24 February, 2014
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. Finance ministers from the G20 have not reported anything significant. They believe that the annual global GDP growth is to be 2% more than previous forecasts for five years. It will bring an additional $ 2 trillion. There were no steps to implement such plans announced. Today at 10-00 GMT (0) we expect the important inflation data from the EZ for January. According to forecasts, it will not change and will remain at 0.7%. Meanwhile, the ECB target level is much higher and equal to 2 %. Low inflation increases the likelihood of rate cuts and may have a negative impact on the EUR. Recall that the ECB meeting concerning rates will be held on March 6. There will be also an inflation forecast published for the first time for 2016. The significant macroeconomic indicators in the U.S. will be released this week on Tuesday, Wednesday and Friday.
The British Pound (GBPUSD) slightly slowed its decline after the announcement of the Bank of England that its agency will support the economic growth in the country. On Wednesday we expect the GDP for the fourth quarter to be released. A slight slowdown in its growth is expected. We believe that before it the Pound will be in the neutral trend.
Some investors believe that part of the money issue from the Fed started flowing to the commodity markets. The coffee price (Coffee) for the week increased by 20%, the biggest increase since 1999. Natural gas (NATGAS) rose last week by 16%. Soybeans (Soyb) showed a good growth and other commodity futures also. According to the CFTC, net long positions on commodity futures reached the highest level since August 2011.
We want to emphasize that futures on crops get more expensive contrary to expectations of increasing production in the U.S. this year. The USDA expects a significant increase in soybean crop in the season 2014/15 to 3.55 billion bushels. Its reserves can be doubled and reach 285 million bushels at the end of the season. It is expected that the ratio of reserves/used reach 8.3 % from 4.5 % of the previous two seasons. According to the Ministry, soy will get cheaper by about a quarter. The corn crop (Corn) could reach 14 billion bushels. The USDA predicts decline in its value from $ 4.5 to $ 3.9 per bushel. It also expects that the wheat (Wheat) will come cheaper with $ 6.8 per bushel to $ 5.3. We recommend you to follow the commodity charts using a technical analysis. It can not be estimated in advance the emission money inflow for the commodity markets and when it's over.
The copper (Copper) quotations fell today. Meanwhile, according to the International Copper Study Group, copper deficiency in the world market increased in November by 129 tons compared with 23 tons in October. Data are converted with delayed. The Indonesian Government has taken a number of bills to stimulate the copper production. They may affect the opposite way. Indonesian smelting companies have drastically reduced copper production and export. We do not exclude that it may increase its cost.
The U.S. Dollar Index (USDIDX) dropped yesterday after the FED Chairman, Janet Yellen
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...
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