22.04.2014 - Volatility on the markets is still at a low level
Major U.S. indexes ended the trading session with growth amid positive corporate news and positive macro statistics. Thus, shares of Newmont Mining Corp (NEM) rose by more than 5%, due to rumors on a possible merger with Barrick Gold Corp (ABX). Shares of Halliburton (HAL) rose by 2.8% after increasing the earnings forecast for the second quarter. At the same time, the index of leading economic indicators rose in March by 0.8%, while the index increased in February by 0.5%. Potential for further growth in the medium term is limited. We maintain a long-term negative outlook on the U.S. market and expect the traditional decline of stock indexes in May.
The price of euro fell against the strengthening of dollar after the release of positive data in the USA. The course of trading today will be affected by data on consumer confidence in the euro area (14:00 GMT), the house price index (13:00 GMT), existing home sales in the U.S. and index of business activity in the manufacturing sector of Richmond (14:00 GMT). We expect a gradual reduction of quotations of euro due to the possibility of launching new incentive measures and reduction of quantitative easing in the U.S. We maintain a long-term negative outlook for the euro.
Growth of quotations of the British pound stopped after the release of positive data in the USA, which resulted in strengthening of the dollar. Today we expect low activity of traders due to the lack of important macro in the UK. Increase in volatility is expected tomorrow after the publication of the letter of the Bank of England on inflation. We expect price growth of the British pound in the medium and long term with the target at 1.70.
The price of USD/JPY continues to consolidate around a strong level of 102.70. Growth of quotes yesterday was caused by the data on trade deficit in Japan, which in March increased to 1.71 trillion vs. 1.27 trillion in February. To continue the growth the price needs a new stimulus. Increase in volatility is expected on Friday after the release of data on consumer price inflation in Japan. We keep medium and long term positive outlook for the USD/JPY.
The price of the Australian dollar after a long consolidation resumed growth on positive data on the index of leading economic indicators in Australia. Thus, the index increased by 0.3% in February, vs. a 0.2% rise in January. Tomorrow is expected the increase in volatility in connection with the release of data on consumer price inflation in Australia and business activity in the manufacturing sector in China, which is the largest importer of Australian goods. We maintain a medium-term negative outlook for the Australian dollar.
The New Zealand dollar slightly increased amid strengthening of the Australian currency. Traders are not in a hurry to accumulate positions before the statement of the Reserve Bank of New Zealand on interest rate and monetary policy in the country. We expect growth recovery in the medium term.
Prices for Light Sweet crude oil continue to stay at a high level due to the strong tension in Ukraine and problems with the supply of Libyan oil. Results of the negotiations in Geneva on April 17 between Ukraine, EU, U.S. and Russia have not led to a reduction of tensions in eastern Ukraine and the situation may worsen at any time. In the next month, will be continued the work on agreement with Iran, which should lead to reduction of its nuclear program and the growth of oil exports to the world market. We maintain a long-term negative outlook for oil prices.
The price of gold has fallen again on positive U.S. corporate earnings season, which has led to lower demand for defensive assets. Gold holdings in investment funds are reducing, and demand for the metal in China and other Asian countries remains weak. Despite this, we expect renewed growth in demand for gold in the medium term and keep a long-term positive outlook for gold.