27.01.2014- On Friday, the stock market showed a strong decline
The last trading day of the week turned out to be poor on important macroeconomic statistics. At the same time we have seen the growth of bearish sentiments on the markets. The reason for a reduction of optimism was a report about the probable reduction of industrial production in China this month. On this background the U.S. market index S&P 500 fell below the psychological level of 1800. Today, in focus will be data on PMI (14:00 GMT) and new home sales in the U.S. (15:00 GMT). In Germany, will be published the business climate index (09:00 GMT).
Euro continues to consolidate below 1.37, after strong growth last week, caused by rising manufacturing activity in the Eurozone.
The reason for the sharp decline of the British pound was the statements of the head of the Bank of England Mark Carney. In his speech, Mr. Carney said the new benchmark for the state monetary policy will be published in February, and in the near future the interest rate and the amount of stimulation will remain near the same levels. Previously the Bank of England stated that they would review the monetary policy after the unemployment rate will reach 7%. Now the figure is 7.1%, which was much better than analysts' forecasts.
After a strong decline, we expect that today the British Pound will be corrected upwards. Tomorrow at 09:30 will be published statistics on GDP growth in the UK in the fourth quarter of 2013.
Japan's trade balance was better than the forecast of analysts. Thus, the deficit declined to 1.15 trillion yen, while anticipated figure of growth was 1.33 trillion yen. After a strong decrease, the price of USD/JPY is consolidating near a strong level of 102.50. On Friday, will be published a large block of macroeconomic data in Japan, after which we expect a strong growth of volatility.
The main event of the week will be a meeting of the Federal Open Market Committee of the U.S. Federal Reserve, on which will be decided the future fate of quantitative easing program. The Fed's decision will be announced at 19:00 GMT, Wednesday.
The price of gold has overcome the strong resistance level 1265 dollars per troy ounce. Reason for the increase of interest in protective assets such as gold, was the decline on the stock markets in the world. Demand in China, at the same time is weakening, because the celebration of the Chinese New Year will take place on this week and all purchases of metal are almost over.
After a strong growth, oil quotations are consolidating near the level of $ 97 per barrel of Light Sweet crude oil. We maintain our negative outlook on oil prices due to record production levels in the U.S. and increasing supplies from Libya and Iran. Possible reduction of quantitative easing program also plays against the price increase.