and consumption in the United States. In addition, investors are closely watching the situation in industry of the second-largest oil consumer - China. We maintain a long-term negative outlook for oil.
The price of gold completes phase of correction against the U.S. dollar. After a strong decline in the previous days, we expect renewed demand for the yellow metal. We recall that decrease in quotations in recent days was due to the decision of the Fed on quantitative easing program reduction and forecasts of earlier than previously expected rate hikes. We expect the resumption of the upward movement in the medium term and maintain a long-term positive outlook for gold.