30 January, 2014
Yesterday, the Fed reduced its program of buying U.S. government bonds by $ 10 billion to $ 65 billion per month. The interest rates have not changed. The next Fed meeting will be held on March 18-19. The Forex market reaction was sluggish. Yesterday, the dollar index (USDIDX) was generally decreased, and only today its increase was observed. Recall that the dollar index rose immediately by 0.7% after the first asset buying reduction from the Fed on December 18. We believe that in the current dynamics of the weak U.S. currency is due to small attractivity of assets. This year, stock markets are corrected down after last year's rapid growth. The S&P 500 decreased by 3.9% since the beginning of 2014. Whereas last year it grew by 25%. Because of the panic, American government bonds yield in developing markets dropped to 2.7% from 3% in mid-December. Nevertheless, we believe that the Fed's decision will still support the dollar. However, its rate will be more responsive to macroeconomic factors, the overall situation in the Forex market, as well as technical analysis signals.
Today at 10-00 and 13-00 GMT (0) we expect a lot of important economic data from the EU. The statistical information for the U.S that can affect the market comes out at 13-30 and 15-00 GMT (0). Overall, the preliminary forecasts for the EU look neutral, but. slightly negative for the U.S.
The British Pound (GBPUSD) weakens for the third consecutive day. Investors expect important macroeconomic data in terms of mortgage lending in December, which will be released today at 9-30 GMT (0). It is expected that the volume of loans will be the highest in the last six years. The Bank of England may tighten monetary policy to prevent the emergence of a "bubble " in the property market .
As it was expected, yesterday's economic data in Japan were negative for the Yen (USDJPY). Recall that its weakening in the chart looks like the rate growth. The volume of retail trade in Japan decreased in December (year to year). Besides it, the volume of curry trade transactions has been decreasing the fourth consecutive week. Today, at 23-30 GMT (0) we expect many macroeconomic data from Japan. The most important of these may be the consumer price index for December. It is projected to be 1.5% on the annual basis. Note that the Bank of Japan stated earlier about the termination of buying Japanese government bonds by printing money, once inflation reaches 2%. In other words, if the CPI is higher than forecast, the Yen may strengthen (falling on the chart) and vice versa. Besides the inflation in Japan we expect the on unemployment data, household spending and industrial production today. The preliminary forecasts, in our opinion, are basically positive for the Yen.
The Canadian Dollar (USDCAD) continued its weakening (growth chart). Investors believe that this is due to reduction of asset buying from the U.S. Federal Reserve, and the panic in devolving markets. We expect the GDP data for Canada, which will be released on Friday.
The U.S. Dollar Index (USDIDX) dropped yesterday after the FED Chairman, Janet Yellen
There were no particularly strong movements in the Forex market on Friday. Strengthening of European currency (EURUSD) was limited because of rumors that the EU may allocate financial assistance to Ukraine in the amount of 20 billion EUR...
The (USDIDX) fell on Tuesday due to weak data on U.S. real estate market from the National Association of Home Builders (NAHB) and a decrease of the production index of New York Empire Manufacturing for February...
As we anticipated in yesterday report, the Feds decision nevertheless supported the dollar. In addition, the macroeconomic data were slightly worse than expected...
On Tuesday, the Dollar index (USDIDX) rose on anticipations of reductions in the program of the U.S. Treasury bonds buying by $ 10 billion to $ 65 billion per month...
The major currency pairs on Monday hardly changed. Market participants are waiting for the U.S. Federal Reserve meeting results on Wednesday...
Last week we observed a strong weakening of emerging markets currencies. The largest decline was the Argentine peso, which has fallen by almost 18%. We can remark two factors that influence emerging markets...
The Euro (EURUSD) and the Swiss franc (USDCHF) strengthened yesterday vs. the U.S. Dollar by more than 1%. The PMI