19 February, 2014
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. Usually they pay little attention to them, but this time the business optimism index the housing sector fell by a record 10 points and fell below 50 points for the first time since May of last year. All the negative macroeconomic indicators released in December, January were explained by extremely cold weather in the United States. Now, some market participants have started fearing a real slowdown of the U.S. economy. Today in the U.S. at 13-30 GMT (0), we expect the official data on the real estate market and the producer price index for January to come out. After yesterday's information from the NAHB, investors believe that they will be negative.
The Canadian dollar continued to strengthen (it looks like a drop in the USDCAD chart). It ignored the information on the reduction of foreign investment in Canadian securities to C $ 4,28 billion in December, for the first tin in six months. Today at 13-30 GMT (0), there are data on wholesales in December for Canada. If they match with a moderately negative outlook, then the Loonie drop on the chart may slow down. Mainly, Forex market participants are focused on inflation and retail sales, which will be released on Friday.
The British Pound (GBPUSD) demonstrated attenuation (reduction on the chart). The yearly inflation in January fell below the target level of the Bank of England 2% and amounted to 1.9%. This is the first time since November 2009. Now investors expect today's unemployment data and the results of the Bank of England meeting coming out at 9-30 GMT (0). Most likely they will also be positive for the economy. However the whole thing reduces the likelihood of rate hike, which hinders the further strengthening of the Pound.
The Swiss Franc (USDCHF) strengthened (reduction on the chart) due to large corporate mergers and acquisitions. However, a number of investors expect to get weaker. According to their opinion, the new anti-immigration law could seriously damage the Swiss economy.
As we predicted in previous reviews, the prices for wheat (Wheat) and soybeans (Soyb) rose. Consumers fear reducing in harvest of winter crops due to bad weather in the Western Hemisphere. According to the Commodity Weather Group forecast, the yield of winter wheat red in the Midwest will be 15% less than usually. Soybeans is negatively affected by drought in Brazil and rains in Argentina. An additional factor in rising prices are investors' expectations that China begins purchasing the U.S. soybeans.
The price of natural gas (Natgas) reached the three-week high. Due to the cold weather the demand for heating in the U.S. increased and gas reserves decreased to a trickle in the last ten years. New weekly inventory data will be released on Thursday. We believe that natural gas is in the long growing trend, as its price in the U.S. is almost three times lower than in Europe. The projections for shale gas production increase in America may not be justified.
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...
As we anticipated in yesterday report, the Feds decision nevertheless supported the dollar. In addition, the macroeconomic data were slightly worse than expected...
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...
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