25.04.2014 - ​Situation in Ukraine raised the price of gold

Major U.S. indexes have not changed much over the last trading session. Positive report of Apple supported the bulls, but could not lead to a steady growth of the market. Statistics on the labor market in the U.S. was worse than expected. Thus, the number of initial unemployment claims in the U.S. rose to 329 thousand that is 20 thousand lower than forecasted. At the same time, durable goods orders rose in March by 2.6% vs. expected increase to 2.1%. This indicator shows a steady increase in demand, which supports the continued growth of the economy. We see the weakness of bulls and expect stopping the growth and the beginning of reduction on the U.S. markets in the medium term.

The price of euro continues to trade within the corridor 1,3790-1,3850. President of the ECB Mario Draghi said that the regulator is ready for further reduction of interest rates and increase of market liquidity to deal with low inflation. Weak data on the U.S. labor market positively influenced the quotes euro. Today in the euro area is not expected the release of important macro, but the course of trading will be affected by data on service PMI (13:45 GMT) and the index of consumer confidence in the U.S. (13:55 GMT). We maintain a long-term negative outlook for the euro.

On Monday will be held a summit of the G-7, at which may be decided on additional sanctions against Russia. Furthermore, among macro statistics on Monday we should pay attention to retail sales in Japan and pending home sales in the United States.

The price of the British pound rose slightly within the side channel 1,6770-1,6840. Positive was caused by improvement in the balance of retail sales in the UK in April to 30 against the forecast 18 and the previous figure of 13. Today the course of trading will be affected by data on retail sales and the number of the mortgage approvals (8:30 GMT). Considering the steady growth of the economy and increase in employment in the UK, we maintain a long-term positive outlook for the pound.

The price of USD/JPY continues to consolidate below 102.70. Consumer price index in Japan remained at 1.3%, despite the growth forecast to 1.4%. Target level of inflation, of the Bank of Japan is 2.0%. Considering loose monetary policy of the Japanese regulator and the reduction of quantitative easing in the U.S., we expect further price growth and keep medium and long term positive outlook.

The Australian dollar continued descending movement after a minor correction. We recall that a strong decline of the currency began after the release of data on slowing down of the consumer price inflation to 0.6% in Q1 2014, against the forecast of 0.8%. Traders expect further easing of monetary policy to fight the deflationary risks. We expect a further weakening of the Australian dollar and maintain a medium-term negative outlook.

Despite the increase in interest rates by the Reserve Bank of New Zealand by 0.25% to 3.0%, the quotes of the pair resumed their descending movement. One of the reasons for the decline was the decrease of the Australian dollar. In addition, inflation has slowed down, and it will lead to the fact that the regulator will not raise rates as fast as was previously expected. In general, the New Zealand economy is in good condition and we expect continued growth of the national currency in the medium term.

Prices for Light sweet crude oil slightly increased within the correction after a sharp decline and now are traded near $ 102 per barrel. High prices are also supported by rising tensions in Ukraine, where there are new casualties, and Russian troops began exercises near the Ukrainian border. At the same time, U.S. crude inventories are at record levels since 1982, which hinders the growth of prices. We expect a decrease in tensions in Ukraine in a few months and maintain a negative outlook on oil prices.

Increase in gold prices resumed amid rising tensions in the eastern regions of Ukraine. Prices were also supported by weak data on the U.S. labor market and the slowdown on the stock markets. In case of correction, which traditionally can begin in May, the demand for defensive assets like gold will grow. Despite this, the purchases of the metal on Asian markets remain at low levels. We expect growth of gold prices in the medium and long term.

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