25.03.2014 - The Fed is not raising rates earlier than anticipated

Major U.S. indexes finished the trading session lower. The reason for the sales was the data on the manufacturing PMI in the U.S. which has made 55.5 against the forecast 56.6 and the previous figure 57.1. Today the focus of investors will be on data concerning the housing market (13:00 and 14:00 GMT), and the index of consumer confidence in the U.S. in March (14:00 GMT). In the medium term the growth may continue, but we maintain a long-term negative outlook.

Because of data on the production sector and the statement of the President of the Federal Reserve Bank of San Francisco John Williams about the fact that the Fed is not going to raise rates earlier than anticipated, the euro has grown considerably. The course of trading today can be influenced by data on the index of business sentiment in Germany. Taking into account comments of representatives of the Fed, we expect growth of the euro in the medium term, but keep a long-term neg.

Statement by the representative of the Fed has led to the growth of quotations of the British pound, but the price has returned to previous levels and is now consolidating around 1.6500. Further price movement of the British currency will depend on the data on consumer and industrial inflation and house price index (09:30 GMT). We should also pay attention to the data on retail sales for February (11:00 GMT). Taking into account a stable growth of national economy and reducing unemployment, we keep long-term positive outlook for the pound.

The price of USD/JPY declined slightly amid falling interest in the dollar due to the weaker data on the growth in the manufacturing sector. At the same time the price continues to consolidate below 102.50. Further price movement will be determined after the release of data on inflation, household expenditures and unemployment in Japan (Friday). Taking into account a loose monetary policy of the Bank of Japan and tightening policy by the Federal Reserve, we keep the medium and long-term positive outlook for the pair.

Despite our expectations, the price of the Australian dollar continued to rise and has overcome nearest local maximum. The reason for the growth was the weakening of the dollar, as well as increase in the index of leading economic indicators of China to 0.9% vs. 0.3% in the previous period. Further movement of the Australian dollar depends on the data on the industry of China, as well as the reduction of quantitative easing in the U.S. Taking into account a loose monetary policy of the Reserve Bank of Australia, we maintain a long-term negative outlook, but in the medium term the growth is probable inside the rising channel.

The price of the New Zealand dollar increased slightly amid positive data from China and the strengthening of the Australian currency, but continues to consolidate around the level of 0.8550. Tomorrow at 21:45 GMT, will be published data on the trade balance of the country, where is expected the growth of the trade surplus in February to 600 million. In order to determine the further price movement we need new signals.

The price of Light Sweet crude oil has fallen due to lower business activity in the industry of China to eight-month low. On the other hand the quotes are supported by tensions in Ukraine and clashes in Libya. Oil production in the U.S. continues to grow and is at thirty years highs, at the same time we see a seasonal decline in oil consumption on the background warming. We expect a strong movement in the price of oil today or tomorrow on the background data on oil and petroleum products' inventories in the U.S. We keep medium and long term negative outlook for oil.

Despite the continued growth of inventories of physical gold in investment funds, the price of the metal continued to decline against statements of Fed officials. Even a weaker dollar could not support gold prices. The price has reached the level 1310 dollars per troy ounce, and probably will be corrected upwards, to the level of 1320. We maintain a long-term positive outlook, but in the medium term, gold may continue to decline.

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