Market Analysis by Vistabrokers

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Vista Brokers: Fed Meeting Influenced on all Financial Markets

 

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On Thursday, stock markets in Europe and Asia were falling amid of the dollar growth after the Fed meeting on Wednesday. The regulator has confirmed the policy of raising interest rates this year giving the US currency a considerable support.

Vista Brokers analysts note that the dollar strengthening has led to a decline in oil prices down to 6-year low, and has put a pressure on gold.

As for the European markets, they are still under the influence of the radical party "Syriza" victory in Greece. Now Greece shares are rebounding slightly after falling by 9.2% on Wednesday. But the pan-European index FTEU3% has lost 0.7%, having dropped to 1.464 points.

In Asia, the stock market declines. The Japanese major index Nikkei fell on Wednesday by 1.1%, and it is the greatest day decline over the past two weeks. Asian MSCI index lost 1.2%.

In the USA, the S&P 500 index fell by 1.4% after the announcement of the Fed meeting results. Recall that many market participants have expected that the US regulator would adjust its plans for the monetary policy after the other major central banks around the world had chosen further easing. However, the Fed confirmed the previously taken course.

Against this backdrop, the dollar index, which tracks the price against a basket of currencies, was up by 0.2%. Against the yen, the dollar rose by 0.3% to 117.87 yen. The euro fell against the greenback to $ 1.1304.

As for commodity markets, the Brent crude oil rose by 0.25% to $ 48.60 per barrel, WTI fell by 0.1% to $ 44.40. Gold has fallen in price to $ 1,279.80 per ounce.

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Vista Brokers: Fed Statement Put Pressure on Gold

 

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On Wednesday, the price of the precious metal fell. At the end of trades on СОМЕХ gold for February delivery fell by 0.5% to $ 1.285.90 per ounce. Vista Brokers analysts note that the reason for the decline of gold was that the US Federal Reserve had confirmed its adherence to the policy of raising rates in the second half of this year. March silver futures closed unchanged at $ 18.09 per ounce.

 

In its accompanying statement, the Fed has noted a "solid growth" of the economy and the labor market. Thus the regulator has expressed an optimistic attitude to the current state of the economy. Also, the Fed has repeated that inflation is likely to reach a level of 2%, although not in the short term.

 

Analysts remind that the day before the market price of precious metals rose after weak data on orders for durable goods in the United States. Disappointing statistics put pressure on the stock market, which in turn led to an increase in demand for safe-haven assets.

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Vista Brokers: US Jobless Claims Reached 15-year Low

 

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On Thursday it became known that one of the key indicators of the US labor market showed the best results since April 2000. For the week ending on January 24, the number of jobless claims fell by 43 000 to 265 000. Most experts were expected a decline to only 300,000.

 

These data provided the yet another confirmation of the US labor market rapid recovering, and supported expectations that the Fed would start to raise interest rates later this year.

 

However, Vista Brokers analysts say that yesterday the market took the strong data on jobless claims in stride. The dollar has not received much support, firstly because of the fact that this statistics is strongly influenced by seasonality. And secondly, because market participants expected data on home sales in the United States. As a result, the euro even rose against the dollar.

 

By the way, data on pending home sales did not make investors happy. In December, the indicator decreased by 3.7% against the expected growth by 0.6%. It is worth noting that the level of sales is still quite high, and indeed against other major world economies the United States looks like an oasis of stability.

 

Actions of the central bank of Switzerland and the European Central Bank have a strong influence on the European region. Regulators of other countries are forced to cut rates to prevent the strong growth of their national currencies against the euro. In particular, the central bank of Denmark for the third time in the last two weeks has lowered its deposit rate.

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Market Pulse 30.01

 

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The last day of the trading week is full of statistics. In particular, the United States will released some important data on the 4th quarter of last year. In the euro zone the data on the consumer price index and the unemployment rate, which may affect the dynamics of the market, will be released.

 

7:00 ** Retail Sales - December (Germany)

 

Moderate impact on the market (EUR). The growth of the indicator reflects higher consumer activity that can support the single currency. In December analysts expect the indicator's growth.

 

9:30 ** Net Lending to Individuals - December (UK)

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

 

Moderate impact on the market (GPB). In December, analysts expect a slight slowdown in growth of loans to individuals, reflecting the deterioration in lending. It promises a drop in consumer spending in the future.

 

10:00 *** Consumer Price Index Flash Estimate - January (euro zone)

10:00 ** Flash Core CPI - January (euro zone)

10:00 ** Unemployment Rate - December (euro zone)

 

Strong impact on the market (EUR). Consumer price index is an important indicator for the market and a reference point for the central bank. Inflation slowing in January can be a factor of pressure for the euro on Friday. Experts predict that the unemployment rate will leave the same - 11.5%.

 

13:30 *** Advance GDP - Q4 (USA)

13:30 ** Advance GDP Price Index - Q4 (USA)

13:30 ** Personal Consumption (First Release) - Q4 (USA)

13:30 ** Core Personal Consumption Expenditure (First Release) - Q4 (USA)

13:30 ** Employment Cost Index - Q4 (USA)

 

Strong impact on the market (USD). In general, analysts expect the data to be positive, which can support the dollar. According to forecasts, the growth of the US economy has slowed down in the 4th quarter compared to the 3d, but the growth still remains stable.

 

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

14:45 ** Revised UoM Consumer Sentiment - January (USA)

 

Moderate impact on the market (USD). Analysts expect that Chicago PMI index in January has decreased, but the rate is stable at above 50, which means the growth.

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Vista Brokers: USD/JPY Remains within Narrow Price Range

 

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From Thursday to Friday Japan has published a large portion of statistics, and the data were highly controversial.

 

The consumer price index in December rose slightly larger than analysts had expected - by 2.4% vs. 2.3%, and this is probably due to the increase in sales tax. Inflation excluding volatile food prices rose by 2.5% vs. 2.6%.

 

Production in Japan is slowly but surely recovering. In December, the industrial output in the country increased by 1% mom and by 0.3% yoy, which is slightly less than it was expected. Exports to the USA grew due to the increased stability of the US economy.

 

Vista Brokers analysts note that weak consumer spending and low inflation make the achievement of inflation target difficult for the Bank of Japan. Although the decline in oil prices can be a positive factor for the country, because Japan is exporting almost all of the fuel.

 

Labor market data came out positive. In December, the unemployment rate in Japan fell to the lowest in more than 15 years - 3.4%. The number of employees has grown, including both employed in full-time and employed part-time. Despite this, the income of households in September rose by 2.1% compared to the last year, when adjusted for inflation corresponds to a decline in real income by 0.8%.

 

Analysts say that the yen against the dollar for the second week in a row is trading in a tight range of 117.3-118.8. The pair can leave these boundaries only due to the influence of such a factor as different vectors of monetary policy of the Fed and the Bank of Japan. The Japanese regulator continues the program of quantitative easing, while the Fed is aimed at tightening monetary policy. Against this background, USD/JPY has all the prerequisites for the restoration of the uptrend.

 

Meanwhile, the Bank of Japan is waiting. The Prime Minister Shinzo Abe fears that new stimulation measures can lead to excessive reduction of the national currency.

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Vista Brokers: Aussie Fell to 5.5 Years Minimum

 

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It is expected that the next week the Reserve Bank of Australia will cut interest rates. It puts pressure on the Aussie, and on the morrow of it, on the other currencies of commodity producers.

 

Vista Brokers analysts note that the last trading day the currency has finished at $ 0.7794. From the beginning of the year, the Australian dollar has fallen by 4.7%, and this is the third consecutive monthly fall.

 

The probability that the central bank of Australia will really cut interest rates on the next meeting on 3 February is very high. Futures on bonds imply a 70 percent probability of such a scenario.

Morgan Stanley has already advised its clients to sell the Australian dollar against the Japanese yen at 85.00 with a stop-loss order placed at 94.00.

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Vista Brokers: Rising Oil Hardly Supported Loonie

 

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The Canadian dollar is increasingly weak against the US currency. After January 21, when the Bank of Canada has unexpectedly cut interest rates, the country's national currency fell to six-year low, and since then is gradually losing ground.

 

Vista Brokers analysts note that last Friday, the Canadian dollar has gotten a little support amid rising oil prices. March WTI futures on the Comex per day increased by 8.3%, to 48.24 dollars per barrel. Brent futures in London rose by 6.6%, to 52.50 dollars per barrel. Apparently, the reason of oil rising was the data on declining production in the United States that has the potential to reduce the amount of produced oil. Also, many market participants have closed short positions on oil futures on the last day of the month.

 

Let's go back to the Canadian dollar - at the end of the last week, it was worth 79.87 cents, and some experts expect a further decline even to 75 cents. On Friday, the International Monetary Fund gave some comments on the situation in Canada. According to the IMF, the main inland risk for the country is a possible "shock in the housing market", and the external one is tightening of the Fed monetary policy. Factors affecting the Canadian economy are the economic slowdown in the world and the decline in oil prices.

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Market Pulse 02.02

 

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On Monday, some European countries and Canada will publish data on the PMI index for the manufacturing sector. During the US trading session, the USA will publish the manufacturing index ISM.

 

8:15 ** Manufacturing PMI - January (Spain)

8:45 ** Manufacturing PMI - January (Italy)

8:50 ** Manufacturing PMI - January (France)

8:55 ** Manufacturing PMI - January (Germany)

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

 

Moderate impact on the market (EUR). According to analysts, data on the index of purchasing managers in manufacturing in substantially all euro zone countries in January will be released at the level of the previous month. Growth or overachievement of the indicator may be favorable for the single currency.

 

9:30 *** Manufacturing PMI - January (UK)

 

Moderate impact on the market (GPB). According to analysts, in January, the index of purchasing managers in manufacturing in the UK rose slightly. Growth or overachievement of the indicator may be favorable for the pound.

 

13:30 ** Core PCE Price Index - December (US)

13:30 ** Personal Spending - December (US)

13:30 ** Personal Consumption Expenditure Deflator - December (US)

 

Moderate impact on the market (USD). Personal consumption expenditure deflator shows the annual growth rate of prices for consume goods and services for Americans. The Fed has long been tracking this particular indicator as inflation.

 

15:00 *** ISM Manufacturing PMI - January (USA)

 

Strong impact on the market (USD). It is expected that in January the index has shown a slight decline. Growth or overachievement of the indicator may be favorable for the currency.

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Vista Brokers: Dollar Takes a Lead from Weak GDP

 

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On Monday, the yen has reached a 2-week high against the dollar amid commodity currencies falling. Concerns about the economic situation in China put pressure on these currencies.

Vista Brokers analysts point out that today, in early trade, the dollar has fallen against the Japanese currency to a minimum from January 16 - 116.64 yen. For comparison, at the close of trading on Friday, USD/JPY was trading at 117.52.

 

According to analysts, the dollar now looks vulnerable against the yen and it is also due to the weak GDP data for the 4th quarter, published in the US on Friday. US economic growth was lower than the market had expected – 2.6% versus 3.0%. Today, investors will wait for the data on ISM manufacturing index in the United States which can attest to the weakness of the dollar or help greenback to regain lost ground. So far, analysts expect the index to decline in January.

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Vista Brokers: EUR/USD Remains in Narrow Range

 

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At the end of the last week, the EUR/USD has stabilized, and on Monday the pair has remained in the same range of about 80 points. Monday trades passed with a slight increase of the pair.

 

Vista Brokers analysts note that mostly all statistics published the first trading day was positive for the euro. Eurozone PMI index for the manufacturing coincided with the forecast of 51.0 against 50.6 a month earlier. Thus, the indicator showed the strongest monthly growth in the last six months due to the increase in new orders. In Italy and Spain PMI index for the manufacturing surpassed market expectations, while in Germany and France the index came out worse than forecast.

 

American statistics did not please investors. At first it was reported that US consumer spending fell in December, which means Americans are cautious and in no hurry to spend money, despite the decline in gasoline prices and a steady growth in the labor market. Personal spending fell by 0.3% compared to the previous month and the forecast of 0.1%. Recall that consumer spending accounts for about 70% of economic activity in the United States and is a key factor in the growth.

 

Later came the index of business activity in the US industry from the ISM, which disappointed investors who had expected 54.9 in January. Index fell more than expected - to 53.5, although the value above 50 indicates that economic growth continues.

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Market Pulse 03.02

 

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Early Tuesday morning in Australia came out a large portion of important data, including building approvals, trade balance, the RBA interest rate decision, together with the accompanying statement. Between publications that are only scheduled to be released, the most important may be called PMI index for the UK construction sector.

 

9:30 *** Construction PMI - January (UK)

 

Strong impact on the market (GPB). The situation in the construction industry in Britain is closely monitored, so the publication can affect markets. Analysts predict a slight decline of the index in January.

 

13:30 ** Raw Materials Price Index - December (Canada)

 

Moderate impact on the market (CAD). A leading indicator of price pressure in the country. Important for Canada, as it exports a lot of raw materials. Disappointing data may put pressure on the Canadian dollar.

 

15:00 ** Factory Orders - December (US)

 

Moderate impact on the market (USD). The change in volume of production orders is often a leading indicator of the industrial production dynamics for several months.

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Vista Brokers: RBA Decision was Unexpected

 

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On Tuesday, February 3, the Reserve Bank of Australia has announced the next interest rate cut - to the value of 2.25%. The decision was a real surprise for the market, because most analysts had expected that the regulator woukd keep interest rates at 2.50% for quite a long time.

 

Vista Brokers analysts identified factors that RBA Governor Glenn Stevens has called causes of rates reducing. They are contained in the accompanying statement. Thus, the rate of economic growth in Australia is low, demand is weakening, inflation is low, the Australian dollar is still overvalued, the real estate market raises fears, peak in unemployment may be higher than had been expected previously. Among other reasons Stevens has called the fact that monetary policy in the major economies of the world is becoming more stimulative, obviously referring to the ECB.

 

Leaders of the central Australian bank hopes that the rate cut will support the demand, will help to achieve inflation targets in 1-2 years, will reduce the rate of the Australian dollar, which is necessary for balanced economic growth.

 

Market reaction to the RBA rate cut followed immediately. The Australian dollar fell sharply against the dollar to 0.7750, where the pair stabilized. The New Zealand dollar followed the aussie. Analysts say that a further decline in AUD/USD is likely, because 130 points is a slight decrease for such news. In comparison, when the Reserve Bank of New Zealand only hinted at mitigation, kiwi fell by 240 points. After the ECB's decision to launch QE, the euro/dollar fell by more than 500 points.

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Vista Brokers: Greek Debt Plan Brought EUR/USD out of Hibernation

 

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On Tuesday, world's stock markets rose amid news about debt restructuring plan proposed by Greece. Constructive proposal of the new Greek authorities caused positive sentiments towards the euro zone. The US dollar was trading under pressure.

 

In last two weeks the world's media were actively discussing further development of the situation in Greece, where as a result of recent parliamentary elections the radical party "Syriza" has come to power. Representatives of international financial institutions and European countries vie stated that the debt remission is impossible for the EU, the ECB and the IMF. Everyone was waiting that Athens submits such requirements and use its possible exit from the euro zone as a blackmail.

 

But it seems that the Greek government has taken a different tack, offering international lenders to conduct a partial exchange of existing bonds for so-called "growth-linked" bonds. Greek finance minister Janis Varufakis explained that part of the debt, which currently stands at more than 300 billion euros, Athens offers to swap into bonds linked to the level of the economic growth. Another part was proposed to swap into "eternal" bonds. When the proposal was announced, Greek stocks rose on average by 4.6%. European stocks also began to rise. At the same time, the dollar index fell against a basket of currencies by 0.6%.

 

As Vista Brokers analysts sat, news that Greece will negotiate with international lenders, rather than give up the debt, brought EUR/USD out of hibernation, where it was in the last days, and caused a rally of the single currency.

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Market Pulse 04.02

 

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On Wednesday, some European countries and the euro zone will publish data on the PMI index for the services sector. In the US and Canada some important indexes will be released, which may cause the growth of the market volatility.

 

8:00 ** Halifax House Price Index - January (UK)

 

Moderate impact on the market (GPB). One of the oldest indicators of the UK property market, which is always in the focus of investors.

 

8:55 ** Final Services PMI - January (Germany)

8:55 ** PMI Composite - January (Germany)

 

Moderate impact on the market (EUR). The index of purchasing managers in the service sector growth or exceeded forecast will be favorable for the currency. Analysts expect that in Germany the above mentioned indices remain at the level of December.

 

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

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

 

Moderate impact on the market (EUR). The index of purchasing managers in the service sector growth or exceeded forecast will be favorable for the currency. Analysts expect that in euro zone the above mentioned indices remain at the level of December.

 

9:30 *** Final Services PMI - January (UK)

9:30 ** PMI Composite - January (UK)

 

Strong impact on the market (GPB). The index of purchasing managers in the service sector growth or exceeded forecast will be favorable for the currency. Analysts expect the growth of the index, which can support the pound.

 

10:00 ** Retail Sales - December (euro zone)

 

Moderate impact on the market (EUR). According to forecasts, the volume of retail trade in the euro area decreased, which means a reduction in consumer activity and may put pressure on the euro.

 

13:15 *** ADP Non-Farm Employment Change - January (USA)

 

Strong impact on the market (USD). This index is the main reference to official statistics, sometimes causing strong market fluctuations. The excess of the forecast is favorable for the dollar.

 

15:00 *** Ivey PMI - January (Canada)

 

Strong impact on the market (CAD). The index of purchasing managers in the service sector growth or exceeded forecast will be favorable for the currency. Analysts expect that in Canada the index will show a slight increase.

 

15:00 *** ISM Non-Manufacturing PMI - January (USA)

15:00 ** ISM Non-Manufacturing Employment Index - January (USA)

 

Strong impact on the market (USD). The value of the ISM Non-Manufacturing PMI in the USA is at a high level, and in January, analysts also expect a small increase - up to 56.6.

[Vistabrokers]

Vista Brokers: Oil Completed its Rally

 

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During the last few days, oil has increased in price by 19% and is now correcting from highs in anticipation of data on crude oil inventories in the United States and amid general concerns about demand.

 

Vista Brokers analysts say that Wednesday morning March futures for Brent were traded at $ 57.65 per barrel compared to $ 57.91 per barrel at the close of market on Tuesday. WTI futures are at $ 52.42 per barrel compared to $ 53.05 per barrel on Tuesday.

 

After the end of the last week, when oil prices had started to actively grow, investors began to talk about the fact that the oil market bottomed after seven straight months dropping and losing in price about 60%. During few days oil has grown by more than 20% from the minimum recorded on January 13 that technically means the beginning of "bull" market. But it seems that the bottom has not been reached.

 

On Wednesday fundamental factors pressured on oil. Firstly, according to the American Petroleum Institute, the US stocks last week rose by more than 6 million barrels. Secondly, a top Chinese energy company CNOOC Ltd announced that this year will significantly reduce the investment to adapt to the reduction in oil prices. The third is that index of business activity in the services sector in China in January rose at the slowest pace in six months. These data were known early Wednesday.

 

It is obvious that such a strong decline in oil prices that we have seen during the last few months, has a strong impact on the world economy. Some analysts still insist that the fall of the market in the long term will be benign. Decline in oil prices will stimulate economic growth, which in turn will support demand for commodities, including oil.

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Vista Brokers: Market Fixed Profit on AUD/USD

 

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On Wednesday morning, the Australian dollar has come up – investors took profits after yesterday's AUD/USD fall to five-year low. Vista Brokers analysts note that on Tuesday the Australian dollar fell sharply after the Reserve Bank of Australia has unexpectedly cut interest rates.

 

After lowering the rate by 0.25% to a record 2.25% the RBA stood on a par with the world's central banks, which began 2015 with the next steps of monetary policy easing. Note that 2014 the Reserve Bank of Australia finished with the message about plans to keep interest rates at 2.50% throughout 2015, to support the mining sector. Therefore, yesterday's decision of the central bank was an absolute surprise for the markets.

 

Long-term forecasts for the Australian immediately began to be revised down. So Goldman Sachs chief economist Tim Toohey has lowered the forecast from $ 0.7500 to $ 0.7200 for the end of 2015.

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Vista Brokers: Positive News did not Support Euro

 

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On Tuesday, European stock markets rose up amid positive earnings reports for Q4, strong statistics for the euro zone and progress in negotiations on Greek debt restructuring.

 

Representatives of the new Greek government held several meetings with the "top officials" of the European Union. Prime Minister Alexis Tsipras met with European Commission President Juncker, President of the European Council and the European Parliament Tusk Schultz. A Greek Finance Minister visited the ECB president Draghi. Athens also reported about upcoming negotiations with the IMF on a partial exchange of Greek debt to "growth-linked" bonds.

 

Among positive statistics for the eurozone, Vista Brokers analysts paid attention to data on the composite PMI index, which in January rose to a six-month high - 52.6, as well as PMI index for the services sector - 52.7. Note that in Italy and Germany these indices have also showed good results, beating forecasts. And only in France data came slightly lower than expected. Retail sales in the euro area continued to rise in December, the growth continues for the third month in a row.

 

Despite this positive news background, EUR/USD only managed to push off from session lows and recover from 1.1437 to 1.1470. The pair failed to rise up to the level of 1.15.

[Vistabrokers]

Market Pulse 05.02

 

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On Thursday, the economic calendar is not too saturated, but many publications are quite important and can affect the dynamics of currency pairs. In the UK, the central bank will announce the decision on interest rates, in Canada and the US data on trade balance will be published. And, of course, the market will wait for data on the number of applications for unemployment benefits in the United States.

 

7:00 ** Factory Orders - December (Germany)

 

Moderate impact on the market (EUR). Factory orders is often a leading indicator of the industrial production dynamics for several months. Positive data are favorable for the euro, and in December, analysts expect the rate growth.

 

12:00 *** Bank of England Interest Rate Decision - February (UK)

12:00 *** Bank of England Interest Rate Decision - February (UK)

12:00 *** MPC Rate Statement - February (UK)

 

Strong impact on the market (GPB). The market does not expect any surprises from the Bank of England, though, judging by recent events, investors' expectations are not always met with reality. For example, nobody has expected the rate reducing by 0.25 percentage points from the Reserve Bank of Australia or strict franc/euro peg refusal from the Bank of Switzerland.

 

13:30 *** Trade Balance - December (Canada)

13:30 *** Trade Balance - December (US)

 

Strong impact on the market (CAD, USD). Trade balance is the difference between export and import . Positive value is favorable for the national currency, reflecting the inflow of money into the country.

 

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

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

13:30 ** Prelim Nonfarm Productivity - Q4 (USA)

13:30 ** Prelim Unit Labor Costs - Q4 (USA)

 

Strong impact on the market (USD). Data on the US labor market often have a significant impact on the market. Analysts expect that during the reporting week, the number of initial claims for benefits was increasing, and if the data is better than forecasts, it can support the dollar.

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Vista Brokers: Greece is in Market Focus Again

 

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As Vista Brokers analysts have predicted, the euro is very sensitive to any news on Greece. Earlier this week, the single currency was supported when the Greek government has put forward a constructive proposal for a partial exchange of debt for growth-linked bonds. The authorities in Athens have also hold some meetings with representatives of international lenders to discuss the proposal, and investors have gotten a hope for a positive solution of the situation in Greece.

 

But on Wednesday night, the European Central Bank announced that from now Greek bonds will not be accepted as collateral for loans from the central bank. Amid this news EUR/USD dropped from 1.1483 to 1.1391. On Thursday morning, the pair rebounded slightly, and then continued to decline.

 

The ECB's decision was a surprise for the market because after the meeting with the ECB president Mario Draghi Greek Finance Minister Janis Varufakis said that the central bank would "whatever it takes" support each member country, including Greece. But it seems that the meeting of Varufakis and Draghi was not as efficient as it seemed to the Minister of Finance.

 

Experts believe that in this way the ECB wants to put pressure on the Greek government and force it to agree with the terms of the old loan program, which include austerity for the country. The decision of the central bank increases the uncertainty in the "Greek problem", because now for a safe way out, Athens will need to overcome this obstacle too.

 

The ECB decision had an impact on the stock markets. Both in Europe and in Asia the major stock indexes opened on Thursday with a reduction. Britain's FTSE lost 0.6%, German DAX - 0.9%, the French CAC - 1.1%. In Japan, the Nikkei, which on Wednesday scored 2%, now went down by 0.8%. The index of Asia-Pacific region excluding Japan MSCI fell by 0.1% after rising by 1% a day earlier.

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Vista Brokers: Winter Economic Forecast Stimulated Euro to Increase

 

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Thursday morning began with the reduction of the euro on news that the ECB no longer accept Greek government bonds as collateral that significantly limit the ability of credit for the Greek financial system. Information overwhelmed market participants who only had cheered up after the news of Athens negotiations with international creditors.

 

However, as Vista Brokers analysts say, the euro decline did not last long - the currency returned to growth versus the US dollar after the European Commission has improved its forecast for economic growth in the eurozone. Now the EC considers that in 2015 the GDP of the monetary union will increase by 1.3% against the previous forecast of 1.1%, and in 2016 - by 1.9%. The forecast for unemployment rate has also been reduced from 11.3% to 11.2%.

 

However, there was a negative aspect: the experts expect the inflation to reduce by 0.1% in 2015, and if the forecast is justified, for the euro area this will be the first deflation in its history.

 

However, after the announcement of the European Commission updated forecasts, the euro rose to $ 1.1425 from $ 1.1344 at the close of US trading session on Wednesday. In addition, the euro rose by more than 1% in the pair with the Swiss franc. Analysts report that the Swiss National Bank buys back the single currency to weaken the franc.

 

Among important statistics of the day we can note results of the Bank of England meeting. Asit was expected the British central bank has left interest rates unchanged at -0.5%. Amid this news pound strengthened to a maximum of three weeks against the dollar.

[Vistabrokers]

Market Pulse 06.02

 

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On Friday, New Zealand is celebrating Treaty of Waitangi, Australia has already published the RBA Monetary Policy Statement for Q1 2015. The day will be rather active and full with important statistics, especially in Canada and in the United States.

 

7:00 ** Industrial Production - December (Germany)

 

Moderate impact on the market (EUR). Analysts predict a slight increase in German industrial production in December. Rate increase or exceeding the forecast is favorable for the currency.

 

9:30 ** Visible Trade Balance - December (UK)

9:30 ** Trade Balance Non EU - December (UK)

 

Moderate impact on the market (GPB). Trade balance is the difference between exports and imports. High values are favorable for the currency, because they reflect a smaller money outflow from the country (as a rule, Britain suffers from a deficit).

 

13:30 *** Building Permits - December (Canada)

13:30 *** Unemployment Rate - January (Canada)

13:30 *** Employment Change - January (Canada)

13:30 ** Full Time Employment Change - January (Canada)

13:30 ** Part Time Employment Change - January (Canada)

 

Strong impact on the market (CAD). Analysts expect the oppositely directed data. Growth in building permits and the number of employees can have a positive impact on the Canadian dollar. However, the unemployment rate is expected to rise by 0.1%.

 

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

13:30 *** Non-Farm Employment Change - January (USA)

13:30 ** Change in Private Payrolls - January (USA)

13:30 ** Change in Manufacturing Payrolls - January (USA)

13:30 ** Average Hourly Earnings - January (USA)

13:30 ** Participation Rate - January (USA)

13:30 ** Two-Month Payroll Net Revision - January (USA)

13:30 ** Establishment Employment Survey Annual Revisions - January (USA)

 

Strong impact on the market (USD). A large portion of data on the labor market may increase the volatility of the market. In general, analysts expect not too positive data.

 

17:45 ** FOMC Member Dennis Lockhart Speaks - February (USA)

 

Moderate impact on the market (USD). Dennis Lockhart is the head of the Federal Reserve Bank of Atlanta and a voting member of the FOMC, that why his opinion affects the monetary policy committee, so Lockhart comments can cause volatility in the markets.

[Vistabrokers]

Vista Brokers: Possible Fed Rates Increase is Long-term Support Factor for Dollar

 

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On Thursday, yet another central bank has decided to decrease interest rates - Bank of Denmark has lowered the deposit rate from -0.50% to -0.75%. It is noteworthy that for the Kingdom it is the fourth decline in the past three weeks. Thus the regulator is trying to deal with the strengthening of the Danish krone against the euro.

 

So far, the Fed remains the only regulator of largest world's economies, tuned to the increase in rates, and it will provide support to the US dollar in the long run.

 

Vista Brokers analysts point out that this has started for the index of the US currency with increase by 5% in January, which is the largest monthly increase since May 2012. Investors have expected that some central banks announce new measures of monetary policy easing, while the Federal Reserve keeps course of its tightening.

 

Such is indeed the case. In mid-January, the SNB released franc to the "free floating". In late January, the ECB made a statement about the launch of an ambitious quantitative easing program. And then one by one the world's banks began to cut rates. The biggest surprise for the market was the rate cut by the Reserve Bank of Australia to a record low 2.25%. Immediately thereafter, the Australian dollar plummeted to a new low of 5.5 years, and the stock market rose to a peak of May 2008.

 

The Canadian dollar also fell to five-year low against the US dollar after the Bank of Canada has cut its main rate to 0.75%. Analysts believe that in this way the bank, which never cut interest rates since 2010, is protecting from lower oil prices. This resource takes a large share of exports in Canada and Australia.

 

Thus, the difference between the monetary policy of the Fed and other banks diverges more and more, contributing to the strengthening of the dollar. But does the Fed really ready to raise interest rates? At this point there are different opinions. For example, billionaire Warren Buffett said that for the Fed it would be "very difficult" to raise rates this year because of too strong dollar.

 

And experts of Congress Budget Office (CBO) believe that the United States may "save" more than $ 2.3 trillion, if interest rates will be holden at current levels until 2025. They point out that the preservation of US interest rates at a low level in the coming years may restrain the growth of the budget deficit and debt load.

 

Meanwhile, the market expects that the Fed will raise rates as early as mid-2015.

[Vistabrokers]

Vista Brokers: Markets Wait for US Labor Market Data

 

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During the US trading session on Friday a large portion of data on the US labor market will be published. Among it is closely monitored by the market non-farm payrolls. Vista Brokers analysts note that in anticipation of the important statistics, market participants are not very active. Euro this morning is declining against the dollar after having surged 1.2% the previous day. The growth is observed in the Asian stock markets.

 

Analysts expect that the number of people employed in the non-agricultural sector of the US has rose in January by 234,000 after the December growth by 252,000. Perhaps this will be the 12th consecutive month, when non-farm payrolls grows by more than 200,000 per month, and the US economy has not seen such situation since 1994. There are also more bold predictions. For example, chief forex analyst at Standard Chartered Callum Henderson believes that the indicator will rise by 260,000 in January. The growth rate and the excess of the forecast will strengthen investors' expectations about the Fed raising interest rates later this year.

[Vistabrokers]

Market Pulse 09.02

 

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On Monday, the economic calendar is almost empty. Today the ECB President Mario Draghi speeks, as well as the Bank of England Governor Mark Carney. In Turkey opens the G20 meetings.

 

6:00 ** Eco Watchers Survey: Current - January (Japan)

6:00 ** Eco Watchers Survey: Outlook - January (Japan)

 

Moderate impact on the market (JPY). For both indices, analysts expect a small growth, although these indices rarely have an impact on the yen. They are based on a survey of workers engaged in services.

 

6:40 *** BOE Governor Mark Carney Speaks - February (UK)

 

Strong impact on the market (GPB). Carney comments about the economic situation, the real estate market, inflation etc can significantly affect the pound.

 

7:00 ** Trade Balance - December (Germany)

 

Moderate impact on the market (EUR). Trade balance is the difference between exports and imports for the period. Positive values are favorable for the currency, because they reflect the flow of money into the country.

 

** ECB President Mario Draghi Speaks

** G20 Meetings - Day 1

[Vistabrokers]

Vista Brokers: Strong Labor Market Data Strengthened Expectations for Fed Rate Hike

 

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On Friday, the dollar has gotten a support after strong employment data in the United States. Immediately after the non-farm payrolls publication US currency rose against the Japanese one from 117.22 to 118.38 yen. The EUR/USD at the end of the day has lost about 1%, dropping to $ 1.1365. Vista Brokers analysts note that jobs data, as well as a number of other, less important indicators were published more than expected and this strengthen market expectations about the Fed rate hike.

 

Thus, the number of people employed in the US non-agricultural sector in January has risen by 257,000, versus the expected 236 000. Data for December were revised with an increase from 252 000 to 329 000. In the private and business sectors of the economy the number of jobs also increased more than analysts have expected. Average hourly earnings rose by 0.5% month on month and 2.2% year on year, against forecasts of 0.3% and 1.9%, respectively. The participation rate has also increased.

 

The only negative of a large portion of statistics was an unexpected increase in the unemployment rate from 5.6% to 5.7%. Analysts had expected the unemployment rate in January will remain the same.

 

Experts point out that the positive labor market data is a serious ground to believe that the Fed will begin to raise interest rates in the middle of this year. Over the past three months, the US economy has created over a million jobs, and such a high result, the country has not seen since 1997. In addition, January marked the 11th straight month of job gains above 200,000, the longest streak since 1994.