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31.01.2014 - Dollar continues to strengthen

Yesterday's trading session ended with growth of the major U.S. indexes. One of the reasons for optimism was a report of a corporation Facebook (FB), which published good report and showed growth of stocks by more than 14%. At the same time macro statistics published yesterday basically was more negative than positive. Thus, the manufacturing PMI in China fell to 49.5, compared with an expected 49.6. U.S. GDP growth in Q4 was 3.2%, which is 0.1% worse than was expected. The number of unemployment claims has also increased to 348 thousand with the expected figure 331 thousand.

On this background euro has accelerated the decline and reached the support at 1.3550. Today the course of trading will be affected by data on unemployment in the Eurozone (10:00 GMT), personal spending and income of consumers (13:30 GMT), and the index of consumer confidence in the U.S. (14:55 GMT).

It is worth recalling that until next Thursday China will be celebrating the New Year. On Monday is expected a block of statistics on manufacturing PMI in the Eurozone (09:00 GMT), the UK (09:30 GMT) and the U.S. (15:00 GMT).

December 26 of USD Performance

The British pound also declined after the euro. Statistics on the housing market also did not help the bulls. Thus, the number of mortgage approvals in December was 72 thousand, at the forecast 73 thousand. Consumer Confidence Index, published last night improved to -7 against expected -12.

USD/JPY continues to decline in the descending channel. Large block of statistics that came out today was mixed, but in general it indicates Japanese government's success which policy is aimed at increasing the country's economy. Thus, the index of business activity in January increased by 1.4 to 56.6, the unemployment rate declined to 3.7%, at the forecast 3.9%, inflation accelerated in December to 1.3%, industrial production rose by 1.1% in December, which is 0.2% worse than the forecast. Due to the policy of the Bank of Japan, we maintain a long-term positive outlook for the USD/JPY.

The price of the Australian dollar continues to consolidate below 0.88. We do not expect a trend change in the near future. Tuesday will be published a statement of the Reserve Bank of Australia, which will help to determine the future direction of the Australian dollar.

As was expected, the price of gold has reached the lower limit of the upward channel, and now it is traded near the strong level of 1242 dollars per troy ounce. Due to the weak demand for physical gold, the demand for the yellow metal is growing amid falling of stock indexes. We expect that the price will continue to move within the channel. It should be stressed that in order to overcome the level of 1265-1270 the price of gold will need a strong fundamental stimulus.

Quotations of U.S. benchmark Light Sweet crude oil continue to move in the local uptrend. The price may continue to grow, but consolidation above the psychological mark of $ 100 per barrel is not likely to happen. Due to the record levels of oil production in the U.S. and increased supply from the Middle East we maintain a long-term negative outlook for oil prices.

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