Daily Forex market overviews by MasterForex

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Overview of the main economical events of the current day - 16/04/2013

JPY rebounds, EUR still under pressure

JPY showed some impressive gains after somewhat disappointing Chinese GDP data, which suggest that the growth is slowing down, making JPY an attractive defensive option. And while JPY was trading at a 4 year low vs USD last week after BoJ’s announcement, Japanese currency has been rising vs USD for the last 4 days fueled by USA urging Japan not to make any aggressive steps as they might lead to trade wars of some kind, according to States.

EUR continues to feel pressure coming from Cyprus problems. Moody’s cut the rating of the largest Cypriot bank – Bank of Cyprus – by 2 notches as analysts expect huge losses from uninsured deposits in coming months.

At the same time EU, ECB and IMF made a joint announcement, saying that the government is ready to implement all and any measures needed to spark an economic growth in Greece by 2014, which seems to put at least this story to rest – or, at least, so it seems.

Finally, GBP was enjoying strong housing sales data, which showed another increase in April, which potentially decreases risks of another recession. Today expect an inflation report to come from UK, which is also likely to be a positive one.

 

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Overview of the main economical events of the current day - 17/04/2013

JPY and USD declines on a falling demand for defensive assets as stock and gold markets are up

A recovery in gold prices coupled with rising American stock market resulted in falling demand for defensive assets, destroying recent gains of both USD and JPY.

Euro climbed up to a 7 weeks high vs USD after stop orders placed on short EUR positions resulted in EUR showing highest growth rates since February and close to this year record daily gains.

GBP continues to fall, fueled by disappointing CPI data from UK, that shows that while inflation growth rates are quite stable, they still are higher than the speed of growth of the labor prices, which potentially creates quite a nasty gap for British economy.

This Thursday and Friday look out for a G20 banking leaders meeting in USA, during which we are likely to hear some more ranting regarding aggressive measures recently introduced by Bank of Japan. Nonetheless, it is unlikely that we’ll hear anything new as Japanese government stands firm on a statement that the measures are aimed exclusively at fighting deflation and not at decreasing the exchange rate of JPY.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 18/04/2013

USD rebounds, EUR and GBP are still under pressure

EUR continues to decline after an interview with the head of Bundesbank, who admitted that ECB might cut the rates if the economy continues to slow down, which set the union currency in a free fall. At the same time he said that monetary policy is not the key question and rather prefers to concentrate on reforms in Germany and EU, saying that the full recovery might take as long as 10 years.

GBP continues its decline, showing a record loss in 6 weeks vs USD after disappointing statistics from UK, that suggest rising unemployment level on the back of declining wages growth. British currency declined vs most of the major currencies after Bank of England meeting minutes were released, showing that Head of BoE supports the idea of expanding the asset purchase program by another GBP 25bn.

This comes as almost no surprise, given the fact that yesterday IMF cut the growth forecasts for UK and announced that BoE needs to increase its measures. Given the condition of the economy, we’d say that it is a really possible scenario – in that case, expect GBP to fall even further.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 19/04/2013

EUR can’t find its place, USD shows some minor gains

EUR is trading up and down vs USD on a not-so-straightforward statistics and conflicting market rumors. It all started with news of large losses allegedly booked by Societe Generale (which turned out to be a false rumor) and continued with Beige Book data from USA, that showed that while business activity is still in a positive zone, it does slow down, adding to the worries regarding the slowdown of an American economy.

GBP continues to fall reaching a 4 weeks low vs EUR on a disappointing retail sales data from UK, which is another proof of rising pressure on the consumers’ income – a negative factor which threatens economy’s recovery. Nonetheless, there were some positive hints as well – for example, the volume of sales was rising in 1Q13, which potentially supports the theory that UK might avoid another recession.

JPY declines as usual after aggressive measures introduced by a new Head of Bank of Japan and, quite as we expected, we haven’t really heard any market moving news coming form a G20 meeting yet, but it might change today.

Also look out for EU trade balance and German manufacturing prices, as well as some data from Spain and Italy that is due today and don’t forget that there is an IMF meeting over the weekend – expect somewhat increased volatility on Monday.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 22/04/2013

GBP rapidly declines on a surprising Fitch decision

Friday surprisingly turned out to be a much more interesting day than one could expect based on the planed data releases as Fitch Ratings decided to cut UK’s rating from AAA to AA+ due to revised debt forecasts and increased possibility of future recession. While it is no news that UK economy is in a tough shape, Fitch’s move still came quite unexpected, putting serious pressure on GBP and EUR as well, which lost its recent gains after the decision was made public.

USD continues to rise vs JPY fueled by the comment of the Japanese Prime Minister, who promised that no G20 meeting participants will be against the new monetary policy.

Today we’ve got GDP data for 1Q13 from both UK and USA and that’s a really important piece of statistics as both economies are currently under close market attention. These numbers are going to show if these economies are falling into recession or not, forming long-term trends for the currencies.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 23/04/2013

Major currencies rise vs USD on different trends

EUR showed some gains vs USD on the news of the re-election of the current President of Italy, which not only decreases political risks in the region, but also makes market sure that the current course of action is to remain unchanged. USD was also under pressure following somewhat weak secondary housing sales data that shows a decline last month. Given that this indicator is usually quite an accurate tool for measuring state of economy, no surprise that US currency was down.

GBP was also rising as investors were looking for defensive options. Seems like the market got over the shock of quite unexpected (in terms of timing, not the fact itself) rating cut by Fitch. This makes sense as, once again, the decision itself was of little surprise, especially given the fact that it follows the same move of Moody’s. All in all, it looks like market understands that from a fundamental point of view nothing’s changed regarding UK, so the currency is rebounding after recent losses.

It was definitely not a finest hour for USD, as even JPY was rising vs the American currency. And while JPY was not able to hold above 100, it still showed some impressive gains after G20 gave a green-light to Japanese monetary measures.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 24/04/2013

EUR reaches 2-week low vs USD on poor data reports, drags GBP downwards

EUR erased its recent gains vs USD after ECB published a report with somewhat weak data, increasing market concerns that a rate cut is possible. EU service sector PMI was slightly up reaching 46.6 compared to 46.4 in March, however the number is still below a threshold level of 50, which separates growth from recession. Moreover, this decline is in line with the decline in Germany, which is the strongest economy in the Union, adding to the concerns.

GBP was declining vs USD as well, partly fueled by disappointing UK CBI industrial trends and budget deficit numbers, however it didn’t have a major impact on the currency and GBP was trading pretty much in line with EUR as European problems are perceived by the market as a more important driver.

Today, UK lending data and some other British statistics are up for release, while from Eurozone watch out for German IFO. We do not expect major market reaction to UK data as the planned releases are quite volatile and have little correlation with retail sales, but IFO might actually have quite a strong effect on trading, especially if the number comes strongly above expectations contradicting recent disappointing PMI data.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 25/04/2013

EURUSD little changed as markets wait for new information

Despite showing some volatility on Wednesday after the release of German IFO, EURUSD trades more or less flat even after somewhat disappointing data, which suggests that short-term the market sees the current levels as fair. New information regarding the US economy is to be released this Friday and, perhaps, it will be finally enough to move the currency – or, perhaps, we will see some movement next week after FOMC and ECB meetings.

Intra-day, GBP was rising vs EUR and showed strong gains after weak German IFO data. However, just like with EURUSD, there was no follow-through GBP buying – and, no sell-offs either following a weaknesss in UK CBI Distributive trades survey.

Today the UK Q1 GDP figures will get lots of attention. While the market looks for marginal growth (up 0.1% qoq), we would not be very surprised if the numbers come on a negative side, «officially» pushing the economy into recession. Given that, expect to find GBP under some pressure.

Other than that, today is quite a slow day in terms of news with only the US initial jobless claims and the Spanish unemployment rate for release. Most likely the impact will be minor.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 26/04/2013

GBP rises on strong statistics

GBP was rising yesterday with a help of 1Q13 GDP data that came surprisingly high at 0.3% compared to expectations of 0.1% qoq growth. Moreover, we had some concerns that the number might actually be a negative one, meaning another recession for UK, however it seems that British economy is actually in a better shape than one could expect based on preliminary indicators. While this positive news do strengthen the position of Bank of England regarding not making any changes to the monetary policy during the meeting in 2 weeks, there are some hints being transmitted to the market that it might actually happen – so keep an eye on further developments in this area.

At the Bank of Japan meeting that ended early this morning BoJ kept the pledge to double the monetary base in 2 years. Focus now turns to the revised macroeconomic forecast that is due today.

EUR was under serious pressure yesterday on rumors that ECB will cut the key interest rate to a record low level during the next week, helping the region's economy. Moreover, some ECB members also hint that this issue might be discussed during the meeting on May 2nd. Given the amount of rumors regarding the rate cut we've seen recently, one might conclude that there is no smoke without a fire, but only time will tell if it's the right conclusion or not.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 29/04/2013

USD rebounds, EUR and GBP are still under pressure

EUR continues to decline after an interview with the head of Bundesbank, who admitted that ECB might cut the rates if the economy continues to slow down, which set the union currency in a free fall. At the same time he said that monetary policy is not the key question and rather prefers to concentrate on reforms in Germany and EU, saying that the full recovery might take as long as 10 years.

GBP continues its decline, showing a record loss in 6 weeks vs USD after disappointing statistics from UK, that suggest rising unemployment level on the back of declining wages growth. British currency declined vs most of the major currencies after Bank of England meeting minutes were released, showing that Head of BoE supports the idea of expanding the asset purchase program by another GBP 25bn.

This comes as almost no surprise, given the fact that yesterday IMF cut the growth forecasts for UK and announced that BoE needs to increase its measures. Given the condition of the economy, we’d say that it is a really possible scenario – in that case, expect GBP to fall even further.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 30/04/2013

EUR rises on declining political risks

EUR is rising vs most of the major currencies as a result of a 2 month long political crisis in Italy coming to its end. And while the European currency was under some pressure following a release of sentiment data which came a little under consensus, EUR bounced back after a successful bond placement by Italy.

Another factor helping EUR climb was a weakness in USD, which appeared after somewhat disappointing US data that shows an increase in unfinished housing deals coupled with declining rate of growth of personal income. And while the data comes as little surprise as most of it was already published in a 1Q13 GDP report, it looks like market participants took the news as an excuse to justify further EUR growth.

GBP is also rising, reaching a 10 week high vs USD fueled by a set of strong data from UK. According to the reports, housing prices are rising (decreasing risks of yet another recession) – which means that increased economy stimulation measures are off the table – at least for now, allowing GBP to show some gains.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 01/05/2013

Markets await US FED decision on rates

The dollar continued to weaken on Tuesday, the fifth day in a row, waiting for the decision of the most powerful central bank in the world on the base interest rate. The results of the two days Federal Reserve’s FOMC meeting will be declared on Wednesday evening. Although nobody is waiting for any significant changes in wording, the last macrostatistics data don’t allow favor an early exit from the program of quantitative easing. All this puts pressure on the dollar.

Even the Conference Board data which happened to be much better than the forecast didn’t help the dollar. In April the confidence among consumers rose significantly – up to 68.1level comparing to the March index 61.9 revised upwards. The April’s figure turned out the highest since November, 2012.

At the same time in April time purchasing manager index /PMI/ in Chicago fell to the lowest level since September, 2009 – up to 49.0 level in comparison with 52.4 level in March. Besides, markets are still under influence of weak figures of the US GDP of the first quarter declared last week. According to these figures the main economics index increased only by 2.5% (with expectations of growth in 3.1%).

Euro continued to grow on Tuesday despite expectations of the key interest rate fall on Thursday at ECB meeting. And although the rate fall is considered as a negative factor for currency – in this case markets interpret this possible event as a positive thing for euro zone economics, stock markets and euro currency.

Pound also continued its growth on Tuesday after the Bank of England report which showed that in March British banks issued loans for buying houses more than it was expected. The number of approved mortgage credits in March was 53.5K against 51.9K in February. All this indicates the economic recovery.

Canadian dollar also is close to parity against the US dollar – after the GDP data issued on Tuesday. Canada’s GDP increased by 0.3% in February against expectations of 0.2% - favored by increased activity in the mining and oil exploration sectors. Year-on-year the rate rose to 1.7%, also exceeding the forecast of 1.3%

Downward short-term correction in the pair USD / JPY is also continuing to develop. The dollar fell on Tuesday against the Japanese yen to its lowest level since April 16. Commerzbank recommends short-term short position in this pair, with goals at 95.80.

May 1 in most countries of the euro zone and China is a bank holiday, so a quiet European session is expected. But the North American session is unlikely to be calm. At first, preliminary data will be released on the labor market from ADP, as well as the ISM Manufacturing PMI. At 18:00 UTC the results will be announced on the two-day meeting of the FOMC.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 02/05/2013

Federal Reserve failed to make the situation clear. ECB is next to talk

EURUSD raised above 1.32 on Tuesday after APD published private sector employment data that appeared to be worse than planned. US employment rate increased by 119 thousand last month, while planned value is 150-150 thousand. Private business employed less personnel in April than the economists have expected due to dismissals on plants. Moreover, March data was reconsidered to be downside.

US industrial production activity in April slowed down as well, though exceeding experts’ expectations. According to the report issued on Wednesday, Production industry procurement management index from ISM dropped to 50.7 in April from 51.3 in March.

This assured the market players that in 2013 the Fed won’t cut monthly bond purchasing, which put pressure on the greenback.

Fed Reserve’s two day meeting ended on Wednesday resulted, at large, as it was expected. Despite weak US data issued within the last few weeks, the Fed didn't mark down the expected economy growth rate, and noted that the inflation rate is slightly lower than the planned value.

The Federal Reserve confirmed its plans to continue retirement of bonds in an amount equal to $85 bln monthly. The only thing that is new is the following statement: “The committee is ready to increase or decrease the assets acquisition rate in order to maintain proper market development and inflation changes”.

Market participants have different ideas on how to react to such a foggy statement. Some think this is in favor of the greenback, the others, vice versa, speak out against the American currency. The same way, the markets didn’t show any clear dynamics after the decision was declared. This increases importance of US employment report to be issued on Friday, for the Fed Reserve plans to adjust the monetary policy depending on economic situation.

The Pound kept increasing on Wednesday, recorded 11-weeks high against dollar after The British industry sector procurement management index turned out to be exceeding expectations. In April the index grown to 49.8 contrary to reconsidered March value 48.6, which is the same as planned.

Australian dollar lost quite a lot on Wednesday after Chinese production industry activity index was issued. Last month it dropped to 50.6 contrary to 50.9 in March. China is the main Australia’s partner.

Today the markets will follow the ECB’s key rate decision. It will determine following direction for Euro. However, it’s quite obvious that after the week of weakness for dollar we can expect some kind of retracement after the Fed Reserve meeting takes place. Technically, Euro reached critical levels around 1.32. Another thing is that stock and commodity markets also shown bad dynamics on Wednesday, which may contribute to the dollar's rate increase in short-run.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 06/05/2013

The main events of the week

This week there won’t be a lot of important macroeconomic indicators. Market participants "digest" the results of the meeting of the two most important central banks of the world: the Federal Reserve and the ECB, as well as key data from the U.S. labor market, released on Friday.

These data turned out a little higher than it was expected. According to the Ministry of Labor the number of jobs in the U.S. economy in the past month increased by 165 thousand, with expectations of 145-150 thousand. The unemployment rate fell by 0.1% to 7.5% - the lowest unemployment rate since December 2008.

But a more important factor was a significant upward revision of the data for the previous two months - a total of 114thousand. In March up to 138 thousand instead of 88thousand, and in February - up to 332 thousand instead of 268 thousand previously reported. Revised February's value is the strongest since May 2010.

The stock market reacted definitely with growth to the published data. The DJIA index for the first time in history has overcome the level of 15000. But there was no definite dynamic at the currency exchange market. At first the dollar rose under the influence of strong stats. But then it fell influenced by rising stock assets and its inclination to risk. The correlation of the dollar growth and stock assets that was observed lately seems to start breaking.

Traditionally, in the second week of the month data on industrial production and trade balance will be released. Data on industrial production will be presented by France on Tuesday, by Germany - on Wednesday, by Britain - on Thursday and by Italy - on Friday. Industrial orders will be released in Germany on Tuesday.

Industrial production and industrial orders are expected to decrease in Germany in March, which highlights the difficulties faced by the euro zone's largest economy. And the UK industrial production can grow and the trade deficit can shrink in March.

Trading balance will be published on Tuesday by Australia and France, on Wednesday – by China and on Thursday – by Germany and Great Britain. Retail sales will be released on Monday in Australia and euro zone.

On Tuesday and Thursday meetings of central banks of Australia and Great Britain will be held. Also Australia, New Zealand and Canada will release its data of Labor market. At the end of the week on Friday and Saturday Great Britain will hold another G7 summit.

The bond market neither has many events that could have an impact on the currency market. On Thursday Spain will issue 10-year bonds. Bonds issue of southern Europe countries has become particularly relevant at the time of the European debt crisis.

But the main event will be a traditional for the second month’s week issue of long-term US bonds from Tuesday to Thursday. In theory, it can lead to the dollar’s rise and fall of stock and commodity assets and so have an indirect effect on currency markets.

6-May (time UTC)
08:00 Netherlands place 84-day and 205-day bills
12:50 France places bills

7-May
09:00 Austria issues 1.95% 2019 1.75% 2023 bonds
17:00 the USA issue 3-years notes

8-May
09:30 Germany issues EUR5 billion 2018 bonds
17:00 the USA issue 10-years notes

9-May
08:30 Spain issues 10-years notes
17:00 the USA issue 30-years bonds

10-May
09:00 Italy issues bills
10:00 ECB announces the amount of the return on a 3-year LTRO loans

 

[MasterForex Broker]

Overview of the main economical events of the current day - 07/05/2013

Euro reacted with a sharp fall to Draghi’s speech

Euro fell below support level of 1.31 on Monday during ECB head Mario Draghi’s speech when he said that the central bank would make a thorough examine of economic data of eurozone and it was also ready for further actions if required. In fact Draghi said that in future there may be further measures of easing monetary police.

“There are a lot of possible complications and consequences which need a thorough exam. The governing council decided to study and analyze these consequences to take measures in case of necessity” –said the head of ECB.

The statistical data released during the European session turned out to be mixed. Retail sales data in the eurozone showed a decline in sales for the 14th month in a row in the annual quantities. The data also turned out to be worse than expected and sales fell by 2.4%, with the forecast of decrease by 2.2%.

However the final PMI index for the service sector of European countries and eurozone turned out a little better than expected. So, the final index of business activity in the service sector of eurozone was 47.0 in April while the forecast was 46.6. But the indexes are still below the level of 50 points which indicates a further decrease of activity in the service sector.

The labor market in Spain shows some signs of improvement. The number of unemployed decreased by 46.1 thousand in April or 0.91% in comparison with the previous month and fell below the level of 5 million, which indicates that the recession in the crisis economy shows signs of weakening.

Statistical Office of Italy (Istat) lowered its economic forecast on Monday for 2013 due to reduction in domestic demand. According to the forecast in 2013 economy can decrease by 1.4% in real terms against earlier forecasts of 0.5%.

On Monday the U.S. dollar rose a little against almost all currencies continuing to win back the labor market strong data that were released at the end of last week.

The Australian dollar fell on Monday after retail sales weak data. The retail sales volume in Australia fell by 0.4% in March while growth by 0.1% was expected. Decrease of retail sales turned out the first within the last three months.

Also it was announced on Monday that the treasury of Australia decreased the forecast of GDP growth for the current and next financial years. Morgan Stanley recommends selling AUD due to the disappointing situation in China while the USA data start to show signs of improvement.

However the Canadian dollar managed to resist the general trend and rose a little on Monday after the release of strong data on building permits in Canada.

The number of building permits in Canada rose by 8.6% in comparison with February.
This is the largest growth rate for the last 5 months. But the published data mainly concerned construction of non-residential premises. The growth of residential quarters construction continues to be slow.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 08/05/2013

Australia’s central bank lowered its key interest rate to its historic low

At a monthly meeting on Tuesday the Reserve Bank of Australia lowered its key interest rate from 3% to 2.75% - the lowest level in its more than 50-years history. The bank referred to a slowdown in the economy, absence of inflationary pressure and a high rate of national currency.

For the last months the situation at the Labor market of Australia has been getting worse – the number of job advertisements decreased in April for the second month in a row. The interest rate decrease was the seventh for the last 19 months. This decision became a surprise as almost no one from the analysts forecast it.

In the final statement the RBA marked that it would use the interest rate decrease to encourage a stable growth of economy in line with achieving the inflation target.

Besides, the central bank also expressed its concern about an “extraordinary” power of the local currency, which makes AUD higher of parity rate against the US dollar for a long time.

The AUD fell dramatically after that but it was supported by the data on trade balance. Trade surplus was is restored for the first time from December, 2011 up to 307 million of Australian dollars due to the growth of coal and iron ore exports.

The euro was rising in the first part of the day after strong data on production orders in Germany were released. But then fell sharply after the release of a disappointing report of IBD/TIPP on economic optimism in the USA.

Industrial orders in Germany rose by 2.2% in March while a fall by 0.4% was expected. The released figures show that the situation in the industrial sector of the largest economy of Europe is getting stable.

However not all data of eurozone turned out so bright. According to the data of French statistical agency Insee industrial production of France fell by 0.9% while a fall by 0.2% was expected. This decrease turned out to be the most dramatic since October, 2012. According to annual basis the figure fell by 2.5%. The economy of France is still under pressure due to the reduction of the national budget and a weak demand from eurozone.

Almost no data on the USA were released on Tuesday except IBD/TIPP report on economic optimism. In May economic optimism index fell by 2.4% to 45.1 from 46.1 in April. Index value higher than 50 indicates consumer sentiment index growth and lower than 50 – pessimism growth. At the moment the index is 2.1 points lower its average value for 12 months which is 47.2.

The pound lowered on Tuesday due to technical factors. The decrease was supported indirectly by the released data of British Retail Consortium (BRC) which showed that the index of retail prices fell by 0.8% in April. It rose only by 0.4% in annual basis in comparison with 1.4% last month.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 13/05/2013

The main events of this week

The end of the week showed that the dollar made an impressive growth against major world currencies. The largest drop was shown by the Australian dollar (-2.95%), followed by New Zealand Dollar (-2.65%), Japanese yen (-2.63%) and Swiss franc (-2.32%).

The growth trigger was the data on initial applications for unemployment benefits, which came out better than expected, and reached levels that were marked before the recession. These data reminded market participants about a key employment report in the U.S., published nearly a week ago, which dispelled some fears about the U.S. economy, which appeared recently due to the macrostatistics decline.

This week will be more intense in the coming out macro data than the last one. There will be data on retail sales (Monday - China, Switzerland and the USA, Tuesday - New Zealand), industrial production (Monday - China, Tuesday - Eurozone, Wednesday – USA) and GDP (Wednesday - Eurozone, Thursday - Japan) and quite a lot of stats on the USA.

The main event of the week for the eurozone will be the publication of preliminary data on GDP for the first quarter of this year of both individual countries and the whole eurozone, which will take place on Wednesday. The GDP reduction of the Eurozone and individual countries may not be as significant as observed in the last quarter of last year.

However, if the data turn out worse than expected, it may give an additional impulse to continue the decline of the euro, which was observed recently. Also markets will pay special attention to the ZEW economic expectations index for Germany coming on Tuesday. According to the forecast investors’ confidence has risen after the decline in April.

There are not a lot of data on Britain. On Wednesday a labor market report will be published. Also on the same day the Bank of England inflation report for the second quarter will be released. Along with the publication the head of the Bank of England Mervyn King will make a speech.

And there will be quite a lot of important data on the USA. Monday - retail sales. Inflation data: production inflation - on Wednesday and consumer inflation – on Thursday. Capital inflow data and industrial production – on Wednesday.
Construction permits and laying of new foundations; manufacturing index, the Philadelphia Fed - on Thursday. And a preliminary index of consumer sentiment in May from the University of Michigan will be released on Friday.
And of course, on Thursday there will be a release of weekly applications for benefits - data that have been gaining more and more weight recently.



The main placements of bonds of the eurozone’s countries (UTC time):

13-May
09:00 Italy places 3-years bonds
09:30 Germany places EUR4 bln 6-months bills
13:00 France places bills

14-May
08:00 Netherlands places up to € 2.5 bln 2018 bonds
08:45 Spain places 6 and 12-months bills
09:30 Belgium places bills

15-May
09:30 Portugal places 6 and 12-months bills
09:30 Germany places EUR5 bln 2015 bonds

16-May
09:00 France places I/L bonds/notes

17-May
08:00 Belgium places bonds

 

[MasterForex Broker]

Overview of the main economical events of the current day - 14/05/2013

Retail sales data supported the dollar

The dollar rose on Monday against almost all main currencies. It was supported by the U.S. retail sales data that turned out a little higher than expected and strengthened the optimism about the largest world’s economy.

According to the data of Department of Commerce retail sales rose unexpectedly by 0.1% in April while a drop by 0.3% was expected. In comparison with the last year sales grew by 3.7%. Base sales, except for auto sales, decreased only by 0.1% with an expectation of 0.2% growth.

Besides, the dollar was supported by speculations on rapid closing up of economic stimulus programme. Last week Wall Street Journal published an article according to which FED is considering the ways of QE-3 programme phase-down.

USD/JPY reached the level of 102 – the highest level since 2008 – after finance minister of Japan Taro Aso had declared that G7 didn’t criticize the monetary policy of Japan at the meeting that ended at the weekend. And probably G7 countries will continue to regard with favor the accommodative monetary policy of the Bank of Japan.

In China there was a release of mixed macroeconomic data which showed acceleration of retail sales growth rates and industrial production in April but growth rates of industrial production turned out a little lower that it was forecasted (9.3% of annual growth instead of expected 9.4%). Investment amount into main Chinese funds increased by 20.6% since January to April but it didn’t reach the expected figures of 21% growth.

The Australian dollar dropped on Monday due to the poll held by the National Bank of Australia which showed a business confidence decline in April in anticipation of the publication of the annual federal budget which will take place on Tuesday. The NAB business confidence index fell to 2 in April from 2 in March.

There were no any significant statistics in Europe but there was another meeting of eurogroup where also support packages for Cyprus and Spain were discussed. By the evening it had been announced that the European Stability Mechanism (ESM), stabilization fund of the European Union had allocated the first financial support tranche in the amount of 2 bln euros. Also the Eurogroup approved a support package for Greece in the amount of 7.5 bln euros.

On Monday Italy placed bonds with the total amount of 8 bln euros, which was coincident with the upper planned level while the funding costs decreased. However this auction didn’t attract any special attention.

The dollar has been rising for three days already but after such growth it can show some correction. Economic expectation index of Germany ZEW will be released on Tuesday and it is expected to rise, which can favor such correction. Also industrial production data in eurozone will be published at that time.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 15/05/2013

ZEW index didn’t meet the expectations of the dollar growth correction

Germany economic sentiment index released on Tuesday from the ZEW research institute didn’t reach the expected figures of 40 points and was at the level of 36.4 in comparison with 36.3 points in March. It dispelled all the hopes of possible dollar’s growth correction. The index of current conditions in Germany dropped to the level of 8.9 points in May from 9.2 points in April and also turned out lower than the expected figures of 9.8 points.

German ZEW Economic Sentiment

ZEW president Clemens Fuest commented the results of the research and marked that the current bad economic situation in eurozone is still putting pressure on investors’ and analysts’ sentiment. Economic sentiment index is calculated from the poll of financial experts to estimate an economic situation in the country for the nearest 6 months. A figure above zero indicates predominance of optimism, below – pessimism. High indicator’s figures show positive economic situation and a good business climate.

However industrial production data in eurozone turned out much better than expected. Industrial production rose by 1% in March in comparison with 0.4% in February while only 0.5% growth was expected, which became the largest growth since July, 2011. It increases hopes for eurozone’s economy revival as it has been in decline for 6 quarters in a row. GDP data of eurozone will be published on Wednesday.

The dollar continued rising on Tuesday for the 4th day in a row while there were shown new signs of American economy recovery and possible early closing up of incentive programmes. The head of FED Plosser declared that he wanted bonds buying programmes to be finished by the end of the year. He also said that the FED should close-up bonds buying programme at the next meeting already.

U.S. Congressional Budget Office announced on Tuesday that the federal budget deficit this year was likely to decrease sharply. Also, the National Federation of Independent Business (NFIB) declared that its Small Business Optimism Index grew in April to 92.1 against 89.5 in March.

While the dollar was rising, the pound continued falling on Tuesday despite the publication of BoE Inflation Report on Wednesday and RICS House Price Balance which showed that housing prices in Great Britain had risen up to the highest level since June, 2010.

Australian dollar continued falling on Tuesday – the 7th day in a row – and dropped to the lowest level since June. The government of Australia introduced a new budget plan and announced that in the current financial year the budget will be well balanced, which differs from the forecast. Also it was marked that the deficit would be observed for 4 financial years until 2016.

New Zealand dollar also dropped on Tuesday after the quarterly retail sales report. According to the report of New Zealand statistics department the total retail sales amount in the first quarter grew only by 0.5%, with growth expectations of 0.8%. Besides, the data for the previous quarter were revised down.

On Wednesday markets’ attention will be attracted by preliminary GDP data of eurozone’s main countries and the eurozone as a whole. There are expectations of some improvements in comparison with the previous quarter. ECB board member Jörg Asmussen announced on Tuesday that the economy of Germany had risen in the first quarter while the eurozone had been in "mild recession" for the whole of 2013.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 16/05/2013

Eurozone economy has been decreasing for the sixth quarter in a row

On Wednesday almost all published macrostatistics turned out disappointing. First of all, preliminary GDP of main eurozone’s countries for the first quarter didn’t reach the expected levels. Besides, the previous quarter data were revised down. So, the GDP of France decreased by 0.2% while a drop by 0.1% was expected; the GDP of Italy fell by 0.5% while -0.4% drop was expected; the GDP of Germany rose only by 0.1% while +0.3% figure was forecasted.

The eurozone GDP as a whole dropped by 0.1% having shown a decline for the 6th quarter in a row, which also turned out lower than the forecast of -0.2%. At the same time the U.S. economy didn’t show negative quarter growth rates from the second quarter of 2009, which is very well seen on the chart below.

Source: epp.eurostat.ec.europa.eu

According to this data the euro fell to the 6-weeks minimum against the U.S. dollar but then it was maintained at the level of 1.2850 and even made an attempt to rise. Such situation was influenced by negative data of the U.S. economy. The manufacturing activity business from the Federal Reserve Bank of New York unexpectedly fell to -1.43 in May, compared with 3.05 in April and the growth forecast to 4.00.

Inflation in the manufacturing sector showed the most drastic decline for more than three years. The producer price index fell by 0.7% in April. Mainly it happened due to the drop of energy prices which fell by 2.5% for the month. The absence of inflation pressure is especially negative for the dollar as it allows continuing quantitative easing and buying of bonds without a fear of price growth.

The U.S. industrial production fell by 0.5% in April while a drop by 0.1% was expected, which was connected with a production loss in the manufacturing industry sector and decrease in demand of municipal services. Capacity utilization fell to 77.8% with the forecast of 78.3%. The data of March also lowered.

The index of industrial production in the USA

Source: federalreserve.gov

The data on the inflow of capital into the United States also turned out negative. Net Long-term TIC Flows in March amounted to 13.5 billion dollars against the forecast of their purchases in the amount of 43.4 billion. Investors mainly bought short-term bonds in March fearing that automatic reduction in expenditures of the federal budget can influence a weak recovery of American economy.

Only statistics from the National Association of Home Builders / NAHB / showed some improvement. NAHB Housing Market Index rose in May, after three months of decline –up to the level of 44, with growth forecast up to 43. On Thursday another U.S. macrostatistics block will be published: housing data, consumer inflation and weekly applications for benefits.

The pound managed to become stable on Wednesday after 4 days of decrease. It was supported by labor market data which happened to be better than expected. The number of applications for unemployment benefits decreased by 7300 in April while a decrease by 3100 was expected. Also, the unemployment rate decreased by 0.1% to the level of 4.5%, while according to the forecast it was to remain the same - at the level of 4.6%.

The Bank of England in its inflation report for the 2nd quarter increased forecasts for GDP growth in the UK, but stressed that the recovery would be weak. It is supposed that in the second quarter of 2013 the GDP growth will increase up to 0.5% from 0.3% in the first quarter. The head of the Bank of England Mervyn King marked that economy recovery was very close. According to him forecast improvement became the first since the beginning of financial crisis.