31.03.2014 - Traders are waiting for a report on inflation in the Eurozone

Major U.S. indexes ended the trading session with a slight increase amid growing consumer confidence index to 80.0, which is 0.6 worse than was expected. Personal incomes of consumers increased by 0.3%, as expected. At the same time, personal spending rose by 0.3% vs. forecasted 0.2% rise. Traders expect the release of data on the U.S. labor market, which will be published at the end of the week.

The price of euro showed a significant reduction, but was able to win back some of its losses and now is consolidating above 1.3750. Central news of the week will be the release of data on inflation in the Eurozone (09:00 GMT). Lately representatives of the ECB more often pointed on the deflationary risks and the willingness of the bank to take steps to fight deflation. Possible new monetary easing measures will lead to a depreciation of the euro. We keep medium and long term negative outlook for the euro.

The price of the British pound continued to strengthen and reached the strong level of 1.6650. On Friday was published the data on business investments which grew by 2.4% and GDP growth of 0.7% in Q4. These indicators coincided with the forecasts and current account deficit narrowed to 22.4 billion against the forecast 13.5 billion. Increase in prices has stopped in the area of 1.6650. At the moment there is a high probability of correction. We maintain long-term and medium-term positive outlook for the pound.

The price of USD/JPY rose sharply on Friday. The reason for the jump is the data on inflation in the country, which shows an increase by 1.3%, with a target level of 2.0%. In addition, on April 1 in Japan is envisaged to increase the sales tax. Moreover, investors were disappointed by the data on business activity index, which fell to 53.9 in March from the previous figure55.5. Industrial output in February fell by 2.3%, with an expected growth by 3.6%. We maintain our medium and long-term positive outlook for the pair.

The Australian dollar has corrected after the strong growth in the previous days and is now trading below 0.9250. Data on new home sales increased by 4.6% in March compared to 0.5% in February, as well as credit growth of 0.4% but failed to support the quotes. Central news of the week will be the statement of the Reserve Bank of Australia on monetary policy (tomorrow 3:30 GMT). We expect the volatility growth tomorrow and do not exclude further downward movement in the medium term.

The New Zealand dollar has corrected after the strong growth of the previous weeks. Index of business confidence in New Zealand in March dropped to 67.3 against the previous figure 70.8. This week is not expected the release of important macro on New Zealand and attention of traders will be focused on data on production in China, which is the main trade partner. We expect further correction of the New Zealand dollar in the medium term.

Oil prices continue to rise gradually on the background of positive data on the U.S. economy, as well as the possibility of introducing new measures to support the economy of China, which is the second largest oil consumer in the world after the United States. Support for oil prices provides the fears about tougher sanctions against Russia from the West. Among the negative factors should be mentioned record production volumes in the U.S. and lower demand for oil due to warming in North America. We maintain long-term and medium-term negative outlook for oil.

Decline of gold prices has stopped below $ 1,300 per troy ounce. After the fall of price by more than 7% of the yearly highs, we expect a corrective upward movement. The reason for the decline of gold has been the strengthening of the dollar, reducing geopolitical tensions around Ukraine and the statement of the head of the Fed on the possibility of an earlier rise in interest rates. The demand for gold is supported by concerns about further growth on global stock markets. The course of trading this week will be affected by data on inflation in the euro area and the U.S. labor market.

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