MasterForex Trend analysis of currency pairs and Comments (Updated daily)

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Overview of the main economical events of the current day - 04/09/2013

The Australian Dollar Grew After the Decision on Rate

The Australian dollar grew after the decision of the Reserve Bank of Australia to keep the rate unchanged at 2.50% despite weak retail sales and current account data. RBA rate statement was less mild than expected, which lowered the expectations that the central bank would continue further interest rate decrease. The central bank took a waiting attitude after eight decreases of the rate since 2011. RBA will continue estimating the outlook and correcting the policy necessary for a stable demand and inflation growth, - said RBA governor Glenn Stevens.

Retails sales in Australia grew only by 0.1% in July while its growth by 0.4% was expected. Current Account deficit rose by 7% in the second quarter up to 9.4 billion dollars, which exceeded the forecasted growth to -8.5 billion. Besides, prior quarter data were revised for the worse.

The US dollar was traded slightly upwards on Tuesday amid a positive report on US manufacturing PMI growth to its high since June, 2011. ISM Manufacturing PMI rose up to 55.7 p. in August from 55.4 p. prior month while its decrease to 54.0 p. was expected. New orders, inventories and prices grew while production and employment dropped. Another report of the US Department of Commerce showed that construction costs growth increased by 0.6% in July for a month having exceeded the expected growth by 0.4%.

ISM Manufacturing PMI and Euro-Zone Business Climate

The euro was traded slightly downwards on Tuesday continuing the decrease of prior days. Euro-zone producer price index has shown its moderate acceleration for two months in a row. Producer price index in the euro-zone rose by 0.3% in July Vs June against the forecasted growth by 0.1%. At the same time Spanish labour market data turned out a little worse than expected – unemployment rate didn’t change last month while its drop by 5.2 thousand was expected.

The pound grew after UK construction PMI report that showed its growth to the highest readings for almost six years but then it lost all the growth. Construction PMI rose to 59.1 p. in August from 57 p. in July while no changes were expected. Construction PMI growth is another sign that UK economic recovery accelerated in the third quarter.

The yen dropped to a month low Vs the dollar amid strong US data and Japanese stock market growth which rose on Tuesday according to Nikkei 225 by 3%. However, the yen was rising shortly on Tuesday after the incident that reminded that the military operation against Syria was just delayed. Some mass media reported on Israel's ballistic missile tests in the Mediterranean. Meanwhile, both parties leaders in the US Congress supported on Tuesday a military attack on Syria. Earlier the president was supported by John Boehner, Speaker of the US House of Representatives.

 

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Overview of the main economical events of the current day - 05/09/2013

UK Services PMI Reached Almost 7-Year High

The US dollar was traded downwards on Wednesday against most major currencies (except the yen) after 5-day growth in a row according to the dollar index amid weak statistic on trade balance and manufacturing PMI in the region of New York. Most of all commodity currencies grew against the dollar. According to the US Department of Commerce US trade balance deficit grew by 13.3% in July – to $39.1 billion having exceeded the expectations. Deficit growth in July was the most significant since January 2011.

Trade Balance of the USA and Canada

The exports dropped in July by 0.6%, while the imports rose by 1.6% mainly due to the oil and automobile imports increase. ISM New York Index dropped to 60.5 in August against 67.8 prior month. IBD/TIPP Economic Optimism grew to 46 in September from 45.1 in August, which met the forecasts. FOMC Member John Williams making speech on Wednesday said that despite bond purchase tapering off, the policy would be still very mild.

The Australian dollar showed the highest growth Vs the dollar among all currencies after the GDP data for the second quarter that turned out a little better than expected. Australian GDP in the second quarter rose by 0.6% compared with the prior quarter, which exceeded the expected growth by 0.5%. At an annual rate the economy has risen by 2.6% Vs Consensus 2.5%. Consumer spending grew by 0.4% last quarter, saving rate increased to 10.8% from 10.5%. The AUD was also supported by Chinese Services PMI growth - HSBC Services PMI reached 5-month high in August and rose to 52.8 against 51.3 in July.

Quarterly GDP growth of Australia and the USA

The Canadian dollar rose amid the Bank of Canada meeting finished on Wednesday where the key interest rate was left unchanged and it was repeated that the current monetary policy was still appropriate as there were no any expected changes of demand from the exports and investment yet. GDP growth met the forecast of the Bank of Canada, inflation was still moderate and the exports and investment should grow. The CAD ignored trade balance deficit growth data of Canada in July that rose to 0.93 billion Canadian dollars against 0.46 billion prior month.

The pound reached almost 2-week high Vs the dollar after the release of Services PMI which grew to the highest readings since December, 2006. Services PMI rose to 60.5 in August from 60.2 while it was expected to fall. Service sector accounts for 75% of all the UK economy. The index has been growing for eight months in a row. August growth was mainly due to new orders increase. The data justifies the strengthening of British economic recovery rates in the third quarter.

The euro rose after the publication of revised GDP for the second quarter despite Services PMI and retail sales data that fell short of expectations. Euro-Zone Revised GDP coincided with the preliminary estimate +0.3% - but an annual rate GDP fell slightly less that the initial estimates: by 0.5% not 0.7%. Retail sales rose only by 0.1% m/m in July against the forecast of +0.4%. The Final Services PMI in the euro-zone was lowered to 50.7 against the preliminary estimate of 51 – however, the index is still at 2-year high.

 

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Overview of the main economical events of the current day - 06/09/2013

The Dollar Strengthened in Anticipation of Non-Farm Payrolls

The dollar grew on Thursday after the release of strong labour market data and Non-Manufacturing PMI – and reached almost 7-week high according to the dollar index. ADP Employment Change almost met the forecasts but Unemployment Claims turned out considerably better than expected. They dropped by 9 thousand to 323 thousand while a fall only by 2 thousand was expected.

However an average number of claims for the past 4 weeks, an indicator that smoothes short-term fluctuations and shows the trend better, dropped to the lowest level since October, 2007 – 328.5 thousand, which was several months before the start of the last recession. A month ago before the release of the last labour market report that indicator was 341.5 thousand. For a month it fell by 13 thousand. It shows that Non-Farm Payrolls that are released on Friday can be strong. It is expected that Employment Change will amount to 180 thousand against 162 thousand prior month; and unemployment rate will stay unchanged 7.4%.

Initial Jobless Claims - 4 Week Average

The US Services PMI reached historical high since the beginning of this statistics in January, 2008. ISM Non-Manufacturing PMI rose to 58.6 in August compared with 56 in July while it was expected to fall. Almost all sub-indices rose except the price. The highest growth was shown by new orders, employment and imports.

ISM Non-Manufacturing PMI

The euro fell to 7-week low Vs the dollar amid the press conference of the ECB president Draghi by the end of the central bank meeting where the policy and interest rates were kept unchanged. However, Draghi said that a possibility to lower the key interest rate was discussed and also referred to downward risks for economy. Besides, German Factory Orders decreased significantly in July more than expected – by 2.7% against the forecasted fall by 1%.

The pound was traded a little better than the euro. The Bank of England also left the key interest rate and bond purchase program unchanged and didn’t make an additional statement by the end of the meeting. The Australian dollar was traded downwards after reaching almost 3-week high against the dollar amid a weak trade balance report. Trade balance deficit reached 0.77 billion Australian dollars in July while trade balance surplus 0.10 billion was expected. Last month data were considerably lowered.

The yen weakened significantly amid 2-day meeting of the Bank of Japan finished on Thursday. The dollar closed higher 100 yens for the first time since July, 24. As it was expected, by the end of the meeting on September 4-5 the Bank of Japan didn’t introduce any changes into monetary policy having refrained from widening not so significant incentive programs. In addition, the central bank slightly improved the current assessment of Japanese economic state. In the statement by the end of the meeting the BoJ said that the economy was recovering at a moderate rate while in August only the beginning of the recovery was marked.

 

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Overview of the main economical events of the current day - 09/09/2013

The Main Events of the Week

The dollar dropped on Friday and leveled almost all weekly growth after the release of Non-Farm Payrolls that fell short of expectations. In August in the USA economy there were created only 169 thousand non-farm jobs against the forecast of 180 thousand. However, data revision downwards turned out much larger – for two past months by whole 74 thousand. The largest revision was for July – by 58 thousand: from 162 thousand to 104 thousand – it was the weakest NFP growth for more than a year.

Employment Change and Unemployment Rate in the USA

Unemployment rate continued falling in August and dropped by 0.1% to 7.3% - against 7.4% in July. However, unemployment decrease was ignored like prior month. Unemployment decrease reflects labor force reduce. Labor force participation rate fell to 63.2% last month –the lowest level since August, 1978 compared with 63.4% a month before.

The number of new jobs created every month has never exceeded 200 thousand within recent 6 months. It significantly lowers the chances to start tapering off QE3 at the Fed September meeting – or it will be the lowest (by 10 bln). FOMC member Charles Evans making speech on Friday said that the Fed would probably reduce bond purchases later this year – but the central bank wouldn’t have enough information for it by September meeting.

By the end of the week the dollar showed the smallest growth according to the dollar index – only by 0.1%. The dollar grew against the yen (+0.91%), the Swiss franc (+0.80%) and the euro (+0.35%); and dropped against New Zealand dollar (-3.59%), Australian dollar (-3.19%), Canadian dollar (-1.24%) and British pound (-0.88%). At the second week of the month there are not a lot of important statistics data that can influence the markets significantly. There will be a publication of industrial output, labour market and inflation data.

In the euro-zone there will be a release of industrial output data and ECB Monthly Bulletin on Thursday and trade balance and Employment Change – on Friday. Industrial output data will be also published in other euro-zone countries: in France – on Tuesday, in Italy – on Thursday. On Tuesday the final Italian GDP for the second quarter will be released; and on Thursday - Consumer Price Index of France and Italy.

In the UK BOE Credit Conditions Survey will be released on Tuesday and labour market data – on Wednesday. On Thursday Inflation Report Hearings will be held where the Bank of England Chairman Mark Carney and other central bank members will make speeches. In Japan the final GDP for the second quarter and Current Account data will be released on Monday, on Tuesday – the last Bank of Japan meeting minutes, on Wednesday - - BSI Manufacturing Index and on Thursday - Core Machinery Orders.

The decision of the Bank of New Zealand on the key interest rate will be announced on Thursday, no changes are expected. In Australia labour market report on Thursday may become the most important event. In Canada Building Permits will be released on Monday and New Housing Price Index – on Thursday. In China inflation data will be released on Monday, Industrial Output, Retail Sales and Fixed Asset Investment – on Tuesday.

In the USA Wholesale Inventories and Trade Sales data will be released on Wednesday, on Thursday - Import Prices and Federal Budget Balance, on Friday – Retail Sales, Producer Price Index and Prelim U. of Michigan Consumer Sentiment. From Tuesday to Thursday the US Department of Treasury will sell long-term bonds. Voting on Syria in the Senate, the upper house of the US Parliament will be held on Wednesday. In the lower house of Parliament the voting can be delayed at least for a week. President Obama is going to make an announcement to the nation about the situation in Syria on Tuesday, September 10.

 

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Overview of the main economical events of the current day - 10/09/2013

Most Experts Are Sure QE3 Reduce to Be Started at the Nearest FOMC Meeting

The US dollar was traded downwards on Monday against most major currencies (except the yen) amid no any significant macrostatistics and continuing to recover Friday weak labour market data that lower the possibility of asset purchase reduce start at the nearest FOMC meeting.

Meanwhile, PIMCO's Bill Gross is sure of the Fed to start tapering off QE despite disappointing labour market report. Most experts polled by Bloomberg last week also expect a reduction of monthly asset purchase of $10 billion at the FOMC meeting on September 17-18.

The pound reached 12-week high against the dollar and the euro –the highest reading of September on the back of also almost empty calendar. George Osborne, Chancellor of the Exchequer announced that British economy had passed a crucial point, which allowed the government to continue implementing economy measures. Sentix Investor Confidence reached more than 2-year high of +6.5 and exceeded zero point that separated optimism from pessimism – for the first time since July, 2011.

Sentix Investor Confidence

The Bank of France raised on Monday its estimate of French economic growth in the third quarter to 0.2% q/q against 0.1% before. Bank of France Business Sentiment reached almost 2-week high in August at 97 against 95 in July.

Japanese yen weakened on Monday amid the news on Saturday of Tokyo hosting summer Olympic Games 2020, which may have a beneficial effect on Japanese economic growth. Hosting Olympic Games can favour construction and influx of tourists to the country and also facilitate implementing Shinzo Abe’s plans. Chinese and Japanese data also had a positive effect. Japanese stock index Nikkei 225 which is recently closely correlated with USDJPY grew by 2.5% and reached monthly high.

Japanese final GDP growth data for the second quarter were raised from 0.6% to 0.9% at a quarterly rate and from 2.6% to 3.8% at an annual rate. As a result the Japanese economy showed the highest half year growth for almost three years, which proves that Prime Minister Shinzo Abe’s policy, which is aimed to economic growth stimulation, is right.

The Australian dollar reached 6-week high Vs the dollar after Chinese trade balance data released on Sunday had showed trade balance surplus by 60% in August to $28.5 bln compared with $17.8 bln this July. The exports increased by 7.2% in August in comparison with the same period last year, which turned out better than Consensus 5.5%. The imports rose by 7% at an annual rate. The data indicate a stable high PMI in Chinese economy. Besides, Home Loans growth data in Australia in July turned out better than expected.

The Canadian dollar continued Friday’s growth and rose to 3-week high on Monday Vs the dollar amid positive housing market data which followed a strong employment report on Friday. Building Permits in July grew by 20.7% m/m up to record 7.99 bln Canadian dollars, which exceeded the expectations almost 5 times. Growth rates turned out the highest for more than two years.

Building Permits in Canada

 

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Overview of the main economical events of the current day - 11/09/2013

Chinese Industrial Output Exceeded Expectations

The US dollar was traded differently on Tuesday; it fell against commodity currencies and the pound and grew against the yen and Swiss franc and almost didn’t change according to dollar index. Some pressure was put by job openings data from the Bureau of Labour Statistics that dropped by 180 thousand in July to 3.69 million against 3.87 million prior month. The reading has been falling for two months in a row. NFIB Small Business Index also dropped to 94 in August against 94.1 in July although its growth was expected.

Defensive currencies such as the yen and Swiss franc and also gold fell on Tuesday after the USA president Obama had agreed to consider Russian plan on Syria’s transfer its chemical weapon under international control, which may significantly reduce the possibility of attack on Syria at the nearest time. Obama said that he asked the Congress to delay voting on military attack in Syria.

The yen fell to more than 7-week low against the dollar, which was favored by the published BoJ meeting minutes of August that showed central bank’s firm intention to continue monetary policy easing.

Chinese positive data released on Tuesday that exceeded the expectations and indicated Chinese economic outlook improvement, supported commodity currencies growth. PRC industrial output growth rates accelerated in August up to 10.4% at an annual rate from 9.7% in July having exceeded forecasted growth by 9.9%. Retail sales grew by 13.4% y/y against expected growth by 13.3%. Fixed Asset Investment ytd/y grew by 20.3% y/y in August (Consensus 20.2%).

Australian dollar rose on Tuesday to its high for more than two months amid Business Confidence growth to the highest level since May, 2011. Australian NAB Business Confidence rose to +6 in August against -3 in July having exceeded zero point, which separated business conditions improvement from its worsening, for the first time in 4 months. Canadian dollar reached 3-week high on Tuesday despite Housing Starts decrease in August by 6.6%.

The pound updated its height of September amid positive housing market statistics. RICS House Price Balance rose to the highest reading in August since November, 2006 and reached 40% compared with 36% in July. The euro was traded a little worse. The pressure was put by French industrial output decrease which has been falling for three months in a row – it dropped by 0.6% in July while its growth by 0.5% was expected. Italian Final GDP for the second quarter also turned out worse than expected. GDP decreased by 0.3% against preliminary decrease estimate by 0.2%.

 

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Overview of the main economical events of the current day - 12/09/2013

GBPUSD Reached 7-Month High

The pound reached 7-month high on Wednesday against the dollar after the release of strong labour market data that exceeded expectations. The pound has grown to the highest level since this January against European currency. In August both Claimant Count Rate and the number of those who get unemployment payment decreased. The data signal that British economic recovery is going on gathering pace.

According to the National Bureau of Statistics Claimant Count Change dropped by 32.6 thousand in August having exceeded the expectations of decrease by 21 thousand. The prior month reading was also revised for the better. Claimant Count Change has been falling for 10 months in a row. Claimant Count Rate decreased by 0.1% to 4.2% in August –the lowest level since February, 2009. ILO Unemployment Rate fell to 7.7% in July in comparison with 7.8% prior month.

Unemployment Rate became a key indicator for further monetary policy line in the UK last month when the Bank of England announced that it would start considering the possibility of interest rate increase in case of unemployment decrease to 7%. Meanwhile, MPC Member David Miles said on Wednesday that he doubted that British unemployment rate would fall quickly despite the signs of economic strengthening.

The dollar has continued falling on Wednesday for four days in a row after the release of a weak labour market report past Friday and in anticipation of FOMC meeting which will take place next week, September 17-18. Mortgage Bankers Association /MBA/ said that MBA Mortgage Applications had fallen by 14% for the recent week compared with the prior week amid rates increase. Wholesale Inventories rose by 0.1% in July compared with the prior month, which turned out lower than expected growth by 0.3%. Wholesale Trade Sales grew by 0.1% m/m against the forecasted growth by 0.4%.

Swiss franc maintained on Wednesday amid UBS outlook increase on Switzerland GDP growth in 2013 to 1.8% from 0.9% and in 2014 to 2% from 1.3% after positive economic readings in the second quarter. The euro has risen higher 1.33 against the dollar for the first time since late August amid weakening concerns about Syria – after US president Barack Obama announced that he was open for diplomatic solution on Syria, which brought relief to the markets of risky assets and increased the pressure on the dollar.

Australian dollar was traded upwards amid Australian consumer sentiment growth to the highest level for almost three years. Westpac Consumer Sentiment rose by 4.7% in September in Australia to 110.6 p. against 105.7 p. in August. Canadian dollar also reached the highest level on Wednesday from the middle of August.

New Zealand dollar rocketed after Reserve Bank of New Zealand meeting where the key interest rate was kept unchanged. However, RBNZ Rate Statement was rather tough – it said that rates increase would probably be necessary next year because of house price inflation. The terms of rates increase will depend on housing and construction sectors dynamics. Interest rate outlook is about 0.50% higher than in June’s outlook.

 

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Overview of the main economical events of the current day - 13/09/2013

Euro-Zone Industrial Output Slumped

The US dollar grew on Thursday against the euro and the pound, fell against the yen and almost didn’t change according to the dollar index amid weak euro-zone and Australian data and unemployment claims decrease to the low of 2006. Unemployment claims fell to 292 thousand last week while a growth to 330 thousand was forecasted. However, too optimistic data could turn out distorted. According to the Department of Labor unemployment claims decrease could be caused by the fact that two states didn’t report about all the claims because of computer programs updating.

The euro was traded slightly downwards amid industrial output decrease in the euro-zone and Italy. Industrial output in the euro-zone slumped in July discrediting the steadiness of the region’s economic recovery. According to the Eurostat euro-zone industrial output dropped by 1.5% in July in comparison with June against the expected decrease only by 0.3% having shown the largest drop since last September. At an annual rate industrial output fell by 2.1% having considerably exceeded the forecasted drop by 0.2%.

Italian industrial output fell by 1.1% in July for a month against the forecasted growth by 0.3%. According to the National Institute of Statistics (Istat) the decrease was recorded in all major sectors except fuel. At an annual rate the reading fell by 4.3% - it is the 23 decrease in a row. ECB chairman Mario Draghi said at the press conference in Riga that he estimated euro-zone economic recovery dynamics with no enthusiasm. The recovery was still very, very green, he said. Meanwhile, the European Parliament approved a bill on Thursday according to which the ECB would become the main regulatory body over most European banks.

The pound also fell a little from 7-month high Vs the dollar amid the Bank of England governor Mark Carney’s speech before the Parliament's Treasury Committee. Communication policy started by the Bank of England favors UK economic recovery, said Carney, but the Bank of England was not satisfied with its growth rates. The central bank is still loyal to its promise not to raise the key interest rate until unemployment rate falls below 7% if inflation remains moderate. According to Carney, BoE guarantees about keeping interest rate increased monetary policy efficiency.

The Australian dollar touched almost 3–month high on Wednesday but then dropped after 4 days of growth. According to Australian Bureau of Statistics Employment Change decreased by 10.8 thousand in August against expected growth by 10 thousand. Unemployment Rate rose by 0.1% to 5.8% from 5.7% in July. Participation Rate in August fell more than expected to 65%. Besides, according to Melbourne Institute Consumer Inflation Expectation in Australia fell to 1.5% in September against 2.3% in August.

New Zealand dollar was traded upwards on Thursday after a tough statement of the Reserve Bank of New Zealand by the end of the central bank meeting which put rate increase on the agenda. The bank said that rate increase was possible in near future when the economy improves. New Zealand may become one of the first developed countries which will start rates increase since 2014.

 

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Overview of the main economical events of the current day - 16/09/2013

The Main Events of the Week

The US dollar fell on Friday against the pound and the yen and almost didn’t change Vs the euro amid the release of weak Consumer Confidence and Retail Sales data in the USA. Preliminary U. of Michigan Consumer Sentiment dropped to 5-month low of 76.8 p. in September from 82.1 p. prior month. The decrease was probably caused by interest rates growth, which restrains housing market growth and economic growth in the whole; and by concerns about Syria.

Preliminary U. of Michigan Consumer Sentiment

Retails sales in August grew by 0.2% against expected growth by 0.5% - it is the lowest growth rate for four months. Core Retail Sales rose only by 0.1% while a growth by 0.3% was expected. At the same time, July data were revised upwards. Sales growth restrains tax increase, limited growth of jobs and slow increase of personal income – all this lowers consumer confidence.

By the end of the week the dollar fell by 0.81% according to the dollar index having been put under pressure after a weak labour market report. It fell Vs all major currencies except the yen (+0.13%). The dollar showed the lowest decrease against New Zealand dollar (-1.73%) and British pound (-1.58%). It fell a little less against the euro (-0.96%), Swiss franc (-0.90%), Australian dollar (-0.72%) and Canadian dollar (-0.57%).

The main event of this week and probably of the whole month may become FOMC meeting on September, 17-18 where a decision about the start of tapering off asset purchase program is expected to be taken. On Wednesday the meeting results will be announced and a quarterly press conference of FED governor Ben Bernanke will take place; also FOMC Economic Projections for inflation and economic growth will be released.

Two thirds of Bloomberg respondents wait for Fed decision concerning asset purchase reduction at September meeting; according to forecasts the reduction will be moderate – by $10 billion (to $75 bln a month). According to the opinion poll of The Wall Street Journal, most economists expect the Fed to announce bond purchase reducing by $15 billion a month. As Credit Suisse experts believe the Fed would announce purchase reducing by $20 billion.

In the euro-zone the final inflation data will be released on Monday, on Tuesday – Trade Balance and Current Account, on Friday - Flash Consumer Confidence. German ZEW Economic Sentiment will be released on Tuesday and German Business Optimism Index is expected to rise. In the UK Consumer and Producer Price Index will be released on Tuesday, on Wednesday – Bank of England Meeting Minutes and on Thursday – Retail Sales and CBI Industrial Order Expectations.

The decision of the Swiss National Bank on the key interest rate will be announced on Thursday. Japanese trade balance will be published on Thursday. In Australia the Reserve Bank of Australia Meeting Minutes and New Motor Vehicle Sales will be released on Tuesday, on Wednesday - Conference Board and Westpac Leading Index. In New Zealand quarterly data will be released: on Wednesday – Current Account and on Thursday – GDP for the second quarter.

In Canada Manufacturing Sales will be published on Tuesday, on Thursday - Wholesale Sales and on Friday – Inflation. There will be quite a lot of data in the USA: on Monday - Empire State Manufacturing Index and industrial output, on Tuesday – Consumer Price Index, Capital Influx and NAHB Housing Market Index; on Wednesday - Building Permits and Housing Starts; on Thursday - Existing Home Sales, Philadelphia Fed Manufacturing Index and Current Account.

 

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Overview of the main economical events of the current day - 17/09/2013

Larry Summers Won’t Be a New Fed Chairman

The US dollar dropped on Monday after former US Finance Minister Larry Summers had withdrawn for Fed chair but then the dollar partially recovered its lost positions. Past Sunday Larry Summers, nominated by Obama a potential Ben Bernanke’s successor as the Fed chairman, withdrew his name justifying his decision with possible difficulties inside the Fed in case of his election, which may have a bad impact on the whole bank and the whole American economy.

Larry Summers was considered a “hawk”, a supporter of tougher monetary policy and in case of his election the probability of total tapering off of stimulus programs in the shortest period of time was growing. This decision increases the chances of Fed vice chairman Janet Yellen, who supports a milder monetary policy, to become a more possible candidate for the Fed chair – although Obama may put forward other candidates for the chair. Other top candidates are former Fed Vice Chairman Donald Kohn and former Treasury Secretary Tim Geithner.

Morgan Stanley experts believe that Summers’ withdrawal from the race for the Fed chair adds pressure on the dollar in anticipation of FOMC meeting. Commerzbank also believes that Yellen as Fed governor may favour dollar’s weakening in long-term perspective. Summers’ withdrawal may lower the concerns about the start of QE tapering off.

Other US data released on Monday had little influence on trading. Empire State Manufacturing Index dropped to 6.29 p. in September from 8.24 p. in August while a growth up to 9.1 p. was forecasted. The decrease was due to employment situation worsening. The US industrial output grew by 0.4% in August, which turned out a little less than expected growth by 0.5% and Capacity Utilization rate slightly increased to 77.8% as it was expected.

ECB president Mario Draghi making speech on Monday said about the progress in the efforts of euro-zone stabilization. Meanwhile, Eurostat data showed that euro-zone Labor Costs decreased to almost 3-year low in the second quarter and were behind inflation rates. It puts pressure on the finance of households and has a negative impact on the region’s stable economic recovery outlook. According to the Istat data, Italian trade balance rose by 64.6% in July to 5.95 billion euro against 3.62 billion in June.

New Zealand dollar reached 4-month high on Monday against the US dollar. Housing market data still support it. REINZ Housing Price Index rose by 2.1% in August compared with the prior month. REINZ House Sales rose by 8.5% in August Vs the same period last year. Risk appetite growth was supported by the agreement on chemical weapon in Syria between Russia and the USA past weekend.

 

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Overview of the main economical events of the current day - 18/09/2013

Euro-Zone Economic Sentiment Reached 4-Year High

The US dollar was traded slightly downwards on Tuesday against most major currencies in anticipation of the US Federal Open Market Committee (FOMC) decision by the end of 2-day meeting on Wednesday – amid weak US inflation statistics and strong economic sentiment growth statistics data in the euro-zone. The attention of market participants on Wednesday will be drawn by the results of the FOMC meeting where the Fed is expected to take a decision concerning QE reduction.

According to the Bloomberg poll most experts expect the Fed to reduce asset purchase by $10 billion – to $75 billion a month. In July the expectations were overestimated - $20 billion. The Fed is supposed to finish these programs totally in June, 2014. The officials of the Federal Reserve at the September meeting will have to consider three negative factors at once which may weaken the US economy in the nearest months: real interest rates growth in the country, complicated political situation abroad and a new episode of never-ending budget war in Washington.

Meanwhile, Congressional Budget Office (CBO) warned on Tuesday about a continuing growth of the US public debt and the risks connected with it. According to the CBO estimates, the US public debt today is 73% of GDP – it is the highest level in the country’s history except the Second World War period. Present level of the public debt is twice higher than at the end of 2007, according to the CBO report.

The USA consumer price growth in August slowed down to 3-month low. Consumer Price Index (CPI) rose by 0.1% m/m in August while a growth by 0.2% was forecasted. Annual rate inflation slowed down (growth by 1.5% Vs forecasted growth by 1.6%). Consumer Price Index Ex Food & Energy also grew by 0.1% m/m against the forecasted growth by 0.2%.

The pound was traded significantly worse that the euro also due to weak inflation report. Consumer Price Index rose by 0.4% in August against the expected growth by 0.5%. Inflation dropped to 2.7% in August at an annual rate in comparison with 2.8% in July. Core CPI remained unchanged in August – at +2% y/y having fallen short of expectations for a moderate growth to 2.1% y/y. Producer Price Index also turned out worse than forecasted.

Annual inflation growth rate in the USA and the UK

The euro was traded upwards. German ZEW Economic Sentiment for the nearest six months rose in September to its high of 49.6 p. since April, 2010 – from 42 p. in August having exceeded the reading of 45 p. considerably.

Euro-Zone ZEW Economic Sentiment rocketed to 58.6 p. from 44 p., the highest reading in 4 years. German ZEW Current Situation rose to 30.6 p. from 18.3 p. in September – the highest reading for 15 months.

The Australian dollar rose on Tuesday after the publication of Australian Reserve Bank Meeting Minutes. The Bank didn’t exclude the possibility of further key interest rate decrease but it doesn’t plan doing it at the nearest time and waits for further clearing of economic situation. Lower lending rates and the AUD rate stimulate economic growth. But other indicators are less positive and the bank prefers waiting for additional evidence of economic growth before taking decisions concerning its further actions. The Canadian dollar was traded upwards amid Manufacturing Sales growth by 1.7% in July that exceeded expected growth by 0.5%.

 

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Overview of the main economical events of the current day - 19/09/2013

No Decision on QE Reduction Is Taken, the Dollar Slumped

The US dollar slumped just after the announcement of the FOMC 2-day meeting results, where it was decided not to reduce bond purchase program. A slight reduction of asset purchase by $5-$10 billion a month was widely expected and the Fed decision was sudden. The dollar fell to more than 7-month low according to the dollar index and showed the lowest drop since July, 10.

The Fed kept interest rate at 0.0%-0.25%. Nine of ten members of the meeting voted for keeping monetary policy unchanged. The head of the Federal Reserve Bank of Kansas Esther George opposed again – for the sixth time this year. She fears that keeping high level of stimulation increases the risks of economic and financial imbalance in future and also may have a negative effect on inflation in long-term perspective.

The economy is not strong enough to stop supporting it by quantitative easing, says the Fed. The decision on QE tapering off is put off for the next FOMC meetings this year. It is necessary to wait for new evidences of economic progress stability before correcting asset purchase rate. The Fed kept unemployment and inflation thresholds unchanged and again confirmed that it would increase or decrease bond purchases according to the economic outlook.

In economic outlooks published by the end of the meeting FOMC members revised downwards their forecasts on economic growth for this and 2014 years. Unemployment and inflation forecasts almost didn’t change. Most Fed officials expect the first interest rate increase in 2015 or later. Three of them believe that it is possible already in 2014.

Making speech at a press conference the Fed governor Ben Bernanke tried to explain taken decisions by poor labour market conditions, tightening financial conditions and fiscal problems. Bernanke said that unemployment rate was not an accurate indicator of labour market state as because of labour force reduction unemployment decrease was not totally due to new jobs creation. There is no any fixed calendar for asset purchase reduction and it can start later this year.

US housing market statistics data released on Wednesday again proved not quite stable economic state which was the reason of the FOMC meeting decisions. Building permits dropped by 3.8% in August at an annual rate to 918 thousand against 954 thousand in July. Housing starts in August also turned out worse than expected – they rose only by 0.9% (to 891 thousand) Vs the forecasted growth by 2.3% to 917 thousand. Mortgage rate increase has a negative impact on housing market recovery within recent six months.

Building Permits and Housing Starts in the USA

The euro and the pound reached its high on Wednesday against the dollar for 7 and 8 months respectively; and Australian dollar – 3-month high. MPC Meeting Minutes supported the pound and gave an optimistic estimate to British economy. The third quarter GDP growth outlook was raised. Further stimulating may be required only in case of economic recovery slow down. According to the meeting minutes Monetary Policy Committee members didn’t think that market interest rate increase failed to meet fundamental economic indicators.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 20/09/2013

UK Retail Sales Fell Unexpectedly

US dollar trade was mixed on Thursday and it made attempts of correction after prior day significant weakening and amid good US statistics. The dollar grew against the yen, the pound and Australian and Canadian dollars and slightly weakened against the yen, franc and New Zealand dollar. The Fed didn’t reduce asset purchase program, which led to a sharp decrease of the dollar across the whole market.

US Existing Home Sales rose by1.7% m/m in August to 5.48 million at an annual rate – the highest level since May, 2010 – while a drop to 5.25 million was expected. Potential buyers hurried to close deals before mortgage rates rose even higher. Philadelphia Fed Manufacturing Index rose from 9.3 p. in August to 22.3 p. in September, the highest level since March, 2011. A growth only up to 10 p. was expected. The index is above zero which has been showing conditions improvement for 4 months in a row.

Conference Board Leading Index rose by 0.7% m/m in August having exceeded the expectations of growth by 0.6% - which may signal of increasing economic activity rate in the nearest time. The US Current Account Deficit dropped by 5.7% in the second quarter to $98.9 billion having reached the lowest level for almost four years, which was favoured by exports increase and a larger income account surplus.

Initial Claims rose considerably less than expected last week to 309 thousand – while a growth to 330 thousand was forecasted. 4-Week Moving Average of Initial Claims continues falling having dropped by 7 thousand by the end of the last week to 314.75 thousand – the lowest level since October, 2007. Meanwhile, the data released a week ago still were not revised in a proper way due to programming problems.

Initial Claims and 4-Week Moving Average of Initial Claims

The pound fell after a weak retail sales report which dropped unexpectedly by 0.9% m/m in August after three months of growth. The indicator was expected to grow by 0.4%. At an annual rate retail sales growth slowed down to 2.1% from 3% prior month against the expected growth by 3.3%. Meanwhile, CBI Industrial Order Expectations rose significantly in September having reached the level of 9 – such reading was only in August, 2007 before the crisis. The reading exceeded zero level for the first time in 2.5 years, which can indicate that the economy continues recovering.

Swiss franc grew amid Swiss National Bank meeting where the monetary policy and also EURCHF floor limit were kept unchanged. The central bank raised the GDP growth outlook for the current and 2014 years. The government of Switzerland also raised GDP growth outlook and lowered unemployment outlook in 2013-2014 years. The yen weakened on Thursday amid Japanese stock index Nikkei growth to almost 2-month heights and also weak Japanese trade balance data.

Annual GDP growth of New Zealand and the USA

New Zealand dollar was supported by GDP data which turned out better than expected. The country’s economy grew by 0.2% in the second quarter in comparison with the prior quarter despite agricultural production decrease, which met the expectations. At an annual rate the GDP rose by 2.5% Vs expected growth by 2.3%. Besides, first quarter data were revised upwards.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 23/09/2013

The Main Events of the Week

The US dollar slightly grew Vs Canadian and Australian dollars on Friday and almost didn’t change Vs other major currencies amid no any significant US statistics. Canadian dollar was traded downwards amid the release of inflation report which showed inflation permanence in August – while it was expected to grow by 0.1% Vs the prior month.

Dollar slightly stabilized on Friday and made attempts of growth after FOMC member Bullard’s statement that a small reduction of bond purchases was possible already at the next FOMC meeting at the end of October. He said that the Fed was close to start tapering off QE in September but there was no reason for bond purchase reduction as macroeconomic data were not so good. The decisions on monetary policy always depend on the data and are not carried out according to a predetermined course.

By the end of the week the dollar considerably dropped to all major currencies (except the yen) having shown the second weekly decrease in a row after an unexpected decision of the Fed which declared on Wednesday that it wouldn’t start bond purchase reduction referring to slow economic growth. The dollar fell according to the dollar index by 1.10% having shown the lowest weekly decrease since early July. The result of the FOMC meeting will keep the dollar under pressure till the end of the year, according to the UBS.

According to the Barclays, Deutsche Bank and Goldman Sachs QE tapering off will be announced only in December when the Fed updates its economic outlooks and makes a press conference. The Bank of America considers that it won’t happen this year. BNP Paribas is also sure that the start of asset purchase tapering off will be only in January or March, 2014.

According to PIMCO, we won’t see QE reduction this year and it advises investors to buy euro at any downturn after the elections in Germany. According to Barclays, asset purchase program will be totally tapered off only by the end of June, 2014 and according to Goldman Sachs, it will happen only by September – both outlooks are moved three months back than the previous expectations of the banks.

In the euro-zone Flash Manufacturing PMI & Flash Services PMI of France, Germany and the whole euro-zone will be released on Monday; on Friday – Confidence Indexes from the European commission. ECB president Mario Draghi will make a speech on Monday in the European Parliament about economy and on Friday – in Italy. In Germany IFO Business Climate will be released on Tuesday, on Wednesday - GfK Consumer Climate and on Friday – preliminary inflation data. Confidence and Sentiment indexes are expected to grow, which will again indicate euro-zone economic recovery after coming out of the recession in the second quarter.

In Great Britain BBA Mortgage Approvals will be published on Tuesday; on Wednesday – CBI Realized Sales; on Thursday – Current Account for the second quarter and Final GDP for the second quarter; and on Friday - GfK Consumer Confidence and Index of Services. In Japan Consumer Price Index will be released on Friday.

In New Zealand Trade Balance will be published on Wednesday and on Friday - ANZ Business Confidence. Retail Sales in Canada will be released on Tuesday. In RBA Financial Stability Review will be published on Wednesday.

In the USA Chicago Fed National Activity Index and Flash Markit Manufacturing PMI will be released on Monday; on Tuesday - S&P/Case-Shiller Home Price Index and CB Consumer Confidence; on Wednesday - Durable Goods Orders and New Home Sales; on Thursday – Final GDP for the second quarter and Pending Home Sales; and on Friday - Personal Income and Spending and Revised U. of Michigan Consumer Sentiment.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 24/09/2013

ECB President Mario Draghi Is Ready to Deploy Another Round of LTRO

The US dollar was traded slightly downwards on Monday to most major currencies amid no important US macrostatistics, stock markets decrease and euro-zone ambiguous statistics. The yen grew on the back of stock markets decrease and the euro was negatively affected by euro-zone manufacturing PMI decrease and also ECB President Mario Draghi’s speech. The Australian dollar looked better, which was favored by Chinese Manufacturing PMI growth.

US Flash Markit Manufacturing PMI dropped to 52.8 p. in September from 53.1 p. in August against the expected growth to 54 p. The decrease happened mainly due to the reduction of new orders and worsening of employment situation. The dollar couldn’t support Chicago Federal National Activity Index which exceeded the expectations in August and grew to +0.14 compared with -0.43 in July after having been at the negative territory for five months. Three month average of the index rose to -0.18 from -0.24.

Fed member William Dudley said on Monday that the economy was not yet so strong that the Fed could start reducing stimulation. Another Fed member Dennis Lockhart making speech on Monday also said that it would be difficult for the Fed to find a reason for tapering off QE at the nearest meeting on October as published economic data are ambiguous. Recently the dollar has been pressed by the political debate over government spending, which may have a negative effect on the US economic growth. Past Friday US president Barack Obama announced that if the Congress didn’t vote for raising the upper threshold of the public debt, another financial crisis may come into the country.

The euro was traded downwards despite the initial reaction to the landslide victory at the parliamentary elections in Germany on Sunday of the ruling party headed by Merkel who actually may have problems with forming a ruling coalition. Flash Manufacturing PMI of France, Germany and the whole euro-zone dropped in September although it was expected to rise. Euro-zone Manufacturing PMI dropped for the first time after 5-month growth – to 51.1 p. in September from 51.4 p. in August.

Meanwhile, the same Service indexes rose and turned out better than expected. Euro-zone Composite PMI grew to 52.1 p. – the highest reading since July, 2011 in comparison with 51.5 p. prior month. Some pressure on the dollar was put by the ECB President Mario Draghi’s speech in European Parliament where he said that the central bank was ready to use any instrument including LTRO if needed. Another round of the unlimited loans can weaken the euro.

Australian dollar was traded upwards after the release of HSBC Flash Manufacturing PMI which grew to 6-month high 51.2 p. in September against the August reading of 50.1 p. having exceeded the expectations and continued the growth for the second month in a row. China is the largest trade partner of Australia. Chinese economy will accelerate growth rates till the end of 2013, according to the world largest investment company BlackRock. Earlier the Bank of America, UBS and ING raised Chinese economic growth estimate for 2013 after Chinese industrial output statistics data in August showed the most significant growth for past 17 months.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 25/09/2013

German Business Climate Growth Slowed Down

The US dollar was traded slightly upwards on Tuesday to most major currencies amid German Business Climate growth that fell out of expectations and amid the decrease of US Consumer Confidence from more than 5-year high.

S&P/Case-Shiller Home Price Index for 20 US megalopolises almost met the expectations and grew by 12.4% in July at an annual rate. FHFA House Price Index turned out a little better and rose by 1% in July; and it was forecasted to grow by 0.8%.

CB Consumer Confidence in the USA dropped from the highest reading since early 2008 of 81.8 p. in August to 79.7 p. in September against the expected decrease to 79.9 p. Current Assessment has risen slightly but the Expectations have considerably fallen in comparison with the prior month. Richmond Manufacturing Index also fell in September to 0 compared with +14 in August while it was forecasted to fall a little.

FOMC member William Dudley said on Tuesday that the Federal Reserve could start QE tapering off till the end of the year but it would depend on the economic situation. Meanwhile, according to the Goldman Sachs Janet Yellen may be named a new Fed chair next week.

The euro was traded downwards after the release of IFO report which showed that German IFO Business Climate rose to 107.7 p. in September from 107.6 p. in August while a growth to 108.4 p. was forecasted. IFO Expectations grew a little better than forecasted while IFO Current Assessment considerably dropped despite the expected growth. ECB Governing Council member Ewald Nowotny confirmed on Tuesday Draghi’s words that LTRO was discussed in the Executive Board and it is important that the ECB showed all its instruments.

The pound was traded downwards amid BBA Mortgage Approvals release that increased in August less than forecasted – to 38.2 thousand against the expected growth to 38.6 thousand. At the same time it is the highest reading for almost three years – from December, 2009.

The Bank of England representative David Miles making speech on Tuesday said that recent positive signals in the British economy don’t indicate a possible early key interest rate increase. Besides, investors are too optimistic about the fact how quickly unemployment rate would fall.

Canadian dollar had almost no reaction to retail sales data and by the end of the day it slightly fell. Retail sales rose in July by 0.6% in comparison with the prior month, which met the expectations. Core Retail Sales rose by 1% having exceeded the expectations (+0.6%) but prior month data were revised downwards.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 26/09/2013

The USA will Reach National Debt Upper Limit Before October, 17

The US dollar dropped on Wednesday Vs most major currencies after four days of correctional growth amid the concerns of raising US national debt ceiling. The euro and the pound rose after the publication of positive statistics on German Consumer Confidence growth and UK Retail Sales. New Zealand and Australian dollar looked worse amid New Zealand trade balance deficit growth to many years’ heights.

As U.S. Secretary of the Treasury Jacob Lew said in the letter to the Speaker of the House of Representatives John Boehner - by October, 17 the U.S. Department of the Treasury would have exhausted the possibilities which allowed the country to avoid debt growth higher than the prohibited level. It was the first time when a deadline was marked by which the politicians will have to come to agreement about raising debt upper limit from the current reading $16.7 trillion.

US statistics released on Wednesday generally met the forecasts and didn’t have any significant impact on trading. Durable Goods Orders showed a weak growth in August as demand for aircraft and military equipment has declined. The orders grew in August by 0.1% while no changes were expected but prior month indicator was revised for the worse. Durable Goods Orders Ex Transportation fell by 0.1% against the forecasted growth by 1%. US New Home Sales rose by 7.9% in August to 421 thousand homes while a growth to 420 thousand was forecasted.

The euro rose after the publication of German Consumer Sentiment. GfK German Consumer Climate rose to 7.1 p. in October having exceeded the forecast of 7.0 p. September index was also revised upwards by 0.1 p. to 0.7 p. The reading in October became the highest one since September, 2007. Italian Consumer Confidence Index grew to 101.1 p. in September – the highest level since June, 2011 against 98.4 p. in August. At the same time Business Confidence Indicator of France dropped in September after four months of growth to 97 p. from 98 p. prior month.

The pound reached 4-day high against the dollar after the release of CBI Realized Sales. CBI Realized Sales reached +34 in September, the highest reading since June, 2012 against +27 in August while it was expected to fall. Consumer Confidence continues to strengthen in the country. The Bank of England announced on Wednesday that housing market recovery was gathering pace and its Financial Policy Committee was ready to act in case of risks for stability.

New Zealand fell to the lowest level for a week against the US dollar after the release of a weak trade balance report although then partially recovered its losses. New Zealand trade balance deficit was 1.19 billion New Zealand dollars in August having considerably exceeded the deficit expectations of 0.70 billion. The data turned out the worst for the past 5 years. The exports dropped by 13.5% in comparison with the prior month and reached the lowest level within the year.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 27/09/2013

UK GDP Growth in the Second Quarter Disappointed Investors

The US dollar was traded upwards to most major currencies amid American labour market strong data, annual rates decrease of the UK economic growth, weak euro-zone data and political instability in Italy.

US Unemployment Claims are still near 6-year low – and decreased by 5 thousand last week to 305 thousand while a growth to 325 thousand was forecasted. Initial Jobless Claims - 4 Week Average continues falling and dropped by 7 thousand more last week to 308 thousand. These data are especially important before Non-Farm Payrolls which will be released next week.

US Unemployment Claims

The Final Estimate of the US GDP growth for the second quarter was kept unchanged at 2.5% at an annual rate – which turned out slightly less than forecasted 2.6%-2.7%. Consumer spending growth was also unchanged – 1.8% Vs the forecast up to 1.9%. The exports and private investment were revised for the worse. However, American economic growth accelerated in the second quarter in comparison with 1.8%-growth by the end of the first quarter.

The dollar partially lost its positions after the release of housing market data. According to the National Association of Realtors (NAR) - Pending Home Sales Index, a leading index of real estate market, fell by 1.6% m/m in August to 107.7, which turned out a little more than expected decrease by 1%. Pending Home Sales have been falling for three months in a row.

The pound dropped after the release of UK Final GDP for the second quarter which turned out weaker than preliminary estimates. Country’s GDP growth estimate in the second quarter was kept unchanged at 0.7% in comparison with the prior quarter. But at an annual rate the reading was lowered to 1.3% from earlier announced level 1.5%, no changes were expected then. Revised Business Investment fell by 2.7% q/q Vs preliminary estimated growth by 0.9%. Current Account deficit for the second quarter also turned out worse than forecasted.

The euro was traded downwards amid euro-zone record loan decrease rates which have been falling for 16 months in a row. Private Loans dropped by 2% in August in the euro-zone in comparison with the same period last year. It is the lowest decrease in Private Loans from the moment of euro zone creation in 1999. During this year there were record loan decrease rates. According to new data the process is accelerating. Retail Sales fell by 0.3% in Italy while a drop only by 0.1% was expected.

The yen fell on Thursday after four days of strengthening on the back of Japanese stock market growth which maintained on speculation in corporation tax decrease and pension reform in Japan. Corporation tax decrease must smooth a negative economic effect from sales tax increase. Government Pension Funds can raise risky assets in their portfolios. Prime Minister of Japan is expected to announce an economic stimulus package on October 1 along with the decision on sales tax increase.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 30/09/2013

The Main Events of the Week

The US dollar was traded downwards on Friday against most major currencies (except commodity ones) amid US Consumer confidence decrease and uncertainty about the budget and national debt ceiling. U. of Michigan Consumer Sentiment dropped in September to the lowest reading for five months 77.5 p. from 82.1 p. prior month. The data turned out worse than forecasted decrease to 78 p.

Negotiations on the budget and US national debt are still an important factor for all financial markets. Their failure can lead to the suspension of the government’s work which in case of duration for 3-4 weeks will decrease US GDP in the fourth quarter by 1.4% according to the forecast of Moody’s. The dollar was also negatively affected by the words of FOMC member Charles Evans who said that he wouldn’t be surprised if bond purchase reduction wasn’t started even in October. FOMC member William Dudley also said that the economy wasn’t strong enough yet to start tapering off QE.

The euro reached 8-day high on Friday Vs the dollar amid euro-zone economic sentiment growth. Euro-Zone Economic Confidence from the European Commission exceeded the forecast (96 p.) and grew in September to the highest reading since August, 2011 amounting to 96.9 p. against 95.3 p. prior month. The pound also rose after the Bank of England governor Mark Carney had said on Friday that he saw no reasons for further quantitative easing.

By the end of the week the dollar lost 0.24% according to the dollar index having closed the third week by decline. The dollar fell against the Japanese yen (-1.04%), British pound (-0.86%) and Swiss franc (-0.47%); it almost didn’t change Vs the euro and Canadian dollar; it rose Vs New Zealand dollar (+0.98%) and Australian dollar (+0.82%). According to the end of September, till the end of which only one day is left, the dollar significantly weakened having lost almost 1.9% according to the dollar index. Monthly decrease risks becoming the lowest for almost two years.

The first week of the month as always will be saturated with important events. There will be three central banks meetings, PMI, retail sales, inflation and labour market data. In euro-zone there will be a release of preliminary inflation data on Monday, on Thursday – manufacturing PMI and unemployment data, on Wednesday – ECB decision on rate and Mario Draghi’s press conference (the meeting is moved for one day due to the holiday on Thursday in Germany) and on Thursday – Service PMI and retail sales. In Germany retail sales data will be published on Monday, on Tuesday – labour market and on Friday – Producer Price Index.

In the UK Mortgage Approvals will be released on Monday and Manufacturing, Construction and Service PMI will be published from Tuesday to Thursday. A further index growth is expected except the service sector where the index is unchanged. In Japan industrial output and retail sales will be released on Monday, on Tuesday – Tankan quarterly report and on Friday the results of the Bank of Japan meeting will be announced.

In Australia retail sales will be released on Tuesday and RBA will announce the results of its meeting on rates, no changes are expected. JPMorgan forecasts another rate decrease in November and it can be insinuated already at this meeting. The markets consider 50%- probability of the rate decrease by 0.25% by the end of this year. On Wednesday Australian trade balance and building permits will be published on Wednesday. In China official Manufacturing PMI will be released on Tuesday and Service PMI – on Thursday. In Canada GDP will be released on Monday and Ivey PMI – on Friday.

In the USA Chicago PMI will be released on Monday, on Tuesday – ISM Manufacturing PMI and Construction Spending; on Wednesday - ADP Employment Change; on Thursday – ISM Service PMI and Factory Orders. Fed governor Bernanke will make a speech at St. Louis Fed conference on Wednesday. And finally, the week and probably the month will be finished on Friday by a key report of the whole week - Non-Farm Payrolls. About 180 thousand of new jobs are expected against 169 thousand prior month - and a constant unemployment rate 7.3%.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 01/10/2013

The US Government Can Shut Down for the First Time in 17 Years

On Monday the markets were not dominated by macroeconomic indicators but by a political crisis in Italy and a fiscal crisis in the USA. The US dollar had fallen a little to most major currencies by the end of the day amid aroused concerns that a failure of negotiations on the US budget for a new financial year could weaken economic growth of the country.

According to the evening of September, 30 two houses of the US Congress didn’t manage to bring their positions on budget issues closer, which may threaten the US government with the first shutdown in 17 years. This factor is putting pressure on the dollar and this issue is still dominating macroeconomic releases. Chicago PMI turned out better than expected (54 p.) and rose to 55.7 p. in September in comparison with 53 p. in August.

The euro opened with a fall amid aggravated political crisis in Italy. The leader of the Conservative Party Berlusconi withdrew his support from the government coalition last Saturday. Italian Prime Minister said that he would demand a vote of confidence on Wednesday to prevent government shutdown. The Fitch published statements about the situation in Italy warning that if Enrico Letta’s government didn’t get a vote of confidence on Wednesday, financial goals of the country may get in jeopardy.

The euro leveled all its losses after the news that some members of Berlusconi’s party may quit the party and support the Prime Minister in order to prevent the collapse of the Italian government. Euro-zone inflation dropped to the lowest reading in September for 3.5 years – 1.1% at an annual rate, which is significantly lower than the target ECB level. Inflation will not make any obstacles for further economic stimulation if the ECB decides it is necessary to support economy.

The pound updated a monthly height on Monday and reached almost 9-month high Vs the dollar amid positive housing market data. The pound showed the highest growth for September in per cent for more than three years. According to the Bank of England Mortgage Approvals rose to 62.2 thousand in August against 60.9 thousand prior month, which became the highest reading since March, 2008. Hometrack House Prices rose by 0.5% in September, which became the highest monthly growth since May, 2007.

The Australian dollar had almost no reaction on HSBC Final Manufacturing PMI decline for September, which was revised to 50.2 from preliminary reading of 51.2 – however, the result turned out slightly better than the reading in August 50.1. New Zealand dollar was traded upwards amid Business Confidence growth in the country to the highest readings for more than 14 years. ANZ Business Confidence rose to 54.1 in September against 48.1 in August – which has become the highest reading since March, 1999.

Canadian dollar also had almost no reaction to July economic growth data which turned out better than forecasted. Canadian GDP rose by 0.6% in July against the expected growth by 0.5% having shown the highest increase rates for 2 years. The yen reached a monthly height against the dollar but then lost all its growth on the back of correctional bounce of stock markets in the second half of the day.