Market Analysis by Vistabrokers

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Vista Brokers: Weak US Statistics did not Prevent Euro from Falling

On Friday a new round of Greece talks with international lenders will be held, and until these negotiations end, the EUR/USD will remain volatile. Vista Brokers analysts say that amid pessimistic expectations of investors on Wednesday, the euro was down, despite the fact that in the US a series of weak statistics was published.

Thus, the volume of building permits in January fell by 0.7% (forecast + 1%), and the number of housing starts – by 2% (forecast -1.7%). The producer price index fell twice stronger than analysts had expected, and the same index, but excluding prices for food and energy showed a drop of 0.1% instead of growth by the same amount. Weaker than expected also was the data on changes in the volume of industrial production and capacity utilization.

However, the single currency remained under pressure looking forward for the decision of the "Greek problem". Recall that on Friday is the deadline for filing an application for an extension of Greece existing international bailout, which will be completed at the end of the month. Analysts say that perhaps Athens will ask about the short-term extension of the program today. Such an action would help the government to buy time for new negotiations that will eventually lead to the cancellation of austerity measures, as Greece hopes.

Earlier, lenders have rejected proposals by the Greek authorities, but everyone understands that time is running out, and therefore, it is likely that a compromise will still be found in the near future.

 

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Vista Brokers: Fed Minutes did not Meet Market Expectations

On Wednesday evening, the US dollar fell against its major counterparts after the publication of the Federal Committee on Open Market (FOMC) meetings minutes. Vista Brokers analysts point out that market participants expected a "hard" tone, but these expectations were not fulfilled.

In the minutes of the meeting on January 27-28 was marked that some FOMC members had expressed confidence that a premature rise in interest rates could hurt the economy. It was also noted that the decline in rates of other world central banks contain certain risks for the US economy.

After the minutes release, the dollar index fell from 94.09 to 94.45. The EUR / USD rose from 1.1340 to 1.1400, and the USD / JPY fell from 119.25 to 118.70. Now investors are skeptical that the Fed will raise rates in the middle of the year, as they have expected earlier.

Recall that when the January meeting was held, and the accompanying statement of FOMC was published, it contained clearly "hawkish" hints that the market took as a signal of imminent rate increase. Then the dollar received strong support. Given that other central banks are now massively reducing rates, the Fed looked at this background as a bulwark of stability.

However, analysts believe that the long-term trend of the US dollar growth remains relevant. Perhaps the Fed is preparing to raise rates, but not as fast as it was expected by market participants. Or the regulator will "drag its feet" longer to prepare the market and do not cause a shock, suddenly raising rates.
Experts also note that the dollar's decline after the publication of minutes was a correction caused by the closure of long positions.

 

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Vista Brokers: Inflation in France Fell more than Expected

On Thursday, the released French data on the consumer price index for January showed a stronger than expected decline. Vista Brokers analysts say that inflation in one of the largest euro zone economies has returned to a minimum of 2009 when the country had just came out of a recession.

So, in January, the consumer price index in France was down by 1% vs. 0.9% in monthly terms. The annual rate fell by 0.4% against the expected 0.3%.

This week inflation data has also came in Greece, which is now in the focus of the market. The fall of the consumer price index in January was 2.8% versus 2.4%. Also on Friday statistics in Italy will be published. Analysts expect lower inflation by 0.4% mom and by 0.6% in annual terms.

 

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Vista Brokers: Greece Reached Turning Point

On Thursday, Greece finally took a step, which financial market participants had looked forward to. The country filed a request to extend a loan agreement, which ends on February 28, for another six months. However, Vista Brokers analysts say that investors doubt that international creditors will agree to the terms that Athens offers.

Recall that representatives of the Eurogroup, the ECB and the IMF together previously insisted that the only option for Greece is to agree to an extension of the existing conditions of its international bailout. Athens wants to gain time to review credit conditions. Germany is particularly active opposed to it. Amid the German criticism of the Greek proposal euro on Thursday was traded under the pressure most of the day.

Today, euro zone finance ministers will meet in Brussels to consider the "Greek problem" again. If Greece will be without the financial support of the EU on March 1, it can cause panic in the market and initiate a chain of events that will lead Greece out of the euro zone.

Of course, the hope for a compromise still exists. Even the German Finance Minister Wolfgang Schaeuble, who has picked to pieces all proposals to restructure the debt of Greece, still claims that there is a space for maneuver, but it is limited. He also noted that the Eurogroup should not forget its main responsibility - to maintain the stability of the eurozone.

 

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VistaBrokers: Pound Rose Significantly in February

A second month of 2015 was quite successful for the pound. The British currency has risen against the dollar by 2.5%, and this makes it one of the strongest currencies in February among the major ones traded on Forex.

Among main fundamental factors of support for the pound VistaBrokers analysts name the fact that the Bank of England this month has kept its monetary policy unchanged and has not given the market any hint of softening. Investors were worried that the BOE follows the ECB and some other European central banks that have taken additional measures to stimulate their economies. However, the "Old Lady" did not give any signals for it keeping a neutral tone and even expressing some optimism about the economic situation in the country.

With optimism the market also took a traditional BOE Inflation Report. In it regulator has suggested that inflation in the UK will fall to zero soon, but there are no long-term deflationary risks, and the central bank intends to achieve the inflation target of 2% in two years. Amid this the British pound rose significantly against major competitors.
Despite the positive picture that loomed in February, the trend may soon turn because of political disturbance in the UK. In May, elections will be held in the country and, according to preliminary surveys, a good chance of winning has anti-European UK Independence Party (UKIP).

The position of the British Conservative Party is still quite strong, but it is unlikely that it will be able to form a majority in parliament, and in this case, political analysts suggest the following scenario. Conservatives will have to form a coalition with the ultra-UKIP and for this to make certain concessions, and the radicals may require early referendum on the UK's membership in the European Union.

In this case, the pound might appear in a situation similar to one in which the euro is now. Uncertainty about Greece and its possible exit from the euro zone has a lot of pressure on the currency. The referendum in the UK and its possible consequences may become a factor of pressure on the pound too.

 

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Market Pulse 20.02

On Friday, the economic calendar is full of important statistics. In the euro zone countries and the USA indexes of business activity will be published. In the UK and Canada the information on retail sales will be released. Recall that markets are waiting for the decision on Greece, so part of the statistics may be overlooked.

8:00 *** Flash Manufacturing PMI - February (France)
8:00 ** Flash Services PMI - February (France)
8:00 ** Flash PMI Composite - February (France)
8:30 *** Flash Manufacturing PMI - February (Germany)
8:30 ** Flash Services PMI - February (Germany)
8:30 ** Flash PMI Composite - February (Germany)
9:00 ** Flash Manufacturing PMI - February (euro zone)
9:00 ** Flash Services PMI - February (euro zone)
9:00 ** Flash PMI Composite - February (euro zone)

Strong impact on the market (EUR). In general, analysts' expectations regarding indices of business activity in the euro zone and its largest economies are quite optimistic. Indices in France, Germany and the euro zone are expected to increase as compared with January.

9:30 *** Retail Sales With Auto Fuel - January (UK)
9:30 ** Retail Sales Ex Auto Fuel - January (UK)

Strong impact on the market (GPB). The rate growth or exceeding the forecast reflects higher consumer activity, thereby strengthening currency. An important indicator for the economy as a whole and for the dynamics of the pound in particular. In January, analysts expect a decline.

13:30 *** Retail Sales - December (Canada)
13:30 *** Core Retail Sales - December (Canada)

Strong impact on the market (CAD). The rate growth or exceeding the forecast reflects higher consumer activity, thereby strengthening currency. An important indicator for the economy as a whole and for the dynamics of the Canadian dollar in particular. In January, analysts expect a decline.

14:45 ** Flash Manufacturing PMI - February (USA)

Moderate impact on the market (USD). The index of purchasing managers in the manufacturing from Markit Economics is at a high level, although it is worth noting that in February expect a slight decline.

 

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Vista Brokers: Greece Gained Time to Reach a Compromise with Creditors

On Friday, EUR/USD started the day with a decline, when it became known that Germany has rejected the Greek proposal on the temporary extension of the lending program. However, as Vista Brokers analysts say, later the pair regained amid optimism about the successful completion of negotiations.

The European stock market was influenced by expectations of a positive outcome of negotiations and rose to its highest level in seven years. The main pan-European Stoxx Europe 600 Index added 0.23%. We also should recall the positive statistics of Friday: the index of business activity in industry and services in France came out better than expected, and the general index of activity showed an unexpected increase in February. The index of business activity in the euro zone from Merkit rose from 52.6 in January to 53.5 in February, which was the highest value in seven months.

In accordance with the expectations of most market participants, at the Eurogroup meeting the agreement on Greece was reached. Thus, the Internationale bailout program for the country was extended for 4 months, during which negotiations on further cooperation continue. At the same time Greece undertakes to meet its debt obligations in full, and should provide the first list of reforms on Monday.

Analysts say that the consent of the Eurogroup for a temporary extension of the program only gave Greece a temporary reprieve, but did not solve the problems of the country, so the risks of leaving the euro zone remain.

 

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Vista Brokers: Oil is Rising amid Greek Optimism

Oil quotes on Monday morning are rising after a late Friday at the Eurogroup meeting it was decided to extent the bailout program for Greece. Vista Brokers analysts note that the long-term trend for oil is still downward, as the market is oversupplied.

In addition, the risk of a global economic slowdown persists, as the risk of Greek exit from the eurozone, because the extension of the program for 4 months is only a temporary solution. Perhaps during this time Athens will be able to negotiate with creditors to change the terms of credit. In any case, in June, the "Greek problem" will again become acute.

Analysts point out that the financial markets generally worked out a positive outcome of Greek negotiations with creditors on Friday, when the issue has become known unofficially. The euro was recovering against the dollar, stocks has reached their record highs.

In its turn oil yielded positive mood on Monday. The price of Brent has reached $ 60.34 per barrel and the price of WTI - $ 50.87. However, the oil market remains below the level of the previous week due to its oversaturation, which has a pressure on oil in the long run.

On Friday, Goldman Sachs has issued a forecast that in the fourth quarter of 2015, growth in oil production will be 440,000 barrels per day compared to the same period last year. Production in the United States at the beginning of the year slowed slightly, but bank's experts believe that the process is temporary.

By the way, Goldman Sachs expects that the rise on the oil market will soon rise stop again and oil prices may fall to $ 39 per barrel. Recall that in mid-January the oil market has rebounded after falling to a six-year low. Last week, Brent crude added almost $ 20, approaching the level of $ 63.

 

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Market Pulse 23.02

Monday is not full of information. Perhaps the market will be too busy with working out the news that Greece has come to a compromise in negotiations with international creditors. In Germany, the portion of indicators from the IFO institute will be released, in the UK – the retail sales data.

9:00 *** Ifo Business Climate - February (Germany)
9:00 ** IFO - Current Assessment - February (Germany)
9:00 ** IFO - Expectations - February (Germany)

Strong impact on the market (EUR). Expectations on IFO institute indexes are very optimistic - recently confidence in the German economy is growing, and these data can strengthen it.

11:00 ** CBI Realized Sales - February (UK)

Moderate impact on the market (GPB). The indicator of the activity in retail sales is based on a survey of retail and wholesale companies on the dynamics of sales. Growth or exceeded forecast is favorable for the pound.

15:00 ** Existing Home Sales - January (USA)

Moderate impact on the market (USD). An important indicator of the the housing market health in the US, has a tendency to affect the markets. The excess of the forecast is favorable for the dollar. In January, the indicator is expected to decline.

 

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Market Pulse 24.02

On Tuesday there will be a series of central banks' representatives speaking in different countries. In the UK, the head of the Central Bank Mark Carney and several members of the MPC will speak, in the euro zone, the United States and Canada - the heads of central banks will talk. Markets will be looking for any signals in monetary policy changes in their comments.

9:10 ** MPC Member Kristin Forbes Speaks - February (UK)
10:00 ** Treasury Select Committee Hearings - February (UK)
10:00 *** BOE Governor Mark Carney Speaks - February (UK)
10:00 ** BOE Deputy Governor for Monetary Policy Ben Broadbent Speaks - February (UK)
10:00 ** MPC Member David Miles Speaks - February (UK)
10:00 ** MPC Member Martin Weale Speaks - February (UK)

Strong impact on the market (GPB). From the Bank of England markets expect hints at monetary policy tightening in the foreseeable future, so investors will closely monitor comments of the Monetary Policy Committee members and draw their own conclusions.

10:00 ** Consumer Price Index - January (euro zone)
10:00 ** Core CPI - January (euro zone)

Moderate impact on the market (EUR). The Consumer Price Index is one of the key indicators, and the benchmark for central banks. In January, analysts expect a decline in consumer prices in both mom and yoy values.

14:00 *** ECB President Mario Draghi Speaks - February (euro zone)

Strong impact on the market (EUR). Draghi's comments about the slowing economy and low inflation can put pressure on the euro, while confidence in the economic situation, on the contrary, can support a single currency. However, the latter is unlikely.

15:00 *** CB Consumer Confidence - February (USA)
15:00 *** Federal Reserve Chair Janet Yellen Testifies - February (USA)

Strong impact on the market (USD). In February, analysts expect a decrease in the indicator of consumer confidence, which can put a pressure on the dollar, although the statistics may still surprise. The indicator is based on a survey of households on the confidence in the future of the US economy. As for the speech of Janet Yellen, evidence of the tougher Fed monetary policy is expected.

19:00 *** BOC Governor Stephen Poloz Speaks - February (Canada)

Strong impact on the market (CAD). Traders and investors listen carefully to the speeches of the runners, as they may contain allusions to change the course of monetary policy, or to change the Bank's assessments of the economic outlook. Tougher stance on inflation and improving the prognosis is favorable for the Canadian dollar. Concern risks and ignoring inflation - negative for the exchange rate.

 

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Vista Brokers: Ifo Indexes Disappointed Market Participants

On Monday, the euro fell from Friday's highs of around 1.1450 reached after a preliminary agreement of Greece with international lenders. Vista Brokers analysts note that stock markets, meanwhile, are reaching new highs amid optimism about the "Greek problem".

A pressure on the single currency had the data on Germany from the Ifo institute, which has come out weaker than expected. Thus, the business climate indicator rose in February by 0.1 vs. 0.7 expected. The current assessment indicator fell from 111.7 to 111.3, while analysts had expected growth to 112.5. Indicator of economic expectations rose also much weaker than expected.

After the release of statistics euro lost 0.64% to the level of 1.1303. A key theme again was negotiations of Greece – having worked out the optimism after their completion, the market focused on a report on the reforms that Athens are now required to provide. List of reforms that Greece is committed to implement, should be given today, although unofficial sources say that it had been already agreed with the Eurogroup.

According to the Greek government, the list will include reforms to combat tax evasion and corruption, as well as some public sector reforms.

 

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Vista Brokers: Market expects Yellen's speech

On Monday, the US dollar rose against the euro and other competitors amid expectations of speech of the Federal Reserve head Janet Yellen ahead of the US Congress. Vista Brokers analysts point out that the Yellen's speech will be devoted to the economic situation in the country and monetary policy, so that is of great interest for investors. The dollar index against the basket of currencies yesterday rose by 0.3%, to 85.62, its highest level since February 11.

Thus, on Tuesday the Fed head will speak first ahead of the Senate Banking Committee, and on Wednesday – ahead of the Finance Committee of the House of Representatives. The market will expect from Yellen evidence that the Fed will raise interest rates this year, for the first time since 2006. Earlier, according to the results of the January Federal Open Market Committee meeting investors caught signals of Fed readiness to raise interest rates, as there was mentioned a significant recovery of the labor market. This gave a support to the dollar - if rates rise, the US currency will become increasingly attractive to investors.

But the last week January meeting minutes were published and they have reflected FOMC sentiment more accurately. It became clear that the Committee is not so determined to act. Some members of the Committee insisted on caution and spoke about the risks that too strong dollar can bring the US economy, as well as about a slowdown in the world economy. In general, the Fed sentiment was much more "dovish" than had been expected and the dollar declined after the minutes.

Now the market expect signals for the tendency to tougher Fed policy from Janet Yellen. Investors will also pay attention to some statistics, which will be released in the US this week, in particular, the data on the consumer price index for January and GDP for Q4 2014. Analysts expect that any of Yellen's comments or statistics can be a catalyst for the dollar and push currency pairs out of their usual ranges.

 

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Vista Brokers: Yellen did not Meet Market Expectations

Of course, the most anticipated event of Tuesday was the speech of the US Federal Reserve Janet Yellen ahead of the Senate Banking Committee. Vista Brokers analysts note that investors have expected from Yellen some signals that the Fed intends to raise rates this year, and the speech left a mixed impression.

Hopes that the Federal Reserve during the summer or autumn will raise rates for the first time since 2006 are quite large. However, Yellen did not give any clear signals about the propensity of Fed to rise rates so soon.

In her speech ahead of the Senate Yellen used to talk about the future plans of the Federal Reserve, and she said that the regulator will gradually move to the phase in which the Fed will consider interest rate hikes "on a meeting-by-meeting basis". The Fed chief gave no clear predictions, but only said that soon Federal Open Market Committee will have more space to maneuver, and they will be able to act according to their judgments about the economic situation.

We note a few points that Janet Yellen has made in her speech:
- the US housing market has not yet recovered as expected, but will rise with economic recovery;
- the Fed sees risks for the economy as balanced, their confidence in the economy has grown;
- the labor market is not completely recovered, but household incomes are rising, thanks to the growth of employment;
- the Fed will raise rates when will be absolutely confident in the economic recovery, starting the process too early is risky;
- the Fed is inclined to think that they need to consider two things: the labor market and inflation.

Overall, the performance was in an optimistic way, but it did not gave a support to the dollar as investors had expected some clear signals.

 

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Vista Brokers: Dollar Dropped against Major Currencies after Yellen's Speech

On Wednesday, the dollar is losing ground against its major competitors after a yesterday's speech of Janet Yellen ahead of the Senate. Vista Brokers analysts recall that prior to the speech the greenback grew against a basket of currencies, as markets expected from the Fed chairman some clear signals that the controller will begin to raise interest rates in June. The Yellen's speech was quite optimistic, as she has noted labor market recovery, the balance of risks, growing confidence in the economy. However, markets did not see those anticipated signals in its comments.

The situation resembles the reaction to the publication of the the January meeting minutes of the Fed last week. Investors and traders also expected that the minutes will show strong commitment of the Federal Open Market Committee, but instead they saw that many members are opposed to the imminent rate hike.

So yesterday Janet Yellen said that the Fed is just beginning to prepare to go to the cycle when rates could be raised, but the issue will be discussed "on a meeting-by-meeting basis". And she also commented that her words should not be taken as a signal that rates could be raised at any particular meeting.

Dollar "bulls" were disappointed, and the US currency came under pressure. On Wednesday, the dollar lost 0.2% against the yen, dropping to 118.73 yen, while on Tuesday, before the Yellen's speech, the dollar traded against the Japanese currency at a 12-day high of 119.84 yen.

Euro began Wednesday morning with a rally against the dollar. At the time of writing, the EUR / USD is at 1.3835, compared with the opening levels of 1.3382. Support for the single currency has the fact that Greece has approved with creditors a plan of reforms, which Athens are required to implement with the extension of the bailout program for 4 months.

The Australian dollar rose against the US by 0.6% to $ 0.7874, not only amid the weakness of greenback, but after it became known that the index of business activity in the manufacturing sector in China in February rose more than expected.

 

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Market Pulse 25.02

If Tuesday's main event was the speech of Janet Yellen ahead of the Senate, on Wednesday investors are waiting for the speech of the Fed Chair ahead of the House of Representatives. Today in China the first important statistics from the beginning of the lunar New Year celebration will be published. This is the HSBC flash manufacturing PMI. The USA will report on the volume of home sales in the primary market.

9:30 ** BBA Mortgage Approvals - January (UK)

Moderate impact on the market (GPB). Shows the number of loans for home purchase. Allows us to estimate the activity in the mortgage market in Britain, according to the largest banks.

11:35 ** BOE Deputy Governor Andrew Bailey Speaks - February (UK)

Moderate impact on the market (GPB). Andrew Bailey is included to the monetary committee which is responsible for the formation of monetary policy. His speech may clarify the next steps of the Bank of England, which could increase the volatility in markets.

15:00 *** Federal Reserve Chair Janet Yellen Testifies - February (USA)
15:00 *** New Home Sales - February (USA)

Strong impact on the market (USD). During yesterday's speech Yellen has confirmed the tendency of the Fed to this year rates hike. Probably, today she would follow the same line. With regard to the volume of home sales in the primary market, in January it is expected to decline.

16:00 *** ECB President Mario Draghi Speaks - February (euro zone)

Strong impact on the market (EUR). Comments of the ECB President Mario Draghi may have a significant impact on the market, especially at times when we expect non-standard measures and changes in the course of monetary policy from the ECB. Now Draghi comments may be particularly interesting in the context of the confirmation of the Fed monetary policy tightening plan.

 

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Vista Brokers: Strong statistics Returned Confidence in Fed Rate Hike in June

It looks like already forgotten a speech of the Fed chairman Janet Yellen, in which she has expressed caution regarding the premature rate hikes. On Thursday, on the agenda was positive statistics from the US, which returned strength to bulls and optimism to the market. Vista Brokers analysts say that the data on inflation and orders for durable goods in the US returned to investors confidence that the Fed will rise interest rates in June.

After the release of statistics the US dollar began to strengthen across the market. Against the yen greenback has immediately rushed to 119.11 yen against 118.85. Euro loss was even more significant: in couple of hours EUR / USD lost 0.7%, dropping to 1.1281 dollars from 1.1317 in anticipation of the data.

So, the main impetus for the growth of the dollar was the data on the consumer price index excluding prices for food and energy prices, which rose in January by 0.2% vs. 0.1%. This indicator, rather than the overall consumer price index, is a benchmark for the Fed, so that the stormy reaction of the market is clear. Another pleasant surprise for investors was the data on durable goods. In January, the index rose by 2.8% against the expected 1.7%.

In such strong data, market participants saw a signal that the Fed will raise rates in the near future, as they reflect the recovery of the US economy.

 

[Vistabrokers]

Vista Brokers: Dollar was Supported by Statistics and Fed Remarks

On Friday morning, the dollar slowed the rally that it had began yesterday after strong US data and remarks of Fed representatives. Vista Brokers analysts say that amid publication of inflation data and orders for durable goods, which were better than expected, the dollar index rose to a basket of currencies by 1.1%.

Today DXY fell by 0.2% to around 95.130 against 95.357 month high reached on Thursday. The euro rebounded by 0.1% to $ 1.1213, while remaining near-month low at $ 1.1184 reached during yesterday's dollar rally. Against the yen, the dollar fell by 0.2% to 119.15.

Strengthening of the US dollar on the one hand was caused by the statistics. Thus, the consumer price index, excluding the prices of food and energy prices in the US rose by 0.2% against 0.1%, which had been expected. The overall consumer price index fell slightly more than forecast, but this is due mainly decline in oil prices. Furthermore, the core CPI which does not include products with the most volatile prices, is the benchmark for the Fed. Orders for durable goods in January rose by 2.8% against the expected 1.7%.

The market reaction to these two indices was so stormy that investors even ignored the fact that the data on the number of initial and counting unemployment claims came out worse than expected.

A positive factor for the dollar on Thursday also were several Fed comments. We note the key moments of FOMC members' speeches.

The Dallas Fed President Richard Fisher said that the US economy is clearly showing a strong growth and absence of inflation and suggested that the Fed could raise short-term rates at first and watch the reaction of the market.

The head of the Federal Reserve Bank of Cleveland Loretta Mester believes that the US GDP growth this year will be 3%. It supports the consideration of a rate increase in June. In her opinion, it is better to start the slow process earlier rather than sharply raise interest rates later, causing shock in the markets.

San Francisco Fed President John Williams expects that the level of "full employment" will be reached this year, and inflation will come to the 2% target by the end of next year. He noted that the Fed could start raising rates in the summer or fall.

Thus, statements of FOMC members were consonant with Janet Yellen remarks and sounded quite optimistic.

 

[Vistabrokers]

Market Pulse 27.02

On Friday a trading day is again filled with fundamental data. The most important will be inflation data in Germany and the GDP changing in the United States. In the USA will also be published osome other statistics that may have an impact on the market.

7:45 ** Consumer Spending - January (France)
7:45 ** Producer Prices - January (France)

Moderate impact on the market (EUR). Forecasts for both indices are not too optimistic. Analysts expect that consumer spending in France has fallen, and the producer price index has declined again.

8:00 ** Flash Consumer Price Index - February (Spain)

Moderate impact on the market (EUR). It is expected that in February the slowdown in inflation in Spain was 1.5%, after the January index also fell by 1.3%. Decline in consumer prices in one of the largest economies of the euro area indicates its moderation.

13:00 *** Prelim Consumer Price Index - February (Germany)
13:00 *** Prelim Consumer Price Index - EU Harmonised - February (Germany)

Strong impact on the market (EUR). Forecasts for both indices are not too optimistic, although when compared to other euro zone economies, the situation in Germany with inflation is not critical. It is expected that in February figures have risen slightly mom and have fallen yoy.

13:30 *** GDP Second Release - Q4 (USA)
13:30 ** Prelim GDP Price Index - Q4 (USA)
13:30 ** Personal Consumption (Second Release) - Q4 (USA)
13:30 ** Core Personal Consumption Expenditure (Second Release) - Q4 (USA)

Strong impact on the market (USD). Preliminary data on changes in US GDP in the 4th quarter of 2014 showed an increase of 2.6%, while analysts were expecting 3%, so that in early February, the market has been disappointed by the data. Now it is expected that GDP will be revised down - from 2.6% to 2.1%.

14:45 ** Chicago PMI - February (USA)

Moderate impact on the market (USD). It is expected that the index of business activity in the Chicago area fell slightly in February, but it does not cancel the fact that the index is at a high enough level.

15:00 ** Pending Home Sales - February (USA)
15:00 ** Revised UoM Consumer Sentiment - February (USA)

Moderate impact on the market (USD). Forecasts for both indices are positive enough. Recall that in recent weeks the US housing market has surprised investors, showing disappointing data or far exceeding forecasts.

 

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Vista Brokers: US GDP in 4th Quarter Rose More than Expected

On Friday morning the euro rose slightly against the dollar. However, it will be very difficult for the single currency to return to its earlier levels. Vista Brokers analysts reminde that on Thursday the US dollar has risen sharply against its major competitors, when the inflation data and durable goods in the USA came out better than expected. The current fundamental picture is not supportive for the euro, which is suffering because of the uncertainty in Greece and numerous signals of slowing economy of the euro zone.

While on Friday there were some positive for the single currency data, but at the general background investors did not pay much attention to it. Thus, in Germany, the preliminary index of consumer prices in February has risen by 0.9% against the expected 0.6% on a monthly basis and by 0.1% against 0.3% in annual terms. This is good news for the euro zone's largest economy, where a month earlier slowdown in inflation was 1.1% and 0.4%, respectively. But successes of Germany do not allow to forget problems of the euro zone.

In the afternoon, the dollar began to grow against the euro again - investors awaited revised data on the US GDP, and these data came out stronger than forecast. Thus, the US GDP growth in Q4 2014 was 2.2% quarterly and 2.4% year on year against the expected 2.1%. This strengthened the already strong enough faith of market participants that the Fed will raise interest rates this year.

At the end of trading the EUR / USD peaked 119.80 and traded at 119.56, up 0.13% during the day. Note that the dollar index finished February with growth, and this is the eighth consecutive month when the index is increasing, which was not observed since 2004.

 

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Vista Brokers: China's Central Bank Unexpectedly Cut its Rates

On Saturday, it was reported that the Chinese central bank has decided to support the economic growth and inflation, lowering interest rates: a key rate by 0.25 to 5.35% and the deposit one – by 0.25 to 2.5%. Vista Brokers analysts say that markets were expecting monetary policy easing from the Central Bank of China, but a little later, and remind us that Chinese controller has already become the 21st bank to adopt new measures easing in January and February 2015.

In the accompanying statement, the central bank said that the rate cut was a necessary measure, given the fall in global commodity prices. The bank's decision on Monday support commodity markets, in particular copper. At the time of writing, the metal is traded on the New York Stock Exchange, Comex for 2,701 dollars per pound (May delivery), up from the opening of trading by 0.35%. Recall that China is the world's largest consumer of copper.

Also, the central bank noted problems in the property market, the growth in consumer prices which is minimum for the last 5 years, and a high debt levels. Markets expect the government can reduce the forecast for economic growth in 2015 to 7% after 7.4% growth in 2014 at a party meeting on March 5.

Analysts also note that at the weekend the data on Manufacturing PMI index was released in China, and it has grown up in February a little more than it was expected, but still remained in the negative zone. Thus, the index is at around 49.9 points, while only values above 50 are considered to be growth.

Recall that the last time the People's Bank of China cut interest rates not so long ago - in November 2014, but this decline have had little impact on the economy, and even then experts said that easing of monetary policy will continue. Now we can also assume that the Central Bank will go along this path in the future. The next step will likely be declining in banks' reserve requirements.