29.11.2013- Markets are not in a hurry to choose direction
Yesterday's trading session on the stock markets passed calmly enough. European indexes have continued moderate growth. Signing the agreement on the coalition in the German Parliament, has been welcomed by the markets. Angela Merkel will continue to manage the largest economy in Europe until at least 2017. Statement by Vice-President of ECB Vitor Constancio also calmed the markets. According to him, discussions on implementing the negative deposit rates will only be possible in case of emergency. Positive mood on European markets was supported by macro data on business activity index in the retail sector. In November, the figure has risen to 48.0 compared with 47.7 recorded in October. The report on the labor market on Germany did not change the market direction. Though, the number of unemployed increased by 10 thousand people. Analysts did not expect changes in this indicator. Unemployment rate at the same time remained unchanged at 6.9%. On this background, quotes of EUR/USD continued to grow. Price moves in rising channel. The nearest support level is at 1.3565. Price movement today will be affected by retail sales data in Germany (07:00 GMT), unemployment and inflation rates in the Euro area (10:00 GMT). British pound yesterday updated two-year highs. Growth was driven by the expectation of release of the report of the Bank of England. Mark Carney, in his speech outlined the need to reduce the cost of mortgages for the population. Support program for buying a first home gives the results, but real estate prices show an increase and the central bank does not like it. At the same time Carney outlined the need to support small businesses. The British pound continues to move in the local rising channel. In case of correction the prices may fall to the levels of 1.6270 and 1.6250. Among corporate news, we should highlight the growth in share prices of mining giant Rio Tinto. Increased demand for the company's shares appeared after the announcement that the iron ore production capacity to 360 million tons will require less investment that was previously expected. Annual growth will be more than 60 million tons in 2014-2017. Large block of macroeconomic data of Japan was rather ambiguous. Despite the fact that the index of business activity in the manufacturing sector increased to 55.1, against expected level of 54.2, and inflation accelerated to 0.9%, a pair yen/dollar and the country's stock market have fallen. The high inflation is more caused by the rise in price of imported energy resources than in the increase of consumption. Household spending rose by only 0.9% while the expected growth was at 1.2%. The data on labor market did not please the markets. Unemployment did not decrease to 3.9% and remained at 4.0%. Industrial production grew by only 0.5%, against expected increase of 2.1%. Because of this, the USD/JPY started to correct. The closest objectives are 101.90 and 101.40. Australian dollar continues to fall in price. Loose monetary policy of the Reserve Bank of Australia, in the near future according to our estimates should lead to a decrease at least to 0.89. Growth in case of correction is possible to the level 0.9140. Prices for Light sweet crude oil continue to consolidate at level 92 dollars per barrel. Prices are pressed by the increase in oil inventories in USA, for tenth consecutive week. Excess of supply over demand in the U.S. is due to many factors, the key one is the implementation of technology of hydraulic fracturing and horizontal drilling. This method allowed to reach a significant increase in oil production. Price growth is possible, in case of correction, to the level of the nearest local minimum 92.80. In the long term, we maintain a negative outlook on oil prices. Record demand for gold from China, which will become the largest consumer of gold instead of India, supports the gold prices. Despite this the price can’t break the downward trend and continues to fall within the channel. Fears of soon reduction of quantitative easing program in the U.S. continue to put pressure on quotes. We expect the price of gold to reach the levels 1220 and 1200. In the long term, we remain bullish view on gold.