Market Analysis by Vistabrokers

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Market Pulse 23.03

Monday's economic calendar is almost empty. Attention of market participants will be attracted by a speech of ECB President Mario Draghi, as well as by a new round of talks on Greece. Today, German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras will meet in Berlin to discuss terms of the agreement.

11:00 ** CBI Industrial Order Expectations - March (UK)

Moderate impact on the market (GPB). The industrial orders expectations index from the British Confederation of Industrialists is a leading indicator for the economy. Increase in the index is favorable for the currency.

14:00 ** Existing Home Sales - February (USA)

Moderate impact on the market (USD). An important indicator of the US housing market health, which may affect the market. Analysts expect the index increase in February after the previous month declining.

14:00 *** ECB President Mario Draghi Speaks - March (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 the period when the central bank takes such non-standard measures to stimulate the economy, as a recently launched large-scale program of quantitative easing.

15:00 ** Flash Consumer Confidence - March (euro zone)

Moderate impact on the market (EUR). This index is based on a survey of households on the level of confidence in the current state of the economy and its future development. Analysts expect a decline in consumer confidence, although not as significant as it was in February.

16:20 ** Vice Chairman of the Federal Reserve Stanley Fischer Speaks - March (USA)

Moderate impact on the market (USD). Markets pay attention to Fisher's comments, because they can give the game of FOMC away. During his last speech the Vice Chairman said that the probability of this year rates hike is high.

 

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Vista Brokers: Dollar Corrects from Earlier Reached Multi-year Highs

A new week in the currency market began with the euro increasing against its main counterpart. Vista Brokers analysts point out that at the end of last week, pessimism regards the euro after the launch of the ECB's quantitative easing program was replaced with the dollar weakness caused by the Fed's indecision. As a result, the euro and other major currencies were able to partially reassert themselves. Note that on Monday, the dollar index, which shows its price against a basket of other currencies, was down by 0.9% to 86.66.

On Monday, markets returned to the theme of Greece. Investors were looking forward to results of the visit of Greek Prime Minister Tsipras to Berlin and his meeting with German Chancellor Merkel. During the meeting, Athens refused compensation claims for damage during World War II. And Merkel, in turn, said that she is not against the establishment of Development Bank to support Greece. However, the country, where in 2 weeks there may be a default, did not receive any specific commitments on financial bailout.

Analysts believe that the reason for greenback reducing, which opens the way for other currencies increasing, is that investors have moved their Fed raising interest rates expectations from June to September. After the last Federal Reserve meeting, investors did not receive expected signals, and it gave them a cold shower regards the dollar.

 

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Vista Brokers: Dollar is weakening amid Fed Rates Increase Expectations Moving from June to September

On Tuesday, the dollar continued to decline against its major counterparts, going futher from earlier reached multi-year highs. Vista Brokers analysts say that the main reason for the greenback's increase against other currencies in recent weeks was that investors have expected the Fed raising interest rates in June. However, after unexpectedly soft statements of the Federal Reserve, which have not given any expected hawkish signals, market sentiment changed. Now, investors expect the first increase in interest rates in September.

During early Tuesday trading, the dollar lost 0.1% against the yen, trading at 119.64 against a 8-year high of 122.04 before the Fed last week's meeting. The euro rose by 0.1% to reach 1.0951, continuing to recover after reaching a 12-year low at 1.0457.

Yesterday the currency market participants lined some of their short positions in the single currency. Some experts expect that for a while the EUR / USD will trade in a limited range, although in the long term, the dollar may still "take its course." For example, Shaun Osborne from TD Securities is stall thinking that soon the dollar and the euro will reach parity. Although analysts do not expect the US currency growth in the near future, because inflation in the US in the next few months is unlikely to grow, and this factor will continue to put pressure on the greenback.

It is worth noting that recent statements of the Federal Reserve representatives had basically hawk character. Thus, Cleveland Fed President Loretta Mester said in an interview on Monday that the dollar strengthening is a signal of the US economic recovery, but the strong currency may hurt exports. Fed Vice Chair Stanley Fischer confirmed that the probability of mid-year rates hike is very high. Also on Monday, San Francisco Fed President John Williams has spoken and his speech was regarded as a hawk.

 

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Market Pulse 03/24

After a quiet Monday came a busy with important information Tuesday, and today high volatility is expected in the market. China has already released its HSBC flash manufacturing PMI index. Lots of important statistics will be published today in the euro zone. Also investors are waiting for inflation data in the UK and the US.

8:00 *** Flash Manufacturing PMI - March (France)
8:00 ** Flash Services PMI - March (France)
8:00 ** Flash PMI Composite - March (France)

Strong impact on the market (EUR). Analysts expect that business activity in the French manufacturing sector has increased, as well as a PMI composite index. In a services sector they predict a slight decline.

8:30 *** Flash Manufacturing PMI - March (Germany)
8:30 ** Flash Services PMI - March (Germany)
8:30 ** Flash PMI Composite - March (Germany)

Strong impact on the market (EUR). Analysts expect a slight growth in all these three indices of the largest eurozone economy. Given the weakness of the dollar amid the US Federal Reserve indecision, positive data could support the euro.

09:00 ** Flash Manufacturing PMI - March (the euro zone)
9:00 ** Flash Services PMI - March (the euro zone)
9:00 ** Flash PMI Composite - March (the euro zone)

Moderate impact on the market (EUR). Analysts expect a slight growth in all three indices in the euro zone. Given the weakness of the dollar amid the US Federal Reserve indecision, positive data could support the euro.

9:30 *** Consumer Price Index - February (UK)
9:30 ** Core CPI - February (UK)
9:30 ** Retail Price Index - February (UK)
9:30 ** Producer Price Index Input - February (UK)
9:30 ** Producer Price Index Output - February (UK)
9:30 ** Producer Price Index Output Core - February (UK)

Moderate impact on the market (GPB). A portion of British statistics, published today, is interesting for traders because it can determine the future dynamics of the pound. In particular, we mean data on the consumer price index, which is predicted to increase by 0.3% in February.

12:30 *** Consumer Price Index - February (USA)
12:30 *** Core CPI - February (USA)
12:30 ** Consumer Price Index - February (USA)
12:30 ** Consumer Price Core Index - February (USA)
12:30 ** Flash Manufacturing PMI - March (USA)

Strong impact on the market (USD). Data can also be very interesting. Recall that in January, consumer prices in the US showed a decline of 0.7% month on month and of 0.1% year on year, but now analysts expect a growth by 0.2% and a decline by 0.1%, respectively. On whether the data coincide with forecasts may depend on the US dollar dynamics.

14:00 *** New Home Sales - February (USA)

Strong impact on the market (USD). The indicator complements the statistics on sales in the secondary market and allows us to see the whole situation in the property market. It counts for much, since new homes sales consider to be an indicator of confidence in the economy.

 

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Vista Brokers: On Tuesday Publications were Multidirectional

Yesterday was published a lot of important data, and firstly we should note PMI indexes in manufacturing and service sectors, which have been released in France, Germany and the euro zone. Vista Brokers analysts note that in France indexes were lower than expected, in contrast to the data in Germany and the euro zone. Overall, the data suggest that the ECB stimulus measures work and business activity is increasing.

For example, in Germany manufacturing PMI grew by 1.3 versus expected 0.4, and the same index, but for the services sector increased by 1.5 versus 0.3. In the euro zone manufacturing PMI rose by 0.9 versus 0.6, and services PMI – by 0.6 versus 0.2. The composite purchasing managers' indexes also rose more than expected both in the euro zone and in its largest of its economy. The single currency rose amid these data against the dollar, as well as European stock markets did.

Later, the upward trend in the euro was replaced by downward one as investors expected strong data on the US inflation. Statistics did not disappoint market participants. In February, the consumer price index in the United States grew by 0.2% on a monthly basis, as it was expected. Year on year the index showed zero growth, but analysts had expected a decline by 0.1%. The core consumer price index excluding volatile food and energy prices showed an increase of 0.2% mom and 1.7% yoy, while the first data was slightly better than expected, and the second one lined with expectations.

 

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Vista Brokers: Strong Franc has a Negative Impact on Swiss Economy

Today in Switzerland a UBS Consumption Indicator for February was published at around 1.19 points. January data were revised down – from 1.24 to 1.11 points. Vista Brokers analysts note that the rate increase in February was mostly caused by increase of new car registrations number. The number of registrations increased by 13% compared with January, but it is still 3% below if to compare with the same period in 2014, when Switzerland had not raised taxes on carbon emissions.

Swiss economy in recent months clearly felt pessimism. A consumer sentiment index fell from 4 to -4 points. Most retailers suffer from the franc growth. In the short term it is positive for consumers, whose purchasing power has increased dramatically. But if you look deeper, too strong franc makes companies to cut costs, including reducing the number of employees. This may in the future lead to higher unemployment and lower wages.

 

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Market Pulse 03/25

Today the most important publications of the day will be IFO indicators in Germany, as well as durable goods data in the USA. New Zealand has already released trade balance data, and Australia has published an RBA financial stability review.

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

Strong impact on the market (EUR). Data for Germany may give the euro a considerable support, as analysts' expectations are quite optimistic, and the dollar is now shaky, so that the single currency has more chances for growth.

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

Moderate impact on the market (GPB). This indicator shows the number of loans for home purchases. It allows us to estimate the activity on the UK mortgage market, according to the largest banks.

10:30 ** FOMC members Charles Evans Speaks - March (USA)

Moderate impact on the market (USD). Charles Evans is a head of the Federal Reserve Bank of Chicago. He is the FOMC voting member, so his opinion affects the monetary policy committee.

12:30 *** Durable Goods Orders - February (USA)
12:30 *** Core Durable Goods Orders - February (USA)

Strong impact on the market (USD). Analysts expect a small growth for both indicators. The first includes volatile prices, for example, from the aircraft industry. These are leading indicators of production trends, as well as of the investment activity.

 

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Vista Brokers: Statistics Supported Euro

On Wednesday, the most anticipated event of the day was a publication of durable goods data in the United States. Vista Brokers analysts note that this indicator is a leading indicator of production trends and investment activity, and markets were expected a strong statistics in the context of the US economy recovery. However, actual data were significantly worse than expected.

Thus, in February, the volume of orders for durable goods fell by 1.4% against the expected growth by 0.3%. Core durable goods orders (excluding transportation equipment) fell by 0.4%, while analysts had expected growth by 0.3%. These data indicate a decrease in demand.

Unlike the US one, the statistics in the euro zone came out better than expected, opening the euro a way to a level of $ 1.10 against the dollar and to growth against other major currencies. IFO business climate indicator in Germany exceeded forecasts, increasingin March to 107.9 instead of 107.4. IFO economic expectations indicator showed growth to 103.9 vs expected 103.0. Investors saw positive statistics as a signal that the eurozone economy shows signs of recovery after the launch of the program of quantitative easing by the ECB.

 

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Vista Brokers: Markets Reacted to Yemen Escalation

On Thursday, stocks fell in Asia due to reduction in risk appetite. Oil climbs rapidely, the dollar strengthens against major currencies. Vista Brokers analysts note that since yesterday financial markets are affected by the conflict in the Middle East. In particular, on Wednesday, Saudi Arabia and its Gulf Arab allies launched air strikes in Yemen, against Houthi fighters.

A strongest impact geopolitical risks have on oil prices. On Wednesday, on the ICE exchange May futures for Brent crude rose by more than 2%, exceeding the level of $ 56 per barrel. On the New York Mercantile Exchange NYMEX May futures for WTI crude oil added more than 3%, breaking the level of $ 49 per barrel. Today, the growth continues. WTI crude oil rose by $ 2.26 to $ 51.47 per barrel, and Brent oil – by $ 2.47 to $ 58.95 per barrel.

US Treasuries, which are considered safe haven, also increased, while gold rose to $ 2,000 per ounce. At the same time Asian stocks show a decrease. The MSCI's broadest index of Asia-Pacific shares outside Japan fell by 0.6%. Japan's Nikkei showed the greatest day drop since mid-January - by 1.6%.

Earlier, on Wednesday the Wall Street has also declined. Nasdaq fell by 2.37%, and it is the maximum daytime drop in nearly a year. DJI fell by 1.62%, S & P 500 – by 1.46%.

There is a possibility that the conflict in the Arabian Peninsula will grow into a real war, as Shiite rebels are supported by Iran. According to Reuters news agency, Saudi Arabia and its allies are tightening the heavy weapons to the borders of Yemen. Yemeni President Hadi, who enjoyed the support of Saudi Arabia, fled the country when insurgents got to the southern city of Aden.

 

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Market Pulse 03/26

7:00 ** GfK Consumer Climate - April (Germany)

Moderate impact on the market (EUR). A leading consumer climate index from GfK characterizes consumers' sentiment, their willingness to spend money and attitude to the economy by the beginning of the reporting month. The growth of the rate may be favorable for the currency.

9:00 ** M3 Money Supply - February (euro zone)

Moderate impact on the market (EUR). An indicator reflects changes in M3 money supply. It demonstrates the growth of cash and non-cash funds in circulation. Increase is positive for the currency, as it reflects the risk of inflation.

09:30 *** Retail Sales With Auto Fuel - February (UK)
9:30 ** Retail Sales Ex Auto Fuel - February (UK)
9:30 ** Financial Policy Committee Statement - March (UK)
11:00 ** CBI Realized Sales - March (UK)

Strong impact on the market (GPB). The most important among this portion of statistics are considered to be retail sales with auto fuel data. Analysts' forecasts are optimistic - in February rate is expected to increase by 0.4% after falling by 0.3% previous month.

12:30 *** Unemployment Claims - March (USA)
12:30 ** Continuing Claims - March (USA)
13:00 ** FOMC Member Dennis Lockhart Speaks - March (USA)

Strong impact on the market (USD). The indicator, which shows the number of Americans who have applied for unemployment benefits during the reporting week, is very relevant and closely monitored by the market now. Forecasts for the past week are optimistic.

13:30 *** BOC Governor Stephen Poloz Speaks - March (Canada)
20:00 ** Annual Budget Release - 2015 (Canada)

Strong impact on the market (CAD). Market participants attentively listen to comments of Stephen Poloz, as they may contain some hints to change the course of monetary policy, or to change the Bank's assessments of the economic outlook.

 

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Market Pulse 03/27

On Thursday, there will be a lack of important information. Several officials will speak today in Britain, and their comments may affect the dynamics of the pound. Some interesting indicators will be released in the USA, where also Fed head Janet Yellen will speak today.

7:00 ** Nationwide House Price Index - March (UK)
8:00 ** MPC Member Andy Haldane Speaks - March (UK)
8:45 ** BOE Governor Mark Carney Speaks - March (UK)
9:15 ** BOE Deputy Governor for Monetary Policy Ben Broadbent Speaks - March (UK)

Moderate impact on the market (GPB). Nationwide house price index shows the change in house prices in the UK. It is considered slightly lagging indicator of the housing market, but research notes may be interesting. Bank's of England officials speeches may also be interesting - investors will look for hints on the future strategy of the Central Bank in them.

10:30 ** Vice Chairman of the Federal Reserve Stanley Fischer Speaks - March (USA)

Moderate impact on the market (USD). Fisher is an influential economist who has worked on management positions at the Bank of Israel, the IMF, the World Bank, Citibank. Market analysts listen to his comments and observations closely.

12:30 ** Final GDP - Q4 (USA)
12:30 ** Personal Consumption (Final) - Q4 (USA)
12:30 ** Core Personal Consumption Expenditure (Final) - Q4 (USA)
14:00 ** Revised UoM Consumer Sentiment - March (USA)

Moderate impact on the market (USD). Analysts believe that the final data will show that the US GDP in the 4th quarter increased by 2.4% qoq and by 2.3% yoy. These data, as well as the information about personal consumer spending and consumer confidence may affect the market, which is now extremely sensitive to the US statistics.

19:45 *** Federal Reserve Chairperson Janet Yellen Speaks - March (USA)

Strong impact on the market (USD). Markets will again expect from the Fed head any hawkish signals, but Yellen may disappoint investors again. In this case, a new wave of dollar sales is possible. The confidence shown by Yellen, on the contrary may give the dollar an opportunity to strengthen against its competitors.

 

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Vista Brokers: Labor Market Statistics Put New Heart into Dollar

On Thursday in the US were published data on unemployment and counting claims, which once again confirmed the recovery of the US labor market. After the publication the US dollar rose against major competitors, showing the strongest daily growth in a week against the euro.

Vista Brokers analysts note that the strong statistics give market participants confidence that the Fed will still raise rates in mid-2015. Especially because at the last press conference after the meeting of the Federal Reserve, its head Janet Yellen reiterated that the central bank is closely watching the outgoing data, on the basis of which will be made decisions on monetary policy.

Thus, the number of initial unemployment claims for the week ended on March 21 fell by 9,000 to 282,000, while analysts expected that value is similar to the previous week - 291 000 new applications. The number of counting claims fell by 6,000 to 2,416.

In February, US employers hired 295,000 workers. Thus, this index exceeds 200,000 the12th consecutive month, and it is the longest period of such growth since 1995. In addition, the US unemployment rate currently is at a minimum since May 2008 - 5.5%.

 

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Vista Brokers: Weak Statistics Boost Expectations of BOE New Stimulus

In the night from Wednesday to Thursday Japan has published a portion of important statistics, and most of the data were weaker than expected. Vista Brokers analysts say that amid such data, the confidence of market participants that the Bank of Japan will take new measures to stimulate the economy is boosting.

A consumer price index in the country continues to check the growth. In February, CPI rose by 2.2% vs. expected 2.3% and previous rate 2.4%. The consumer price index ex-fresh food showed an increase of 2.0% against expected 2.1%, as well as the consumer price index ex-food, energy.

We should also note that consumer price indices for the Japanese capital Tokyo were fully in line with forecasts, as well as data on unemployment. In February, the unemployment rate in Japan fell from 3.6% to 3.5%. Data on changes in retail sales were worse than expected. During the last winter month this index increased by 0.7% mom and fell by 1.8% yoy, against expectations of 0.9% and -1.4% respectively.

Recently, market participants and financial analysts are talking more about the possibility that the Bank of Japan will have to expand its already massive bond buying program, as the central bank did not succeed to achieve the inflation target of 2% yet. Interestingly, the target for consumer prices was established in April 2013, so that next month will be two years, during which the Bank of Japan is trying to achieve this target. In the way of the central bank are both political mistakes, such as sales tax increasing, and bad luck, by which we mean a decrease in oil prices.

Meanwhile, experts say that Japan's central bank is creating its own bubble in the country's securities market and risks to monopolize the market of government bonds. At the end of 2014 the Bank of Japan bought ETF assets in the amount of 3.85 trillion yen, and plans to buy 3 trillion yen annually. But the current ETF market value is only 11.5 trillion yen, that is, the market will be entirely in the hands of the central bank by the end of 2017. Then there will be only stocks. The central bank periodically enters to the market and buy stocks for 30-40 billion yen in the first half of the trading day, when the main trend has not formed yet. Naturally, then price goes up. Now Bank owns 2% of the total market in Japan, but this number is constantly increasing.

 

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Vista Brokers: Dollar Ended the Week Lower against its Major Competitors

A key event of Friday was a speech of the Fed Chairman Janet Yellen at a conference in San Francisco late in the evening. Vista Brokers analysts say that prior to this speech, market participants were afraid to make any sudden movements and to bet on the rise of the dollar. And these fears were justified: Yellen comments were as restrained as the Fed's accompanying statement after the meeting on March 18th.

The US dollar declines against a basket of major currencies for the second week in a row. Last trading week, the dollar index finished with a reduction, at around 97,374. While on Thursday the US currency had all the chances to increase when the labor market data came out stronger than expected.

So, let us note the main points of the Janet Yellen's speech: it is appropriate to leave monetary policy stimulating for some time, and rates will rise gradually over the next few years; the economy remains relatively weak, and the labor market still has a space to grow; retail sales data were a little disappointed, and the strong dollar has a negative impact on exports. The euro ended the week at $ 1.08910, against the yen the dollar fell to 119,150, and against the franc - to 0.96180.

 

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Vista Brokers: New Zealand Dollar Falls against the US Dollar

Vista Brokers analysts point out that on Monday NZD / USD continues to decline, while against the Australian dollar the kiwi is recovering. At of this writing, versus the US dollar the New Zealand currency is at around 0.7514 against 0.7579 at the close of trading on Friday. A pair New Zealand dollar / Australian dollar is trading at 0.9756 against 0.9714 on Friday.

Note that for New Zealand and Australian currencies, two important events in the near future are GlobalDairyTrade auction this week, which will indicate a direction of prices for dairy products in the world and a meeting of the Reserve Bank of Australia. New Zealand's economy is largely influenced by the price of dairy products, and ANZ Bank predicts a fall in prices in next two months. Sentiment in the dairy market may be pessimistic, as it became known that Fonterra has increased supply volumes.

 

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Market Pulse 03/30

On Monday, in many European countries will be published data on preliminary consumer price index. In the United States will be published data on personal spending. The day is not too full of important information, although the publication of the consumer price index in Germany may have a significant impact on the market.

7:00 ** Flash Consumer Price Index - March (Spain)

Moderate impact on the market (EUR). Inflation is one of key indicators, as it often has an influence on monetary policy. In Spain, analysts expect a decrease in inflation in March by 1%.

7:00 ** KOF Economic Barometer - March (Switzerland)

Moderate impact on the market (CHF). The barometer covers a lot of different indicators. In March, the index is expected to decline, which could put pressure on the franc.

8:30 ** Net Lending to Individuals - February (UK)
8:30 ** Mortgage Approvals - February (UK)

Moderate impact on the market (GPB). These indicators show a situation in lending, including the one at the real estate market, so that their growth is favorable for the currency. Experts' forecasts for February are positive.

12:00 *** Prelim Consumer Price Index - March (Germany)
12:00 *** Prelim Consumer Price Index - EU Harmonised - March (Germany)

Strong impact on the market (EUR). Analysts expect that in March the preliminary consumer price index has risen by 0.4% mom and 0.3% yoy. Expectations regarding the harmonized index are also optimistic. If the data exceeds the forecast, it may cause the upward movement of the euro.

12:30 ** Core PCE Price Index - February (USA)
12:30 ** Personal Spending - February (USA)
12:30 ** Personal Consumption Expenditure Deflator - February (USA)

Moderate impact on the market (USD). It is expected that in February, personal spending has risen, and it is considered one of the signals of economic recovery, which investors may perceive positively. Each signal market participants perceive now as proof of imminent Fed rate hikes.

14:00 ** Pending Home Sales - February (USA)

Moderate impact on the market (USD). Change in the volume of pending transactions at the real estate is an early indicator of the US housing market activity. Strong data are beneficial for the dollar.

 

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Vista Brokers: On Monday Euro Remained under Pressure

The single currency declined amid worries about Greece, while the dollar rose against its major counterparts on expectations that the Fed is planning to raise rates this year. Vista Brokers analysts point out that as a result of negotiations with creditors Athens may receive financial aid in the amount of 240 billion euros, but there are some doubts on this subject. Indeed, the list of reforms has not yet been approved, and lenders, in particular, Germany, said that it is needed to be improved again. Investors doubt whether negotiations will finish before mid-April, when the Greek treasury funds run out.

It is worth noting that the decline of the euro was limited with positive currency fundamental background. So, confidence in the economy of the euro zone rose to a maximum of July 2011, and preliminary data on consumer price index in Germany was better than expected. The pressure on the single currency has a program of quantitative easing, which was recently launched by the ECB. This is a long-term factor of pressure on the euro, as the difference in monetary policies of the ECB and the Fed is too obvious.

On Monday, the US dollar also took a lead from comments of the Fed Chairman Janet Yellen sounded during Friday's speech. Market participants have concluded from the speech that the Fed still intends to raise rates this year. Amid this the dollar index rose, moving away from the reached last week lows. The US dollar rose against the euro, yen and other major competitors.

 

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Vista Brokers: Iran Sanctions Rescinding will Increase Oil Market Supply

On Tuesday, oil continues to decline after Iran and six world powers (the Great Britain, China, Russia, the USA, France and Germany) have announced that negotiations on a nuclear program draw to an end. A deadline for signing the agreement between Iran and the "six" is July 1, 2015, but the prior agreement must be reached now.

Vista Brokers analysts note the high probability that in consequence of this deal Tehran will be obliged to perform only peaceful nuclear research, and major world powers will cancel a number of international sanctions. Sanctions were applied to Iran, when there were suspicions that the country is making a nuclear weapon, and they involve, including, strong oil exports limits.

If the embargo will be removed, the market supply of oil will increase. Especially because during the long period of sanctions, Iran has accumulated a lot of inventories to be released into the market. It is considered that in a seaway are stored 30 million barrels. In addition, experts note that in the first 3-6 months after the lifting of sanctions, Iran could increase production by 500,000 barrels a day, and during the year – by 700,000.

The possibility of the oil market supply increasing puts pressure on the "black gold". Thus, Brent crude on Tuesday fell to $ 55.94 a barrel, continuing Monday's decline. WTI fell to around $ 48.12 per barrel. A stronger U.S. dollar also weighed on oil prices. The greenback rose against major competitors and forced to fall commodity market after the Fed Chairman Janet Yellen on Friday confirmed that the central bank plans to increase rates this year.

Note that in the decline of oil is limited by a military conflict that Saudi Arabia and its allies have begun in Yemen. Once the country has caused the first air strikes on Yemen, oil started to rally. But then investors calmed down, realizing that major oil transportation arteries, especially the Strait of Bab el Mandeb, are not in danger. As a result, oil prices rather quickly returned to their previous levels, but at any moment this factor can again become decisive in the market.

 

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Market Pulse 03/31

Tuesday's economic calendar is full of important publications, which will be released in the euro zone, the UK, Canada, the USA, New Zealand. Market volatility will be high. The strongest influence on the movement of currency pairs can provide data on inflation in the euro zone and the indicator of consumer confidence in the United States.

6:00 ** Retail Sales - February (Germany)

Moderate impact on the market (EUR). In February, analysts expect a decrease of the index by 0.9% after a significant growth in the previous month. Weak data could put pressure on the euro.

7:55 ** Unemployment Change - March (Germany)
7:55 ** Unemployment Rate - March (Germany)
7:55 ** Unemployment Data Released by Federal Labor Agency - March (Germany)

Moderate impact on the market (EUR). Predictions about the labor market data in Germany are rather optimistic. Experts expect th unemployment change decrease by 10 000 and drop in the unemployment rate to 6.4%.

8:30 *** Current Account - Q4 (UK)
8:30 ** Final GDP - Q4 (UK)

Strong impact on the market (GPB). Current account index includes the results of goods and services fluctuations, as well as inflow and outflow of capital. Growth or exceeding the forecast is favorable for the currency. With regard to the final GDP data, investors do not expect any surprises, but everything is possible.

9:00 *** Consumer Price Index Flash Estimate - March (euro zone)
9:00 ** Flash Core CPI - March (euro zone)
9:00 ** Unemployment Rate - March (euro zone)

Strong impact on the market (EUR). Analysts expect that the inflation in the euro zone has fallen by 0.3% in March. Unemployment is projected to remain at a high level of 11.2%. If the data will be worse than expected, this may have a negative impact on the euro. While an opposite scenario is also possible.

12:00 ** FOMC members Jeffrey Lacker Speaks - March (USA)
12:50 ** FOMC members Dennis Lockhart Speaks - March (USA)

Moderate impact on the market (USD). Comments of FOMC members can affect the dynamics of the greenback, as they can reflect sentiments of the Committee. So that market participants keep track of these data.

12:30 *** GDP - January (Canada)

Strong impact on the market (CAD). Analysts expect that in January, the Canadian economy grew slightly weaker than the previous month - by 0.2% on a monthly basis and 2.4% on an annualized one.

13:45 ** Chicago PMI - March (USA)

Moderate impact on the market (USD). The index of business activity in the Chicago area. Values above 50 reflect the increase to the previous month, below – the reduction. It is expected that the rate will grow to 52.5.

14:00 *** CB Consumer Confidence - March (USA)

Strong impact on the market (USD). The consumer confidence index from the Conference Board is based on a survey of households regards the level of confidence in the current state of the economy and its development in the future. The growth of the rate reflects the confidence in the economy, favorably affecting the currency.

*** Global Dairy Trade Price Index - March (New Zealand)

Strong impact on the market (NZD). This indicator has a significant impact on the New Zealand dollar, as dairy products loom a large part of New Zealand's exports. Analysts expect a significant reduction in the index in March.

 

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Vista Brokers: Euro Recovered amid Dollar Weakness

On Tuesday, statistics from the USA was multidirectional. The US Commerce Department data showed the most significant trade deficit in nearly 7 years. Meanwhile, the ISM non-manufacturing index has shown better than expected results. Vista Brokers analysts note that the weakness of the dollar gave the single European currency a possibility to recover.

The US trade deficit in March rose to 51.37 billion - the highest level since October 2008, showing the highest growth over the month since December 1996 (43.1%). Analysts believe that the weak data (the forecast assumed a decline only to 41.2 billion US dollars) may indicate that the country's GDP in the first quarter will show a decline. But the growth in the second quarter of 2015 can neutralize the weak performance in January-March. So it does not affect expectations about the Fed interest rate hike.

Nevertheless, the US stock markets, as well as "treasuries" were down on Tuesday, while the dollar fell against a basket of major currencies. The decline was limited by positive data on the ISM composite index for the non-manufacturing sector. In April, the activity in this sector of the US economy rose from 56.5 to 57.8, although most experts had expected a decline to 56.2.