27.11.2013- Markets are short of strength for growth
Mixed macro in the U.S. allowed indexes to show moderate growth for most of the trading session, but near the end of trading, players decided to fix their positions. This move neutralized all the previous growth. Data on consumer confidence showed a significant decrease for the third month in a row. Now figure stands at 70.4 Consensus 72.2. Richmond manufacturing index was also published yesterday. It exceeded expectations and rose from 3 points to 13. Investors were pleased with the housing market data on building permits in the U.S. that have risen by 6.2% from 0.97 million to 1.03 million, analysts predicted a decline to 0.94 million. Home price index in 20 major cities across the country grew with maximum rate since February 2006, that clearly indicates the recovery of the real estate market in the world's largest economy. European markets ended the day on the negative territory. The effect of the deal between Iran and negotiators did not live long. It happened because the settlement of the situation coincided with, on the one hand overbought stock market, on the other with the oversold commodities. In the long term, this deal should still play for the favor of the bulls. Statistics from the U.S. did not help to end the day in green territory. Investors are afraid that, positive data could potentially push the Fed to reduce the bond buyback program. Price of EUR/USD broke through the resistance level of 1.3560. The reason was in weakening dollar that happened because of negative statistics on consumer confidence in the United States. The discussions about the negative deposit rate again took place during yesterday’s trading session. ECB representative Benoit Kere noted that such move is just one of the tools of the regulator. At the same time, Mr. Kere expects a gradual increase in inflation rate to 2%. Price of the pair continues to move inside the rising channel. Growth is limited by its upper bound. We expect the price to reach 1.3660. Support stands at 1.3490. The British pound declined yesterday on the statement of the head of the Bank of England - Carney, who said that the decline in the unemployment rate to 7% will not lead to an automatic increase in the interest rate, but only starts the process of considering the possibility of its increase. But due to the weakening U.S. dollar, the pound is traded near local maximum. Growth is still limited with 1.6250, which is the upper limit of the upward channel. Support levels are located at 1.6170 and 1.6070. After dropping to 101.40 support level, USD/JPY begins to recover. Japan's stock market closed the trading session with only second decline in November. Obviously, after such an increase the index should have a correction. Another factor that contributes to the instability of the markets in Asia, is the conflict between Japan and China on the disputed territories. Tensions in the region increase, because of the United States support of Japan. The reasons for this interest in the islands are natural gas reserves, which are estimated at 200 billion cubic meters. We expect further consolidation around the level of 101.00. Support is at 100.90 and 100.40. Growth is limited by a local maximum at around 101.90. After a significant decrease, Australian dollar continues to consolidate at a mark of 0.91. The policy of the Reserve Bank of Australia is aimed at weakening Australian dollar and it does not give grounds to expect a significant growth in near future. Increase in prices is expected only in the form of correction and is limited with level of 0.92. Further decline is most likely to continue in the limits of descending channel. Oil is consolidating on anticipation of the release of data on oil and petroleum products in the U.S. (19:30 GMT). In the case of inventory reduction, we can see Light sweet crude oil on the 95.30 and 96.50. Support is around 92.50. We maintain a long-term negative outlook for the oil price. Weak demand for physical gold and concerns about the reduction of quantitative easing, continue to put pressure on the metal price quotations. Decision to reduce the intervention can be taken as early as December 17-18. From the point of view of technical analysis, gold moves in the downward channel. The closest objectives are at 1230 and 1220. Growth is limited by the level of 1270. Among macro that will be released today, we should pay attention to the number of unemployment claims (13:30 GMT), Chicago manufacturing index (14:45 GMT), the consumer confidence index and inflation expectations in the U.S. (14:55 GMT).