Market Analysis by Vistabrokers

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Vista Brokers: Fate of Greece Can be Decided on Friday

 

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On Tuesday, the euro was able to regain ground lost after yesterday's Eurogroup meeting, where no decision on Greece was made. Reaching a daily low at 1.1336, EUR / USD turned and moved up. Among supporting factors Vista Brokers analysts call investors' hopes that the "Greek problem" will be solved on Friday, as well as positive data on ZEW indices.

 

In Germany, the ZEW economic sentiment index grew weaker than forecast, but strong enough compared with January, and the ZEW survey index (current situation) showed an increase to 45.5 vs. 30.0. In the euro zone economic sentiment index rose to 52.7, while analysts were expecting the growth to 51.3.

 

As for Greece, the new round of talks will be held on Friday, February 20th, and this day is also the deadline, in which Athens can apply for an extension of the bailout program. Greek Prime Minister Alexis Tsipras called the conditions under which international lenders have put his country, a blackmail, since financial aid is impossible without reforms, including austerity measures. Yesterday at a press conference after the Eurogroup meeting the IMF chief Christine Lagarde has once again reminded: without reforms Greece will not get the money.

 

Despite the tense rhetoric of parties, market participants remain optimistic and believe that on Friday Athens will possibly come to some agreement with the creditors. In any case, all the negotiators insist that Greece will remain in the eurozone.

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Vista Brokers: BoJ Left its Monetary Policy Unchanged

 

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On Tuesday, USD/JPY has returned to the level of 119 amid the US Treasury yields growth and weak statistics on Japan. The pair showed growth for the first time in the last four trading sessions. Vista Brokers analysts note that the dollar rally against the yen was also caused by investors' confidence that the Fed will raise interest rates much sooner than the Bank of Japan.

 

Today, market participants were expected the results of the Bank of Japan meeting, where the regulator announced the decision on interest rates and the increase in the monetary base, as well as they were expected for BoJ comments on monetary policy and a press conference. Predictably there was no any surprises - the Japanese regulator has left its monetary policy unchanged. The Bank of Japan has confirmed its continued focus on economy stimulating, keeping rates at a minimum level of 0.10% and the asset purchase program at a record - 80 trillion yen.

 

Recall that on the night of Sunday to Monday were published data on the GDP of Japan, showed growth in the 4th quarter. Actual data were worse than expected, and it has put pressure on the yen, but on the second thought, the annual GDP growth of 2.2% is a good result, considering that in the previous quarter, the economy has slowed down by 2.3%. However, analysts were expecting an even more impressive performance – 3.7% growth.

 

Preliminary data on changes in GDP (quarterly) and nominal gross domestic product were also worse than expected. Judging by the latest macroeconomic data, Japan will have to overcome many more obstacles to return to sustained economic growth and indicators of previous years. So that tightening of monetary policy in the near future just is not expected.

 

Related comment BOJ was quite neutral, but analysts see improved mood compared to the previous month. Thus, the regulator said that the economy is recovering at a moderate pace and recalled the inflation target of 2%, which the country plans to achieve in the next financial year. "Industrial output is picking up," the BOJ said. That was a brighter view than last month, when it said output was "bottoming out."

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Vista Brokers: Aussie Remains within Narrow Price Range

 

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On Wednesday, the Australian dollar was trading at 0.7823 against the US dollar compared to 0.7799 on Tuesday evening. As Vista Brokers analysts say, the AUD/USD “swing” within a narrow price range continues.

 

Recently, an economic activity in Australia shows clear signs of slowing down. So, at the end of last week the disappointing data on unemployment was published, which in January rose by 0.3% immediately. The number of employed in the first month of the year decreased by 12.2 thousand, which is also much worse than expected. On the eve Greg Gibbs, a currency RBS strategist in Singapore noted that the rating of Australia may be revised and given the growing economic instability, the country can hardly expect to maintain AAA rating.

 

Australia's central bank insists that the low rate of the Australian dollar is useful for the economy.

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Market Pulse 19.02

 

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After an intensive Wednesday, on Thursday the economic calendar looks quite empty, but during the US trading session we expect some several important publications. In particular, the weekly data on unemployment claims in the US will be released, as well as the Philly Fed manufacturing index.

 

9:00 ** ECB Monetary Policy Meeting Accounts - January (euro zone)

 

Moderate impact on the market (EUR). The report may contain some hints on future ECB's strategy, so the market pays attention to it.

 

11:00 ** CBI Industrial Order - February (UK)

 

Moderate impact on the market (GPB). The index of industrial orders from the British Confederation of Industrialists is a leading indicator of economic health. Its growth is favorable for the currency, and in February, analysts expect positive values.

 

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

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

 

Strong impact on the market (USD). In recent years, this indicator has gained great influence, as it is one of the benchmarks for the monetary policy of the Fed. Analysts expect moderate values for the reporting week, however, the statistics may surprise us.

 

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

 

Moderate impact on the market (EUR). The indicator is still at a low level, but in February a slight increase is expected, which may have a positive impact on the single currency.

 

15:00 *** Philly Fed Manufacturing Index - February (USA)

 

Strong impact on the market (USD). The index is based on a survey of manufacturing companies in the region. Values greater than zero reflect an improvement in business conditions and the forecast for February is very positive, so that the publication could support the dollar.

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

 

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

 

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

 

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

 

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

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Vista Brokers: Fed Minutes did not Meet Market Expectations

 

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

 

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

 

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

 

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

 

However, analysts believe that the long-term trend of the US dollar growth remains relevant. Perhaps the Fed is preparing to raise rates, but not as fast as it was expected by market participants. Or the regulator will "drag its feet" longer to prepare the market and do not cause a shock, suddenly raising rates.

Experts also note that the dollar's decline after the publication of minutes was a correction caused by the closure of long positions.

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Vista Brokers: Inflation in France Fell more than Expected

 

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

 

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

 

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

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Vista Brokers: Inflation in France Fell more than Expected

 

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

 

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

 

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

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Vista Brokers: Greece Reached Turning Point

 

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

 

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

 

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

 

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

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VistaBrokers: Pound Rose Significantly in February

 

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

 

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

 

With optimism the market also took a traditional BOE Inflation Report. In it regulator has suggested that inflation in the UK will fall to zero soon, but there are no long-term deflationary risks, and the central bank intends to achieve the inflation target of 2% in two years. Amid this the British pound rose significantly against major competitors.

Despite the positive picture that loomed in February, the trend may soon turn because of political disturbance in the UK. In May, elections will be held in the country and, according to preliminary surveys, a good chance of winning has anti-European UK Independence Party (UKIP).

 

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

 

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

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Market Pulse 20.02

 

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

 

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

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

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

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

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

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

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

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

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

 

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

 

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

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

 

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

 

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

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

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

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Vista Brokers: Oil is Rising amid Greek Optimism

 

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

 

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

 

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

 

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

 

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

 

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

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Market Pulse 23.02

 

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

 

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

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

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

 

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

 

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

 

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

 

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

 

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

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Market Pulse 24.02

 

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

 

9:10 ** MPC Member Kristin Forbes Speaks - February (UK)

10:00 ** Treasury Select Committee Hearings - February (UK)

10:00 *** BOE Governor Mark Carney Speaks - February (UK)

10:00 ** BOE Deputy Governor for Monetary Policy Ben Broadbent Speaks - February (UK)

10:00 ** MPC Member David Miles Speaks - February (UK)

10:00 ** MPC Member Martin Weale Speaks - February (UK)

 

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

 

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

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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

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Vista Brokers: Ifo Indexes Disappointed Market Participants

 

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

 

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

 

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

 

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

[Vistabrokers]

Vista Brokers: Market expects Yellen's speech

 

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

 

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

 

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

 

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

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Vista Brokers: Yellen did not Meet Market Expectations

 

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

 

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

 

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

 

We note a few points that Janet Yellen has made in her speech:

- the US housing market has not yet recovered as expected, but will rise with economic recovery;

- the Fed sees risks for the economy as balanced, their confidence in the economy has grown;

- the labor market is not completely recovered, but household incomes are rising, thanks to the growth of employment;

- the Fed will raise rates when will be absolutely confident in the economic recovery, starting the process too early is risky;

- the Fed is inclined to think that they need to consider two things: the labor market and inflation.

 

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

[Vistabrokers]

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

 

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

 

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

 

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

 

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

 

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

 

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

[Vistabrokers]

Market Pulse 25.02

 

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

 

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

 

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

 

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

 

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

 

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

15:00 *** New Home Sales - February (USA)

 

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

 

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

 

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

[Vistabrokers]

Vista Brokers: Cautious Stance of Fed Disappoints Bulls

 

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On Wednesday, the dollar has gotten a support after the release of statistics on the volume of home sales in the US primary market in January. Vista Brokers analysts point out that for the first month of the new year the volume of sales has declined slightly, though showing much stronger results than the market had expected. So, in percentage terms sales decreased by 0.2% against the expected 2.3%. Values for December were also revised slightly higher.

 

However, this positive did not keep the dollar from lower against its major counterparts after the speech of Janet Yellen ahead of the House of Representatives. Fed Chairman in her comments was again cautious, noting that wage growth and inflation have to accelerate before the Fed will raise rates, and labor market recovery is not a good reason to start this process. Fed fears that a premature rate hike could lead to negative consequences for the US economy.

 

Yesterday's speech was in sync with comments that Yellen has given on Tuesday ahead of the Senate. In the second day as well as in the first one after the Fed's head speech the dollar was under pressure. Thus, yesterday USD / JPY fell by 0.1% to 118.86, and the EUR / USD rose by 0.2% to 1.1362. The dollar index fell by 0.3%, to 85.20.

 

Analysts reminds that the next Fed meeting will be held on March 17-18. Perhaps, then, bulls will get some signals that rates will still be raised in the summer. While market participants are disappointed with the too cautious stance of the controller.

[Vistabrokers]

Vista Brokers: On Thursday, Oil is Trading under Pressure Again

 

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On Thursday, oil prices are falling again after its rally on Wednesday amid the publication of data on resource production growth in the United States. Vista Brokers analysts say that Brent crude oil has decreased by 0.62% to 61.25 dollars per barrel after Wednesday gained more than 5%. April futures for WTI crude oil has fallen by 1.06% to 50.45 dollars per barrel after rising 3% in the previous trading session.

 

A pressure to oil prices was put by the weekly US Department of Energy review, which showed that commercial oil reserves in the country are at 80-year highs. For the week ending on February 20 this indicator has risen by 8.4 million barrels to 434.1 million barrels, while analysts expected an increase by only 3.98 million barrels.

 

Earlier on Wednesday, oil has gained support from several fundamental factors. Firstly, Saudi Oil Minister Ali al-Naimi said that markets had calmed down, and demand for resources had begun to gradually increase. Secondly, it was reported that manufacturing activity in China has grown much stronger than expected, and Greece approved the list of reforms with the Eurogroup. This strengthened hopes for global economic recovery, and therefore the demand for fuel. And thirdly, it was the speech of the Federal Reserve head Janet Yellen ahead of the Senate, which showed a cautious position of the controller and put pressure on the dollar.

 

However, these factors have not been able to support the growth of oil for too long - today the market has returned to the theme of high levels of oil production and a falling demand. Note that in the United States the production is large-scale, despite the fact that now in the oil sector the largest since 1980 workers' strike takes place. It is a strike of several thousand workers at 15 oil companies.

 

Analysts say that despite some increase of oil over the past few weeks, in global terms, we still have a crash by almost 50%, which is the largest decline in the oil market over the past 20 years. The main reason is that the "shale revolution" and the growth of production in the United States, together with the return of Libyan oil to the market which led to a strong increase in demand. At the same time slowing economies of the euro zone, China and Japan led to lower demand.

[Vistabrokers]

Vista Brokers: S & P Downgraded Outlook for Economic Growth in China and Japan

 

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On Thursday, it was reported that the international rating agency Standard & Poor's lowered its forecasts for 2015 - 2016 years in Japan and China. At the same time, as Vista Brokers analysts say, the forecast for India was improved.

 

Thus, Standard & Poor's experts expect that by the end of 2015 Japan's GDP will grow by only 0.7% instead of 1.3% as it had been expected in earlier forecasts. The next year it is expected to grow by 1.3% against 2.1%. As for China, the forecast for GDP growth in 2015 was lowered by S & P from 7.1% to 6.9%, and in 2016 - from 6.7% to 6.6%. The rating agency has kept the rating of Chinaat the same level "AA-" with a stable outlook.

 

With regard to India, Standard & Poor's has revised its forecasts upstairs. Thus, for the fiscal year ending in March 2016, India's economy is expected to grow by 7.9% versus 6.2% previously expected. In the next fiscal year it is projected to grow by 8.2% instead of 6.6%.

[Vistabrokers]

Market Pulse 26.02

 

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Thursday will be a day with a highly charged fundamental background. Important statistics will be published in Germany, UK, USA, Canada, the euro zone, so that the market can be extremely volatile.

 

8:55 ** Unemployment Change - February (Germany)

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

8:55 ** Unemployment Data Released by Federal Labor Agency - February (Germany)

 

Moderate impact on the market (EUR). Data for Germany are expected to be quite positive - analysts suggest that the number of unemployed people in February, will reduce by 10K and the unemployment rate will remain the same.

 

9:30 *** Second Estimate GDP - Q4 (UK)

 

Strong impact on the market (GPB). The UK GDP growth in the final quarter of the last year is expected to reach 0.5% month on month and 2.7% year on year.

 

10:15 *** ECB Announces Allotment in 4-years TLTROs - February (euro zone)

 

Strong impact on the market (EUR). The value indicates the amount of loans that the ECB has issued to commercial banks. The large volume indicates an increased demand for liquidity from the ECB and may put pressure on the euro.

 

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

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

 

Strong impact on the market (CAD). Analysts expect that the consumer price index in January in Canada has fallen by 0.3%, while the core index has risen by 0.1%. Not too optimistic forecasts for the economy and the actual data can be even worse if the Canadian dollar will be under pressure.

 

13:30 *** Consumer Price Index - January (USA)

13:30 *** Core CPI - January (USA)

13:30 *** Durable Goods Orders - January (USA)

13:30 *** Core Durable Goods Orders - January (USA)

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

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

 

Strong impact on the market (USD). Such a large portion of statistics can seriously affect the dollar. The market attention will likely be turned to the data that are reference points for the Fed: the consumer price index and unemployment claims.

[Vistabrokers]

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

 

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

 

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

 

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

 

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