Market Analysis by Vistabrokers

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Vista Brokers: Euro Flirts with 11-year Lows

 

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On Monday, the euro is flirting with 11-year lows. Investors expect that the European Central Bank will announce the launch of the quantitative easing program this week.

 

Vista Brokers analysts note that the single currency last traded at $ 1.1557, near the level of $ 1.14595 reached on Friday. Against the Japanese yen, the euro is near a 3-month low, at around 135.17. Against the Canadian dollar the currency is trading at 16-month low of C$ 1.3749, reached on Friday.

 

Most experts believe that on the next meeting on January 22 the ECB will announce new steps of the economy stimulation. The question is only how the head of the regulator Mario Draghi will describe the action plan of the ECB, and what comments he will give on this occasion.

 

Analysts expect the volatility in the markets at the end of the week will be high. Not only because of the ECB meeting, but also due to the upcoming elections in Greece. According to preliminary surveys of the electorate, the population prefers the radical left political forces, and if they come to power, the membership of Greece in the euro area will be open to question.

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Market Pulse 20.01

 

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On Tuesday the most interesting publications are ZEW indices, which will show the sentiment about the economy in Germany and in the euro zone. Canada will publish the data on changes in the volume of industrial supplies, which may have an impact on the Canadian dollar.

 

10:00 *** ZEW Economic Sentiment - January (Germany)

10:00 ** ZEW Survey (Current Situation) - January (Germany)

10:00 ** ZEW Economic Sentiment - January (euro zone)

 

Strong impact on the market (EUR). ZEW indices are closely monitored by markets, providing a noticeable influence on them immediately after publication. Analysts give optimistic forecasts in all three indices. If the evidence does not justify these expectations, the euro could come under pressure.

 

13:30 *** Manufacturing Sales - November (Canada)

 

Strong impact on the market (CAD). Manufacturing Sales can serve as an early indicator of the acceleration or deceleration of economic activity. The growth is favorable for the Canadian dollar.

 

13:45 ** BOE Deputy Governor for Financial Stability Jon Cunliffe Speaks - January (UK)

 

Moderate impact on the market (GPB). John Kanlif holds the post of Deputy Governor of the Bank of England's financial stability. He is a member of the Monetary Policy Committee, so his comments are relevant to the market.

 

15:00 ** FOMC Member Jerome Powell Speaks - January (USA)

 

Moderate impact on the market (USD). Jerome Powell is actively involved in the Fed monetary policy creating. His comments may have an impact on the market as they show the attitude of FOMC members.

 

15:00 ** NAHB Housing Market Index - January (USA)

 

Moderate impact on the market (USD). The indicator is based on a survey of 900 developers in respect of current and future sales of private homes. Rarely has an impact on the market.

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Vista Brokers: QE Expectations Support European Markets

 

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EUR/USD started Monday trades near 11-year lows. Most experts believe that on the next meeting on 22 January the ECB will announce new steps of the economy stimulation, and until Thursday, these expectations will influence on the market.

 

The euro decline was short-lived - the pair soon began to grow showing the biggest jump since December 16 to $ 1.1625. Late last week, the single currency has reached its lowest level since November 2003, trading against the dollar at $ 1.1460. However, a new week has given the euro a chance to reassert oneself.

 

The single currency also rose against the yen, versus which last week it was trading at the lowest level since October 16 - 134.71. Having lost 17% last week against the Swiss franc, the euro rebounded on Monday to around 1.0193.

 

Vista Brokers analysts point out that the belief that the ECB President Mario Draghi will announce the launch of quantitative easing (QE) this Thursday, is very high. This is confirmed by the Bloomberg survey, according to which 93% of respondents believe that the events will move in this way. Experts believe that Draghi will announce will announce a 550 billion-euro bond-purchase.

 

On these expectations European stock markets on Monday rose to a 7-year high. The Stoxx Europe 600 Index rose by 0.22% to 354.54, the highest closing level since January 2008.

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Vista Brokers: On Tuesday, the dollar rose against the Japanese yen

 

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On Tuesday, the dollar rose to a one-week high against the yen amid the data showed the Chinese economic growth slowing. Vista Brokers analysts say that the speculation on the Chinese economy "drawdown" was in the market long time ago. And now investors are wondering whether the Bank of Japan will take some measures to limit the demand for yen.

 

The additional stimulus to growth the dollar received from the updated forecast of the International Monetary Fund. The IMF lowered its growth forecasts for almost all major economies, but not for the USA. The organization's experts expect that global growth in 2015-2016 will be 3.5% and 3.7% (-0.3% compared with the previous forecast). At the same time, the growth forecasts for the US economy have been increased to 3.6% in 2015 and 3.3% in 2016. The main reasons for the forecasts cutting the IMF calls reassess the prospects of economy of China, the euro zone, Russia and Japan, as well as the weakening of the petroleum exporting countries in response to falling prices for oil.

 

Amid the dollar rose against the yen by 0.9% at 118,615 yen after touching an earlier peak of 118.775.

 

Analysts note that the data on China's GDP changes in 2014 turned out to be the weakest for the last 24 years, although it is slightly stronger than profile experts expected. Over the past year, the Chinese economy grew by 7.4%, against 7.5% projected by the government and market expectations of 7.3%.

 

The euro against the yen rose by 0.46% to 137,190.

 

 

Vista Brokers: Bank of Japan did not Extend Stimulus Plan

 

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On Monday morning, the yen strengthened against the dollar after the Bank of Japan did not announce additional measures to stimulate the economy. The Japanese currency has strengthened against the dollar by 1% to 117.66. EUR/JPY rose by 0.7% to 136.31 yen per euro.

 

Vista Brokers analysts note that Asian stock markets also received support. MSCI index (the broadest stock index for the Asia-Pacific region outside of Japan) grew by 1.1% and reached its highest level in six weeks. Against this background Australian and New Zealand currencies increased, inspired by the demand for high-risk assets. The Australian dollar rose by 0.7% to 82.26, and New Zealand kiwi - by 0.4% to 76.67.

 

According to experts, the decision of the Bank of Japan to retain the stimulus plan was expected, although some market participants put their a stake on belief that Haruhiko Kuroda today announces some new measures. In the new fiscal year which will start in April, the prospects for achieving the target level of inflation in Japan remain very vague. Therefore, some market participants expect new steps of stimulation from the Bank of Japan. The last time the regulator took the decision to expand the asset purchase program to 80 trillion yen in October 2014.

 

Euro against the dollar rose on Wednesday. The market is in anticipation of tomorrow's ECB meeting, which will determine the monetary control strategy for the near future and will have an impact on the euro.

Analysts remind that on Thursday, the European Central Bank may announce the launch of the quantitative easing program, involves 550 billion-euro ($637 billion) bond-purchase. That is according to 93 percent of respondents in a Bloomberg survey of economists.

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Vista Brokers: Stock Markets are Rising in ECB Meeting Expectations

 

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On Thursday morning, the euro was trading near 11-year low against the dollar. Today is the day when the ECB should announce the launch of the quantitative easing program, and the market remains highly volatile. Amid named expectations American, Asian and European stock markets are rising.

 

While trading in London euro against the dollar has weakened by 0.2%, reaching $ 1.1588. Vista Brokers analysts point out that for the pair it is a minimum since November 2003, after the ECB was said to propose 50 billion euros of asset purchases. Now we are talking about much larger amounts - 550, or even 600 billion euros. That is the amount that market participants want to hear today from Mario Draghi.

 

Yields on 10-year bonds in Japan rose by 8 points, up to a maximum of 2013. Futures on the Euro Stoxx 50 rose by 0.3%, while the Standard & Poor's 500 index – by 0.2%. Hang Seng Index gained 0.6%.

 

Although more than 90% of the experts participating in the Bloomberg survey believe in such a decision of the European Central Bank, it is always the possibility that the actions of the regulator will go counter to the market expectations. If the bank announces its plan to stimulate the economy today, large-scale asset purchases will begin on the 1st of March.

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Market Pulse 22.01

 

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The long-awaited day of the ECB meeting came, and all investors' attention will be riveted to this event. It is expected during the traditional ECB Press Conference Mario Draghi will announce the launch of the quantitative easing program.

 

8:00 ** Unemployment rate - Q4 (Spain)

 

Moderate impact on the market (EUR). The Spanish indicator usually has a low impact, as the country is relatively small to affect the performance of the entire euro zone.

 

9:00 ** MPC Member David Miles Speaks - January (UK)

9:25 ** BOE Executive Director Paul Fisher Speaks - January (UK)

 

Moderate impact on the market (GPB). Comments of David Miles and Paul Fischer about the prospects for credit, inflation and the economy as a whole, can have an impact on the pound.

 

12:45 *** ECB Interest Rate Decision - January (euro zone)

12:45 ** Deposit Facility Rate - January (euro zone)

12:45 ** Marginal Lending Facility - January (euro zone)

 

Strong impact on the market (EUR). Changes in the rates are extremely important, and the quotes usually take a lead from it in advance. At this meeting, the ECB will unlikely make changes in rates.

 

13:30 *** ECB Press Conference - January (euro zone)

 

Strong impact on the market (EUR). It is expected that Mario Draghi will announce an extensive quantitative easing program on this press conference. Although the market was taking a lead from this decision for about a week, the ECB's decision both appropriate and not appropriate to the forecast, may have a strong influence on the euro.

 

13:30 *** Unemployment Claims - January (USA)

13:30 ** Continuing Claims - January (USA)

 

Strong impact on the market (EUR). Analysts expect positive data for the reporting week, although on news from the ECB, investors can leave these statistics without attention.

 

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

 

Moderate impact on the market (EUR). The consumer confidence index is based on a survey of households on the level of confidence in the current state of the economy and its development in the future. Analysts expect the decline of the indicator in January.

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Vista Brokers: Waiting for ECB Decision Influences on Metals

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Gold in global markets falls for a second day. Investors expect that the expansion of the ECB stimulation program will increase the demand for risky assets. Vista Brokers analysts point out that in 2015, gold has already increased by 8.8% on numerous signals of slowdown in the global economy.

 

On Wednesday, gold was traded at a five-month high of $ 1,300 an ounce. Today in London gold for immediate delivery has fallen in price by 0.5% to $ 1,286.73. February futures fell on the Comex by 0.6% to $ 1,286.10.

 

Silver for immediate delivery fell by 0.4% to $ 18.0582 an ounce and palladium - by 0.5% to $ 763.75. Platinum added 0.2% to $ 1,275.88 an ounce.

 

Analysts reminde that with high probability, today ECB President Mario Draghi will announce the launch of the quantitative easing program, which means a monthly asset purchasing by 50 billion euros (58 billion dollars).

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Vista Brokers: ECB Stimulation Program Can Support Oil

 

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Oil prices reduction continues to be one of the most debated topics, giving way, perhaps, only to the ECB quantitative easing program. Oil companies and exporters expect the market tests the bottom and start to rise. At the same time, many experts say that oil prices may fall to 30 dollars a barrel, because there are no economic justification for a high price, and there is a clear oversupply and falling demand in the market.

 

This situation lays mainly to the charge of North America, which is steadily increasing its production. The global economy, which is experiencing a period of deceleration, does not need oil in such quantities.

The report of the International Energy Agency in January indicated that in the IV quarter of 2014 excess supply (the difference between supply and demand) amounted to 890 thousand barrels. In comparison with the previous quarter, it's 170 thousand barrels more oversupply a day. For the first half of 2015 the IEA predicts reduction in demand by 900 thousand barrels per day compared to the IV quarter 2014. The agency expects growth in demand not earlier than in the III quarter of this year, and to this this lays forecast the IEA lays a decline of North America production.

 

Analysts say that at the moment it is difficult to predict the movement of the oil market, because during the past year oil prices were almost always supported by geopolitical risks. This year, such a situation is also possible - in case of such risks, the price can quickly grow by $ 20 a barrel or even more.

 

Also, the price can depend on the OPEC decisions about the decline in production. Note that some of the exporting countries were ready to change the quota, but others expressed strong protest against it, with the fear to lose the market share.

Vista Brokers analysts note that on Wednesday the price of oil on world markets is growing on the information that the ECB is close to the adoption of more aggressive measures to stimulate the economy. If Mario Draghi today will announce the launch of quantitative easing, it can support oil. Today, March futures for WTI crude oil on the Comex rose by 2.8% to $ 47.78 per barrel. March futures for Brent in London rose by 2.2% to $ 49.03 a barrel.

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Vista Brokers: Euro Fell against Major Competitors

 

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As markets had expected, on Thursday the ECB announced the launch of the quantitative easing program. Against this background, the EUR / USD broke the 1.14 level, and continued to decline, stopping only at the level of 1.1380.

 

Vista Brokers analysts point out thatthe large-scale program of bonds purchasing will become the long term factor of pressure for the euro. Yesterday, the single currency was trading at 11-year low against the dollar, 3-month low against the yen, and 7-year low against the pound.

 

QE starting was the anticipated event for the markets. As experts predicted, the ECB will buy bonds from March 2015 until September 2016. Thus, the euro zone economy will regularly be supported by new liquidity, and by the end of the program, it will receive € 1 trillion. The volume of monthly purchases will be 60 billion euros.

 

Note that the Bundesbank, the central bank of the eurozone's largest economy, was against such aggressive measures to stimulate the economy of the region. They said about the illegality of such measures in terms of the European Union legislation and also claimed that the weak eurozone economy in such conditions will not have an incentive to carry out important economic reforms.

 

Analysts say that amid the aggressive ECB actions, the US economy currently looks like an island of stability, and it will support the US currency. The dollar index on Thursday rose from 92.78 to 94.02 points.

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Market Pulse 23.01

 

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On Friday, the ECB's decision to launch the stimulation program will still impact on the market. Therefore, the actions of its members may be contrary to the outgoing news. Nevertheless, some important publications in European countries and Canada should be noted .

 

8:00 *** Flash Manufacturing PMI - January (France)

8:00 ** Flash Services PMI - January (France)

8:00 ** Flash PMI Composite - January (France)

 

Strong impact on the market (EUR). Flash manufacturing PMI is considered to be the most important of these indices. It is currently below 50, which is considered to be the deterioration of the overall situation. Nevertheless, analysts expect a slight growth of these three indicators in January.

 

8:30 *** Flash Manufacturing PMI - January (Germany)

8:30 ** Flash Services PMI - January (Germany)

8:30 ** Flash PMI Composite - January (Germany)

 

Strong impact on the market (EUR). In Germany, the indices are slightly higher than 50. Analysts expect a slight growth of these three indicators.

 

9:00 ** Flash Manufacturing PMI - January (euro zone)

9:00 ** Survey of Professional Forecasters - Q1 (euro zone)

9:00 ** Flash Services PMI - January (euro zone)

9:00 ** Flash PMI Composite - January (euro zone)

 

Strong impact on the market (EUR). Given the high market volatility caused by the decision of the ECB it is unlikely that these publications will have a strong impact on the euro, even if the values of indices will exceed forecasts.

 

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

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

 

Strong impact on the market (GPB). Growth of these indices (or the forecast excessing) reflects the upturn of consumer activity that strengthens the currency. This important indicator during the release can seriously affect the pound.

 

13:30 *** Consumer Price Index - December (Canada)

13:30 *** Core CPI - December (Canada)

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

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

 

Strong impact on the market (CAD). The portion of important statistics can have a significant impact on the Canadian dollar. It is expected that inflation in Canada will again show a decrease, while the volume of retail sales will rise slightly.

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Vista Brokers: Markets after ECB's Decision

 

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Yesterday's announcement of the European Central Bank about the launch of quantitative easing in March caused strong fluctuations in the financial markets, which continues today.

 

In particular, stock markets are rising in Asia, the USA, Australia, South Korea etc. Vista Brokers analysts note that S&P 500 and Dow Jones indices rose by 1.5%, the Japanese Nikkei - by 1%, the MSCI Asia-Pacific - by 0.9%. In Europe stocks and eurobonds are rising.

 

Meanwhile, the euro against the dollar is still trading at 11-year low of about $ 1.1344, having lost 2% this week.Versus the yen the single currency fell to the 3-month low at 134.28 yen. The additional pressure on the euro have the upcoming elections in Greece, where extreme left political forces can win. Such a scenario can lead to the situation when the country will leave the euro zone.

 

By the way, the participation of Greece in the ECB quantitative easing program open to question. According to Mario Draghi, the regulator will buy Greek government bonds, but only if Athens will fulfill all the program conditions. The radical SYRIZA party, which may come to power in Greece intends to cancel the austerity measures prescribed by international lenders, which may lead the country to default.

 

In such a difficult situation, experts are wondering how the euro will behave in further. Societe Generale analysts note that the single currency can not fall without correction, but do not give specific predictions about this correction. HSBC said that the launch of the quantitative easing program should already be considered by the market, as the EUR / USD began to decline as early as mid-2014, when hints about the QE become less transparent. The Bank's experts talk about the possibility of the euro reducing to 1, but in such a case, the US Federal Reserve will begin to operate, because such a strengthening of the dollar will be not profitable for the USA.

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Vista Brokers: Saudi King's Death Feeds Oil Market Uncertainty

 

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On Friday, oil prices rise after the news about the death of Saudi Arabia King Abdullah bin Abdul-Aziz Al Saud. Brent is traded at $ 49.30 per barrel, WTI - at $ 46.70 per barrel.

 

The crown of the country, which is the largest exporter of oil, goes to the Abdullah's brother, Salman. He has already said that the oil policy of the state remains unchanged, and the key in this area position of oil minister remains for Ali al-Naimi. Salman also intends to follow the OPEC policy in respect of oil production quotas.

 

Vista Brokers analysts note that the change of government in Saudi Arabia has added uncertainty to the already snappish oil market, which is going down over the last six months. Earlier this year, the market has been falling and with the high volatility, but this week the price rebounded slightly, and Brent was traded at around $ 47.78 - $ 50.45 per barrel.

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Vista Brokers: Euro on Friday was Traded under Pressure

 

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At the end of the last week, the euro against the dollar has lost about 2.5% after the announcement of the ECB's decision to launch a program of quantitative easing. On Friday, the single currency was trading at 11-year low against the US currency. Against the yen, the euro reached a 16-month low at 130.91.

 

Vista Brokers analysts note that since the beginning of 2015 the EUR/USD has lost 7% and in January the pair can show the most significant monthly decrease since the crisis of 2009.

 

Today, the single currency may have another reason for the fall - the announcement of Greek election results. On Sunday, the country has held early parliamentary elections, and the radical left-wing party "Syriza" can come to power. In this case, Athens can stop paying public debts and review the conditions for receiving financial assistance. Although the leaders of the radical party say that a Greek exit from the eurozone is not in their plans, the market is considered in such a scenario.

 

Also this week, market participants will wait for the US Federal Reserve meeting, which will take place on Wednesday. After an unpleasant surprise from the Swiss National Bank and the announcement about the launch of QE from the ECB, investors want to be sure that the US central bank will not deviate from the course. Analysts remind that this year investors expect that the Fed will raise interest rates.

 

While the euro declines in the currency market, the dollar is rising not only against the single currency, but also against other major competitors. On Friday, the currency rose against the Australian, New Zealand and Canadian dollar amid prices for natural resources declined. It has become a factor of pressure on the resource-exporting countries.

 

The dollar index DXY rose from 94.26 to 94.74, reaching a new 11-year high.

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Market Pulse 26.01

 

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On Monday, Australian markets are closed - today the country celebrates Australia Day. Several important indicators will be released in Germany and the UK. Also this day willstart Eurogroup Meetings, which in relation to the recent ECB decision may attract the attention of traders.

 

9:00 *** Ifo Business Climate - January (Germany)

9:00 ** IFO - Current Assessment - January (Germany)

9:00 ** IFO - Expectations - January (Germany)

 

Strong impact on the market (EUR). Analysts expect that these three indicators of the German IFO Institute will show the growth compared to December. Recall that these indicators are based on a survey of manufacturers, builders, wholesale and retail companies.

 

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

9:30 ** MPC Member Kristin Forbes Speaks - December (UK)

 

Moderate impact on the market (GPB). The volume of mortgage lending shows the activity on the UK mortgage market. As for Kristin Forbes, her speech can influence on the pound, because it can show the mood of the Monetary Policy Committee.

 

14:45 ** ECB Announces Covered Bond Purchase - January (eurozone)

 

Moderate impact on the market (EUR). ECB announces its weekly balance sheet, from which investors conclude on the extent of buying bonds by the regulator. Expansion of purchases is a signal for greater activity of the ECB, which puts pressure on the euro.

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Vista Brokers: Euro Hit 11-year low Amid Election Results in Greece

 

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As expected, the left radical Syriza party whose leaders are against the cooperation with international creditors swept to victory in a snap election in Greece. Against this background, on Monday, the single currency broke through the 11-year low against the dollar and fell to $ 1.1098, the lowest level since September 2003.

 

The "Syriza" won 36.3% which infers 149 of 300 seats in the new Greek parliament. It means a very great power for radical forces and huge uncertainty for the whole Europe. The leader of the leftist Alexis Tsipras has said that the choice made by the Greek people, would entail the end of the austerity program. "Today the Greek people overturned an agreement with creditors - they brought us only poverty and misery. Now the dictates of creditors is in the past "- said Tsipras.

 

Vista Brokers analysts point out that it is unclear how the new Prime Minister of Greece, Tsipras will output from the difficult economic situation. It is clear that he will be able to achieve only some concessions from creditors, but not a complete debt write-off. The country is in a vicious circle, and is unable to finance its obligations on their own, given that it does not have access to financial markets. In summer Greece may need new injections to repay debts on schedule, and if the country ceases to comply with the terms of international lenders, it will not receive the money. In this case, the default or the “Grexit” (exit from the euro zone) are possible. This uncertainty scares markets.

 

Today, the euro is reduced not only against the dollar. EUR/JPY is at 11-year low - 130.16 yen. Also, the single currency fell against the pound to 7-year low – 74.06.

 

Analysts note that the position of the euro is very unstable after the announcement of the ECB quantitative easing program launch.

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Vista Brokers: Euro Partly Reasserts itself

 

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On Monday, the euro fell against the dollar to its lowest level since September 2003, when it became known that in Greece the opposition leftist coalition "Syriza" had won the elections. Markets concern that the new government may refuse to cooperate with international lenders or even initiate the process of exit from the eurozone. Against this background, the European currency fell by 0.3% against the dollar to $ 1.1167.

 

However, Vista Brokers analysts said that the market excitement about Greece had not lasted too long. At midday, the euro has already returned to the level of $ 1.1237 and continued to slowly reassert itself. Investors felt that the risks from so-called Grexit was overvalued.

 

According to a senior Nordea Bank analyst Niels Christensen, it is too early to worry about it, and there are no real prerequisites for the new round of debt crisis in the region development after the elections in Greece.

 

Meanwhile, the head of the Eurogroup Jeroen Deysselblum said that there is no plan for the Greek exit from the euro zone, and the country must adhere to budgetary rules established in the area. As for election promises of "Syriza" to reduce Greek debt, Deysselblum noted that the Eurogroup has already taken enough efforts to ease the debt burden of the country, and the debt can not be canceled.

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Market Pulse 27.01

 

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Tuesday's economic calendar is not too saturated. The Eurogroup meeting continues In Brussels, where among other issues, the victory of radical party "Syriza" in Greece is discussed. A number of important data will be released today in the United States.

 

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

9:30 *** Prelim GDP - Q4 (UK)

 

Strong impact on the market (GPB). It is expected that on a quarterly basis the UK economy slowed its growth compared to Q3, but on an annualised basis - it has accelerated. Growth or accelerate of the growth will be favorable to the pound.

 

13:30 *** Durable Goods Orders - December (US)

13:30 *** Core Durable Goods Orders - December (US)

 

Strong impact on the market (USD). Changing in the volume of orders for durable goods is a leading indicator of production trends, as well as the investment activity in the country. After the decrease in November, in December the indicator is expected to rise slightly.

 

15:00 *** CB Consumer Confidence - January (USA)

15:00 *** New Home Sales - December (US)

 

Strong impact on the market (USD). The consumer confidence index is based on a survey of households on the level of confidence in the current state of the economy and its development in the future. The growth of the confidence in the economy favorably affects the currency.

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Vista Brokers: Long-term Trend for EUR/USD Remains Bearish

 

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On Tuesday, the euro strengthened against the dollar after the EUR/USD had reached the 11-year low at $ 1.1098 on Monday. Here, many investors preferred to take profits, and this eased the pressure on the single currency. Today, as Vista Brokers analysts say, the euro against the dollar trades at $ 1.1238.

 

Experts remind that a large-scale selling of the euro last week was caused by the decision of the European Central Bank to launch a quantitative easing program. Earlier this week, the bearish trend for the single currency was supported by the news about the victory of the radical forces in the elections in Greece. At the moment, the market has already taken a lead from these news and the pair came to the phase of correction. Most likely it will not last too long.

 

Greece will remain a factor of pressure on the euro. Investors will be watching Alexis Tsipras in anticipation of any statements and explanations of how he plans to fulfill his campaign promises. Also, some negotiations of the new Greek government with international creditors will attract investors' attention.

 

Recall that Tsipras and his party "Syriza" promised the electorate a significant reduction of debt and getting out of austerity. It is still unclear how radicals plan to achieve it. But the higher ranks of the European Union have already commented on this situation, saying that the cancellation of debt for Greece would be no question.

 

Meanwhile, analysts of world's leading banks rush to cut their forecasts for the euro. UOB Bank expects a decline in EUR/USD to 1.1000 in the coming weeks. Danske Bank predicts a drop below support level 1.1000 in the next 6 months.

 

The dollar on Tuesday fell slightly against the yen to 118.26 yen. Last week, the US currency was trading against the Japanese in a fairly wide range, from 117 to 119 yen.

 

The greenback this week may be strong influenced by the US Federal Reserve meeting, which starts today and will last two days. Investors are waiting for confirmation from the American regulator about the policy of monetary tightening.

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Vista Brokers: On Tuesday Oil Rose above $48

 

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On Tuesday, oil rose above $48 per barrel, recovering positions after falling amid the weakness of the dollar against the euro.Vista Brokers analysts say that Brent crude oil has risen by 22 cents to $ 48.38 a barrel. Meanwhile, WTI is traded at $ 45.25 per barrel.

 

In the currency market, the euro is rising against the dollar, correcting from the punched on Monday 11-year low. Some market participants expect the Fed meeting would not justify expectations of relatively stable path to the interest rates growth.

 

Also the oil is supported by comments of the OPEC general secretary Abdullah El-Badri, who had said that the price of oil may even exceed $ 200 per barrel if there would be a lack of investment.

[Vistabrokers]

Vista Brokers: Markets Wait for FOMC decision

 

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On Thursday US stock indexes moved down under a pressure from disappointing U.S. durable goods orders data. In December durable goods orders decreased by 3.4% against the expected growth of 0.6%. The core index fell by 0.8% against the expected growth of 0.6%.

 

Against this backdrop, US stock indexes were down around 2%. DJI fell by 2.05% to 17,316.42. SPX - by 1.61% to 2,023.91. IXIC – by 2.09% to 4,672.06.

 

Vista Brokers analysts note that expectations for this year's first Fed meeting was also the factor of pressure for the US stock market. Investors look forward FOMC to express its commitment to the course of monetary tightening marked earlier. Doubts about the Fed raising rates occurred after the ECB had announced the launch of an ambitious quantitative easing program.

 

According to experts, any statements of the Fed about the strong US labor market will support expectations of rates growth in the middle of this year. The references about the problems of the world economy or low inflation will enhance the excitement in markets.

 

Using the doubts of market participants about the US dollar, the euro recovered the second consecutive day against the US currency. On Tuesday, the euro has moved up from 11-month high reached on Monday morning on the news about the Greek elections results.

 

On commodity markets oil and gold are rising. Brent futures on Tuesday were trading at $ 48.37 per barrel, WTI - at $ 45.47 per barrel. Spot gold rose by 0.5% to $ 1,287.30 per ounce.

[Vistabrokers]

Market Pulse 28.01

 

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Certainly, the most important event of Wednesday and even of the whole week for financial markets will be the announcement of the US Federal Reserve meeting results. Today FOMC will announce its decision on the basic interest rate, and then the FOMC statement will be published. Also the Reserve Bank of New Zealand will announce its decision about the interest rate.

 

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

 

Moderate impact on the market (EUR). The GfK leading index characterizes the attitude of consumers to the economy by the beginning of the reporting month. As a rule, the growth of the index is favorable for the currency.

 

15:30 ** Crude Oil Inventories - January (USA)

 

Moderate impact on the market (USD). Changes in the level of crude oil reserves in the United States is one of the benchmarks for the oil market.

 

18:50 *** BOE Governor Mark Carney Speaks - January (UK)

 

Strong impact on the market (GPB). Comments of Carney about inflation or the labor market can quite strongly influence the pound because on their basis investors can draw conclusions about the future monetary policy of the central bank.

 

19:00 *** FOMC Rate Decision - January (USA)

19:00 *** FOMC Statement - January (USA)

 

Strong impact on the market (USD). Financial market participants expect some hints on the Fed's furtherer actions in the light of recent decisions of the ECB and the Swiss National Bank. The Fed will either confirm or not confirm its policy of raising interest rates this year. In any case, it can greatly affect the dollar.

[Vistabrokers]

Vista Brokers: Stock Market is Recovering after Decline

 

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On Tuesday, some US shares have declined, mainly against the backdrop of disappointing data on orders for durable goods in the United States. The most significant drop has showed the IT-companiy Microsoft, which shares have declined by 9.3% to $ 42.66 due to slow sales of the software for business. Shares of the largest engineering company Caterpillar have fallen by 7.2% to $ 79.85 amid worries about the impact of cheap oil on the work of this manufacturer of equipment for energy companies. Among the "outsiders" of the market were also Procter & Gable and DuPont Co.

 

Vista Brokers analysts point out that frustration on Wednesday the US stock market was replaced by more positive mood, and major indexes began to restore positions. Firstly, the expectations of the Fed meeting no longer pressured so much on markets as the day before. And secondly, some US companies brought a pleasant surprise to investors. It is, first of all, Apple Inc., which after the close of markets on Tuesday announced a net profit growth in the first quarter of fiscal year 2015 by 38%, due to the huge demand for new smartphone iPhone with larger screens. After this news Apple's stock price jumped immediately by 5%.

 

Interestingly, the 18 billion dollars of net profit earned by Apple for the quarter, is a world record. The previous record belonged to the oil giant ExxonMobil, which had earned in 2012 $ 15.9 billion of quarterly profit.

 

Also shares of Yahoo Inc increased by 6% immediately after the news that the company will provide its share of the Chinese Alibaba Group to create an independent company SpinCo. Investors approved a plan of Yahoo, especially the fact that the separation of a stake in Alibaba do not require the tax payment. Yahoo Inc shares growed despite the fact that in the fourth quarter of 2014 its profit had reduced by half.

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Vista Brokers: Greece May Continue to Weigh on Euro

 

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Some analysts believe that the euro against may fall the dollar to 1 in the near future, with the development of the situation in Greece. Several months in a row the market was taking a lead from the fears that radical political forces would come to power in the country. When it occurred, the EUR/USD had fallen to a 11-year low.

 

Now, market participants will closely monitor the situation to see how "Syriza" is fulfilling its campaign promises. Vista Brokers analysts reminde that the party leader Alexis Tsipras voiced about the following plan of action after the elections: Greece will remain in the euro zone, but will force international creditors to cancel debts and will leave the austerity program. Over the next few weeks Tsipras will try to negotiate with the EU, ECB and IMF to revise the terms of lending, and will possibly squeeze "troika" on Greece's exit from the euro zone in case of reducing dept failure.

 

Experts point out that the victory of "Syriza" in Greece may lead to much more serious consequences than even the country's exit from the euro zone. Thus, other countries where radical political forces already have the large support may follow Greece. These are Italy, Spain, France.

[Vistabrokers]

Vista Brokers: Fed Meeting Results are Positive for Dollar

 

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On Wednesday, the most anticipated event of this week for financial markets took place - this year's first meeting of the US Federal Reserve. Iahead of it the US dollar against the euro rose in price. By 13:00 GMT the single currency was at $ 1.1355 level compared with $ 1.1381 at the close of trading on Tuesday. USD/JPY has remained stable - at 117.88 yen.

 

The Fed meeting results were published at 19:00 GMT without any press conference, thus investors tried to catch hints of further steps of the US central bank between the lines of the statement.

 

Vista Brokers analysts note several important theses that have been made. Firstly, the Fed has marked a steady development of the US economy and the labor market, as well as the fact that the drop in oil prices has increased the purchasing power of households. Secondly, the Fed expects the decline in inflation in the short term and its growth in medium-term to the target level of 2%. Also worth noting is that the interest rate has remained in the same range.

 

As analysts had expected, the FOMC statement did not give any surprise. Although some experts got to see in a slightly changed text some hints at "softening". In particular, the State Street Global Advisors economist Michael Aron believes that even if inflation will grow closer to the target level, the Fed's policy remains soft for a long time.

 

Immediately after the publication the US stock market began to decline and the yield of US 30-year Treasuries fell to the record - 2.291%. The dollar strengthened against a basket of currencies by 0.5%.

[Vistabrokers]

Market Pulse 29.01

 

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8:50 *** Unemployment Change - January (Germany)

8:55 *** Unemployment Rate - January (Germany)

 

Strong impact on the market (EUR). Analysts expect that unemployment in Germany will remain the same - 6.5%, while the number of unemployed will fall, but less than in the previous reporting period. Excess of forecasts can support a single currency.

 

10:00 ** Consumer Confidence - January (euro zone)

 

Moderate impact on the market (EUR). The leading index, published by the European Commission, which reflects consumer confidence in the economic situation. Analysts expect lowering of confidence level by 8.5.

 

11:00 ** CBI Distributive Trades Survey - January (UK)

 

Moderate impact on the market (GPB). A report published by the Confederation of British Industry, is an indicator of short-term trends in the retail and wholesale trade in Great Britain. As a rule, the high value of the index is positive for the pound.

 

13:00 ** Preliminary Consumer Price Index - January (Germany)

13:00 ** Harmonised Index of Consumer Prices - January (Germany)

 

Moderate impact on the market (EUR). After a small increase in the previous month, on January, analysts expect lowering of inflation in the euro zone's largest economy. This can put pressure on the euro.

 

13:30 *** Initial Jobless Claims - January (USA)

13:30 *** Continuing Jobless Claims - January (USA)

 

Strong impact on the market (USD). In the accompanying statement of FOMC which has been released yesterday was a comment that labor market conditions have improved and the employment growth is "strong." In recent months, the number of claims in the US has been steadily decreasing.

 

15:00 ** Pending Home Sales - December (US)

 

Moderate impact on the market (USD). One of the most important indicators for the US real estate market, which characterizes activity in this area. High result strengthens the dollar.