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

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Overview of the main economical events of the current day - 31/10/2013

FOMC Didn’t Bring Any Surprise but Dollar Rose

The US dollar rose on Wednesday after the results of FOMC meeting although it was traded downwards all day before it. No changes in the monetary policy were made and almost nothing changed in the final statement in comparison with the former meeting – though the Fed marked some improvement in American economic state. Probably the market participants expected a milder statement considering government shutdown earlier this month.

The voting was over with the result 9-1and the estimate of economic state was almost unchanged. High market rates were not mentioned in the statement but housing market slowdown was marked. Although the Fed marked that the US economic recovery was still unstable, it also said about economic activity growth and weakening downward risks. Besides, the Fed didn’t exclude the possibility of QE tapering this year already.

The Fed again kept a low profile concerning bond purchase program wishing to see more evidence of economic situation improvement. The last employment report again showed a disappointing Employment Change growth in September. ADP Non-Farm Employment Change for October released on Wednesday turned out worse than expected. ADP Employment Change rose only by 130 thousand although a growth by 150 thousand was expected. Prior month data were revised for the worse by 19 thousand to 145 thousand. The indicator has been falling for 4 months in a row.

The euro was traded upwards at the beginning of the day but then it fell. German labour market data met expectations on the whole. Unemployment rate in October stayed at 6.9% and German Unemployment Change grew by 2 thousand while no changes were expected. According to the Reuters, 44 of 59 economists believe that the ECB would announce a new program of long-term refinancing operations. They think that interest rates will stay unchanged till early 2015.

Euro-Zone Economic Sentiment Indicator in October rose to 97.8 compared with 96.9 in September showing the highest reading since August 2011. Spanish economy went out of 2-year recession – in the third quarter the GDP of Spain grew by 0.1% in comparison with the prior quarter, which coincided with the released estimate of the Bank of Spain last week.

New Zealand dollar rose after the decision of the Reserve Bank of New Zealand to keep the key interest rate unchanged. RBNZ governor Wheeler said that rate increase could be necessary next year considering high house price inflation. But the terms and the scale of rate increase will depend on the housing market situation. Wheeler said that despite a high rate of New Zealand dollar was still a problem, it allowed the central bank to show a high flexibility regarding further rates increase.

 

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Overview of the main economical events of the current day - 01/11/2013

EURUSD: the Lowest Decrease for Half a Year

The US dollar rose significantly on Thursday according to the dollar index amid Chicago PMI growth but it was traded differently Vs major currencies. The euro fell after the release of weak unemployment and inflation reports in the euro-zone; and retails sales and consumer confidence in Germany. Canadian dollar grew after the release of strong GDP of Canada that exceeded the forecasts. The pound and Australian dollar were supported by housing market data.

The dollar rose significantly against the euro and Swiss franc; it fell against Canadian dollar, yen and New Zealand dollar; and almost didn’t change Vs the pound and Australian dollar. The US Unemployment Claims last week almost met expectations having dropped by 10 thousand to 340 thousand while a decrease by 12 thousand to 338 thousand was forecasted. The reading has been falling for three weeks in a row. At the same time 4-week average of claims rose by 8 thousand to 356. 25 thousand and considerably exceeded the number of claims for the last week.

Chicago PMI rocketed in October despite the forecasts to 2.5-year high 65.9 p. in comparison with 55.7 p. in September while a decrease to 55 p. was expected. The number of employees and new orders rose significantly. Chicago PMI is released not long before ISM Manufacturing PMI and it can be used for its forecasting. ISM Manufacturing PMI will be released on Friday.

The euro showed the lowest decrease on Thursday Vs dollar for 6 months having dropped to 2-week low amid a large number of negative statistics. Euro-zone inflation slowed down in October to 0.7% at an annual rate compared with 1.1% in September and turned out the lowest since November, 2009. Unemployment rate in the euro-zone returned to its record readings in September at 12.2%, September data were revised for the worse from 12.0% to 12.2%. Italian Unemployment Rate grew to 12.5% in September against the expected growth to 12.3%.

German retail sales fell by 0.4% in September; a growth by the same 0.4% was expected. Prior month data were revised for the worse. GfK Consumer Climate fell unexpectedly for the first time in 10 months having dropped to 7.0 p. in November after having reached 6-year high 7.1 p. in October. Index growth to 7.2 p. was expected.

Weak inflation and employment reports increased expectations of new monetary policy easing measures from the ECB. The ECB member Nowotny said on Thursday that the ECB would provide liquidity to euro-zone banks to avoid a "cliff" effect when 3-year term of LTRO expired. JPMorgan and BNP expect ECB rate decrease by 0.25% in December. According to Morgan Stanley European banks will decrease its offshore assets to accelerate the process of paying back their loans in the ECB, which may lead to the growth of euro.

Unlike the euro the pound almost hadn’t changed by the end of the day – it was supported by housing market data. Nationwide House Prices in the UK rose by 1% m/m in October having exceeded forecasted growth by 0.7%. At the same time UK consumer confidence fell in October after five months of growth. GfK Consumer Confidence fell to minus 11 p. in October from minus 10 p. in September when it was the highest for 5 years.

The yen rose insignificantly after a few days of fall amid the finished meeting of the Bank of Japan where monetary policy was kept unchanged. The Bank of Japan announced that it followed a positive forecast for inflation signaling that the probability of new monetary policy measures is low in the nearest time. Canadian dollar grew after the release of strong Canadian economic growth data. The GDP grew in August by 0.3% m/m having exceeded the forecasted growth by 0.1 three times.

The Australian dollar grew on the back of housing market positive statistics but then it lost all its growth. Building Approvals in September rose by 14.4% in comparison with August, which became the largest growth for more than a year. Exports and imports price growth also exceeded expectations. New Zealand dollar was traded upwards after RBNZ signaled about keeping the inclination to tough policy.

 

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Overview of the main economical events of the current day - 04/11/2013

The Main Events of the Week

The US dollar continued growing on Friday Vs most major currencies amid manufacturing PMI growth which is still at 2.5-years high. The pound fell after weak UK manufacturing PMI that didn’t meet the expectations. The euro continued falling amid the expectations of a possible rate decrease at the next several ECB meetings after the release of previously weak inflation data.

ISM Manufacturing PMI in the USA rose to 56.4 p. in October in comparison with 56.2 p. prior month while index decrease to 55 p. was expected. The growth happened mainly due to new export orders, prices and employment; while production, inventories and supplies dropped. The Final Markit Manufacturing PMI also fell in October less than forecasted to 51.8 p. while initially a decrease to 51.1 p. from 52.8 p. in September was reported.

U.S. ISM Manufacturing and Non-Manufacturing PMI

By the end of the week the dollar grew almost by 2% according to the dollar index and showed the highest weekly growth for more than 4 months. Most of all it grew against the euro (+2.29%), Swiss franc (+2.18%), Australian dollar (+1.50%), British pound (+1.49%) and Japanese yen (+1.29%). The US dollar rose insignificantly only to New Zealand dollar (+0.16%) and fell only against the Canadian dollar (-0.25%).

The euro showed the lowest decrease to the dollar in points for almost 1.5 year. After euro-zone weak inflation data the expectations of possible rate decrease at the next several ECB meetings rose at the market; although nobody expects it at the nearest meeting on November 7. However, market participants will be very attentive to the ECB governor Mario Draghi’s press conference which will take place after the meeting on Thursday.

The dollar was supported after the Fed had slightly improved its estimate of American economy at the last meeting, which was proved by PMI of Chicago and of all country. According to the Bloomberg, economists worsened the forecast of the US GDP growth for the 4th quarter to 2% from 2.4% three weeks earlier because of the government shutdown for16 days in October. Besides, growth estimate for the 1st quarter of 2014 didn’t change (+2.6%).

GDP first release for the third quarter will be released on Thursday, November 7, with 8 days delay. Meanwhile, most leading banks didn’t change its forecasts on QE3 tapering and continue expecting it only next March-April. The Fed member Bullard announced on Friday that the situation at the labour market had a key value and if it continued improving, the central bank would be able to start QE reduction.

A very important event of this week will be Friday release of Non-Farm Payrolls for October. About 125-130 thousand new jobs and unemployment rate growth by 0.1% to 7.3% are expected. The data must show how the government shutdown influenced economic situation in the country. ADP data for October which are usually considered preliminary - indicated ADP Employment Change decrease to 130 thousand.

In the USA on Monday there will be a release of Factory Orders for August and September, on Tuesday - ISM Non-Manufacturing PMI; and on Friday – Personal Income and Spending and Preliminary U. of Michigan Consumer Sentiment. The USA and Canada shifted to Daylight Saving Time on Sunday, November 3.

In the euro-zone there will be a release of Manufacturing PMI on Monday and non-Manufacturing PMI – on Wednesday; on Tuesday – Producer Prices and on Wednesday – Retail Sales. In Germany Factory Orders will be released on Wednesday, on Thursday – Industrial Output and on Friday – Trade Balance. In France Industrial Output and Trade Balance will released on Friday.

The Bank of England will publish the results of its monthly meeting on Thursday; no changes in the policy are expected. In the UK construction PMI will be released on Monday, on Tuesday – Service PMI, on Wednesday – industrial output and on Friday – Trade Balance. The Bank of Japan will publish on Wednesday Meeting Minutes of October 3-4; and the BoJ governor will make a speech in Osaka and will hold a press conference.

In Australia retail sales will be released on Monday, on Wednesday – trade balance, on Thursday – labour market report and on Friday - RBA Monetary Policy Statement. Australian Reserve Bank meeting is traditionally held on the first Tuesday of the month and no changes in the policy are expected. New Zealand Employment Change will be released on Wednesday.

In Canada Building Permits and Ivey PMI will be released on Wednesday; and on Friday – labour market report. In China a large block of statistics will be released at the end of the week: trade balance – on Friday; and on Saturday – inflation, industrial output, retail sales and new loans.

 

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Overview of the main economical events of the current day - 05/11/2013

ECB Rate Decrease Is Possible but Unlikely

The US dollar was traded slightly downwards on Monday against most major currencies having been corrected after five days of growth. The US Factory Orders turned out slightly worse than expected. The pound rose amid the UK construction PMI increase which is at 6-year high. The euro also slightly strengthened on the back of a small growth of euro-zone manufacturing PMI. The Australian dollar grew after the positive statistics on Chinese Service PMI growth and Australian retail sales.

On Monday the US Factory Orders for two months were released. Factory Orders fell by 0.1% in August, which turned out worse than expected growth by 0.3%. Factory Orders in September rose by 1.7% after two months of decrease – which met the forecasts (+1.8%). However, the growth was mainly due to aircraft orders growth – Factory Orders ex Transportation fell by 0.2% in September. Capital Goods Orders that include machinery and electronics fell by 1.3%.

Fed member Bullard said that the probability of QE tapering in December still existed – at the same time inflation was too low for it. Meanwhile, Standard & Poor's lowered the U.S. GDP growth forecast in the 4th quarter from 1.7% to 1.6% at an annual rate.

The pound was traded slightly upwards after the release of data that showed UK Construction PMI growth which is at 6-year high. The UK Construction PMI rose to 59.4 p. in October against 58.9 p. in September – while its decrease was expected. Construction continues growing in the UK but the sector accounts only for 6.3% of all economy.

The euro fell to its low for almost 7 weeks to the dollar but then recovered its losses and even strengthened a little by the end of the day amid euro-zone manufacturing PMI slight growth. Euro-zone Manufacturing PMI rose to 51.3 p. in October from 51.1 p. in September, which coincided with the preliminary estimates. German data turned out better than expected while the data of France and Italy were a little worse.

Sentix Investor Confidence exceeded expectations (6.2) and rose up to 9.3 in November compared with 6.1 in October still being at 2.5-year high. Meanwhile, rate decrease expectations are growing at the market and more banks forecast its decrease already this week. These are Bank of America, UBS and Royal Bank of Scotland. Surely, ECB rate decrease in November is possible but still is unlikely.

Retail Sales Change (m/m) in Australia and the USA

Australian dollar rose after the release of retail sales strong data which showed a fast monthly growth for past seven months. Retail sales rose by 0.8% in September Vs prior month while a growth only by 0.4% was expected. AUD was also supported by Chinese Services PMI growth. Chinese Non-Manufacturing PMI released on Sunday grew to its high for 16 months 56.3 p. in October.

 

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Overview of the main economical events of the current day - 06/11/2013

UK Services PMI Reached 16-Year High

The US dollar was traded differently on Tuesday amid Services PMI growth – it grew against the euro, Swiss franc and Canadian dollar; weakened Vs the pound and New Zealand dollar; almost didn’t change Vs yen and Australian dollar. The pound strengthened on the back of Services PMI growth up to 16-year high, the euro weakened amid negative statistics. Australian dollar fell after RBA said a lower exchange rate will likely be needed to rebalance the mining-dependent economy but then it recovered its losses. New Zealand dollar continued getting support from RBNZ statement about keeping its inclination to tough policy.

The dollar strengthened after ISM data that showed Non-Manufacturing PMI growth. ISM Non-Manufacturing PMI rose to 55.4 p. in October from 54.4 p. in September while its decrease was expected. Most of all grew Employment Index, Business Activity Index and Imports – while new orders and prices fell. The data show that the government shutdown didn’t have so strong influence on economy. IBD/TIPP Economic Optimism also grew in November to 41.4 p. compared with 38.4 p. in September having exceeded the expected growth.

ISM Non-Manufacturing PMI, Employment Index and Business Activity Index

The pound rose considerably amid UK Services PMI growth that reached the highest level since May, 1997 – which is a sign of strengthened economic recovery at the beginning of the 4th quarter. Services PMI rose to 62.5 p. in October from 60.3 p. in September while its decrease was expected. According to preliminary data GDP for the third quarter will show the highest growth rate for three years. Economic growth has been going on since January.

European commission raised its forecast of British GDP for the current year up to 1.3% from 0.6%, for the next year – to 2.2% from 1.7%. CBI that represents the interests of 240 thousand British enterprises improved the forecasts for British economy in 2013 to 1.4% against prior forecast +1.2%. Growth forecasts for the nearest two years are also raised. Recovery which started in service sector spread to industrial production and construction and looks larger – said CBI CEO.

The euro was traded downwards. Euro-zone Producer Price Index at an annual rate showed the fastest decrease rate in September since January, 2010. Producer Price Index fell by 0.9% compared with the same month last year while a decrease by 0.8% was forecasted. Spanish Unemployment Change increased by 87 thousand in October in comparison with the prior month having exceeded the expectations of growth by 31 thousand. The euro was negatively affected by European commission GDP growth estimate in 2014 that worsened to 1.1% from 1.2% and also increase of unemployment forecast to 12.2% from 12.1%. The forecast for 2013 about the economic decrease by 0.4% and unemployment rate of 12.2% stayed unchanged.

Australian dollar fell after the meeting of the Reserve Bank of Australia where the rate was kept unchanged as assumed. However, RBA governor Glenn Stevens said that Australian currency rate was still uncomfortably high and a lower level of AUD rate is likely to be needed to achieve balanced growth in the economy. The economy is likely to stay below trend and unemployment rate will rise – said Stevens.

Despite strengthened consumer and business confidence, consumer spending of Australia is still moderate and labour market is weak. However, RBA statement about a high rate of the national currency didn’t impress significantly market participants and AUD recovered all its losses. Amid improving Asian data and coming end of the year – reduction of short positions can help AUD to continue recovering.

 

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Overview of the main economical events of the current day - 07/11/2013

Dollar Started Weakening Anticipating GDP and U.S. Non-Farm Payrolls

The US dollar was traded downwards on Wednesday Vs most major currencies except yen – in anticipation of statistics on the US economic state. The pound grew on the back of the UK positive industrial output data; and the euro – amid euro-zone Final Services PMI and German Factory Orders. New Zealand dollar continued growing amid a positive labour market report and Australian dollar strengthened after trade balance data. Canadian dollar rose amid PMI growth and the yen weakened amid Japanese stock market growth.

Later this week there will be a publication of important statistics data on the US economic state: on Thursday GDP for the third quarter will be released (a growth by 2% after 2.5% growth in the second quarter is expected), and on Friday – Employment Change growth for October (+125 thousand are expected) and Unemployment rate (a growth by 0.1% to 7.3% is expected). On Wednesday there were no significant statistics data. CB Leading Index grew by 0.7% in September having exceeded the expectations a little.

The euro rose on Wednesday amid positive statistics. Final Services PMI amounted to 51.6 p. in October having exceeded preliminary estimates of 50.9 p. though it turned out lower than 52.2 p. in September. In Spain, France and Germany the index turned out better than expected – and only in Italy it turned out worse than forecasted. Final PMI Composite reached 51.9 p. in October also having exceeded preliminary estimates. German Factory Orders rose by 3.3% m/m in September exceeding the expected growth by 0.5% considerably. At the same time euro-zone retail sales for September fell more than forecasted – by 0.6% while a decrease by 0.4% was expected.

The pound continued rising on the back of UK industrial output which grew more than forecasted in September. Industrial output grew by 0.9% Vs prior month and manufacturing industry – by 1.2% having exceeded expected growth by 0.6% and 1.1% respectively. The UK housing prices growth, according to Halifax, grew by 0.7% in October, with annual growth 8.1%.

New Zealand dollar rose on Wednesday almost to 2-week high Vs dollar after the release of New Zealand labour market strong data. Employment Change in the third quarter rose by 1.2% in comparison with the prior quarter having significantly exceeded expected growth by 0.5%. Employment change growth has been going on for three quarters. Unemployment rate decreased to 6.2% Vs 6.4% prior quarter. Participation Rate increased to 68.6% against 68.1% in the second quarter.

Australian dollar also strengthened after Australian trade balance release. Trade deficit decreased to 284 million AUD in September while a large deficit of 500 million was expected. Canadian dollar rose amid PMI growth to 5-month high. In Canada Ivey PMI rose to 62.8 p. in October Vs expected growth only to 52 p. At the same time Building Permits in Canada grew less than expected.

 

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Overview of the main economical events of the current day - 08/11/2013

ECB Unexpectedly Lowered Key Interest Rate

The US dollar rose on Thursday Vs most major currencies except yen – after the release of stronger than expected GDP growth data. The euro dropped after the ECB had lowered key interest rate unexpectedly. The pound had almost no reaction to the Bank of England meeting results where the policy was kept unchanged. Australian dollar fell after a weak labour market report. The yen grew amid a considerable stock market fall.

Advance GDP for the third quarter showed that the US Gross Domestic Product (Annualized) accelerated to 2.8% from 2.5% in the second quarter – while a growth only to 2% was expected. The main growth factor was a change in private inventories which increase added 0.8% to GDP growth. At the same time Personal Consumption and companies’ investment slowed down. Personal Consumption which accounts for 70% of GDP grew by 1.5% having shown the smallest growth since 2011. Goldman Sachs decreased its forecast on the US GDP growth in the fourth quarter from 2.0% to 1.5%.

The euro slumped almost to 8-week low Vs dollar after a sudden decision of the ECB to lower the key interest rate by 0.25% to the record low of 0.25%. This decision was forecasted by only three of 70 economists polled by Bloomberg. ECB governor Mario Draghi expressed concerns during a press conference that low inflation in the currency block would be kept for a long period and again confirmed a promise made earlier to keep key interest rate at a low level.

Draghi said that interest rates may be lowered in future and the ECB technically is ready to lower deposit rate which is at zero level now in spite of the fact that the central bank didn’t change the rate on Thursday. German data also turned out worse than expected – industrial output fell by 0.9% in September while no changes were expected. At the end of the day the euro partially recovered its losses.

The pound had almost no reaction to the BoE meeting results, where the policy was kept unchanged, and by the end of the day it almost hadn’t changed. Next week on Wednesday Bank of England governor Carney will introduce BOE Inflation Report. The yen fell to 1.5-month low Vs the dollar but then rose amid a considerable decrease of stock markets. S&P 500 showed the lowest decrease for 2 months.

Australian dollar fell after a weak labour market report. According to Australian Bureau of Statistics, Employment Change rose by 1.1 thousand in October which turned out significantly less than the expected growth by 10 thousand. The growth was caused mainly by Part Time Employment Change – while Full Time Employment Change decreased by 27.9 thousand. Unemployment rate in October stayed at the revised upwards September level 5.7%. At the same time AIG Construction Index in October rose higher 50 – up to 54.4 for the first time in three years.

 

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

The Main Events of the Week

The US dollar rose on Friday against all major currencies after positive Non-Farm Payrolls that showed acceleration of new jobs creation in October. According to the Labor Department Non-Farm Employment Change grew by 204 thousand while a growth only by 125 thousand was forecasted. The data showed that government shutdown in October didn’t influence the economy, which raised the probability of an earlier QE tapering.

Besides, two prior months data were revised upwards – total revision was +60 thousand. An average employment growth for the last three months is more than 200 thousand now corresponding to a strong growth of the beginning of this year. Unemployment rate grew up to 7.3% from September level 7.2% as expected. At the same time the US preliminary consumer sentiment fell in November to its low of 72 p. for almost 2 years from 73.2 p. prior month while its growth was expected.

By the end of the week the dollar had risen by 0.55% according to the dollar index showing a growth for two weeks and getting support after US strong GDP and Non-Farm Payrolls data. Most of all the dollar rose against the Swiss franc (+1.11%) and euro (+0.93%) amid unexpected ECB rate decrease. A smaller growth was shown Vs Australian dollar (+0.61%), Canadian dollar (+0.57%), Japanese yen (+0.48%) and New Zealand dollar (+0.25%). The dollar fell only against the British pound (-0.55%).

Monday is a day-off in the USA and Canada. On Tuesday Chicago Fed National Activity Index will be released. On Wednesday - Federal Budget Balance, on Thursday – Trade Balance and on Friday - Empire State Manufacturing Index, import prices and industrial output. On Thursday Fed governor Bernanke will make a speech about 100-anniversary of the Fed and there will be a hearing on the nomination of Janet Yellen for Federal Reserve chair. From Tuesday to Thursday the U.S. Treasury Department will sell long-term bonds and at the end of the week earnings season of American companies for the third quarter will be over.

The main event of the week in the euro-zone may be publication of preliminary GDP for the third quarter of major countries and the whole euro-zone on Thursday. Euro-zone economic growth is expected to continue at a slower rate than in the second quarter and will account for 0.1% q/q. The growth is likely to slow down significantly in Germany and France – Spain, on the contrary, will return to a moderate growth. On Wednesday in the euro-zone there will be industrial output data and on Friday – the Final Consumer Price Index.

In the UK there will be a release of Producer and Consumer Price Index, and on Thursday – Retail Sales. But the most important day may be Wednesday when a labour market report will be released and a little later the BoE will publish Inflation Report, and BoE governor will make a speech about new forecasts on unemployment, GDP and inflation. The labour market report is expected to show unemployment decrease, which may strengthen the expectations of an earlier rate increase by the Bank of England.

In Australia there will be a release of NAB Business Confidence and on Wednesday - Westpac Consumer Sentiment. In New Zealand on Wednesday RBNZ Financial Stability Report will be released and RBNZ governor Wheeler will make a speech before the Parliament; on Thursday there will be a retail sales report. Japanese GDP preliminary data for the third quarter will be published on Thursday. In Canada Trade Balance and New Housing Prices will be released on Thursday and on Friday - Manufacturing Sales.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 12/11/2013

The Week Started Quietly: Euro Is Recovering

The US dollar fell against the euro and changed a little Vs other currencies at low-active trading on Monday amid no significant macrostatistics and day-offs in the USA, Canada and France. The U.S. state institutions were closed due to Veterans Day, debt market didn’t work but the trades at the stock market were held.

The euro rose Vs dollar on Monday partially recovering its losses after last week’s two-day significant fall which was caused by ECB rate decrease and strong U.S. Non-Farm Payrolls. On Sunday evening the coalition government of Greece managed to get the support of Parliament despite a vote of no confidence from the main opposition party.

Italian industrial output rose by 0.2% in September against prior month while a growth by 0.3% was expected. At the same time industrial output fell less than expected at an annual rate – by 3% while a drop by 3.6% was forecasted.

Australian dollar was traded downwards amid New Yuan Loans decrease. Chinese banks approved loans of 506 billion Yuan in October Vs 787 billion Yuan in September, which turned out less than expected 580 billion. October reading became the lowest for the whole current year. Chinese central bank took a tough line to restrain a quick lending growth and rising inflation.

At the same time Australian Home Loans in September rose more than expected – by 4.4% m/m while a growth by 3.5% was forecasted. On Friday Bank of Australia lowered its economic growth forecasts and left an opportunity for further interest rates decrease.

Chinese statistics released last Saturday showed that industrial output grew by 10.3% in October Vs last year, which is slightly more than 10.2% in September and higher than expected 10%. Chinese inflation accelerated last month up to 3.2% at an annual rate – the highest level for 8 months.

At the same time inflation turned out less than expected 3.2% and still is lower the target level of 3.5% fixed by Chinese Communist party for the current year – which lowers the probability of financial conditions tightening in China. On Tuesday the four-day Third Plenary Session of the 18th Congress of the Communist Party of China (CPC) Central Committee will be over and economic stimulus plan is expected to be prepared.

New Zealand dollar almost didn’t change on Monday amid positive statistics. Electronic Card Retail Sales in New Zealand grew by 1.4% in October having exceeded expected growth by 1.3%. At an annual rate the growth accounted for 7%. Finance Minister of New Zealand said that a good momentum is generated in the economy and New Zealand is on the way to budget surplus in 2014-15 fiscal year.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 13/11/2013

The Pound Dropped After a Weak CPI

The US dollar grew on Tuesday Vs most major currencies but fell Vs the euro which continued recovering. The pound fell after a weak CPI. Australian dollar continued falling amid Australian Business Confidence decrease. Japanese yen weakened amid Japanese stock market growth.

Chicago Fed National Activity Index rose in September slightly less than expected – to 0.14 p. against expected growth to 0.15 p. NFIB Small Business Index fell from 93.3 p. in October to 91.6 p., the lowest reading for 7 months. Meanwhile, FOMC member Lockhart said on Tuesday that QE tapering was quite possible to start in December.

The euro continued growing for the second day. German Consumer Price Index dropped in October to the lowest level since April having confirmed preliminary estimates. ECB member Asmussen said on Tuesday that further actions towards interest rates were possible and they would depend on inflation – and he didn’t exclude the probability of deposit rate decrease that is at zero level now.

The pound dropped to 2-month low Vs the dollar after a weak CPI which annual rates reached almost 4-year low but then the pound recovered some losses. Annualized inflation slowed down in October to 2.2% from 2.7% on September – while its growth by 2.5% was expected. Core inflation grew by 1.7% against expected growth by 2%. Retail price inflation decreased to 2.6% y/y from 3.2% in September. RICS House Price Balance grew to 57 in October, the highest level since June, 2002 but turned out slightly worse than expected.

According to BNP Paribas a sharp fall of the pound after the publication of inflation data is a possibility to buy this currency before the release of BoE Inflation Report on Wednesday. This report may indicate some inclination of the central bank to tough monetary policy. The most important part of the report will be possible terms of reaching unemployment threshold of 7% which may be revised from the second quarter of 2016 to the fourth quarter of 2015.

Japanese yen fell to 2-month low Vs dollar amid Japanese stock market growth. Nikkei 225 rocketed by 2.2% up to almost 2-week high. Australian dollar continued falling amid Australian Business Confidence fall. NAB Business Confidence decreased from 2.5-year high of +12 points in September to +5 in October. NAB Business Conditions didn’t change in October but stayed at low -4 p.

New Zealand dollar fell after RBNZ Financial Stability Report. RBNZ governor Wheeler said that misbalances of housing market are the main threat for the financial system. The terms and volumes of interest rates increase are not determined and NZD rate is still overvalued.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 14/11/2013

The Pound Was in the Center of Attention on Wednesday

The dollar fell on Wednesday Vs most major currencies amid no significant macrostatistics in the USA and before Fed Chairperson-Designate Yellen testifies on monetary policy before the Senate Banking Committee on Thursday. But the spotlight of Wednesday was the pound due to labour market and inflation report. The euro continued growing for the third day despite weak industrial output data in the euro-zone. Australian dollar grew after four days of decrease amid consumer confidence growth.

The dollar dropped even more at the end of the day after the publication of Yellen’s speech before the Senate. Janet Yellen made it clear that the Fed must support the economy by stimulus measures. Economic recovery support today is the best way for the Fed to return to normal policy and the Fed has a lot of to do to strengthen financial system – she said.

The pound grew considerably on Wednesday after the publication of positive unemployment forecast and following BOE Inflation Report. Claimant Count Change fell by 41.7 thousand in October although its decrease only by 30 thousand was expected. ILO Unemployment Rate fell from 7.7% in August to 7.6% in September, the lowest reading for more than four years. Claimant Count Rate in October fell to its low 3.9% since January 2009 compared with 4% in September.

In its Inflation Report the Bank of England signaled of a possible early interest rate increase. Key unemployment rate 7%, after which the first increase of interest rates may be made, may be reached with 50% probability by the third quarter of 2015, not by the second quarter of 2016 as it was considered before. GDP growth forecast for 2014 was raised from 2.5% to 2.8%. In the fourth quarter of the current year the GDP will rise by 0.9% after the growth by 0.8% in the third quarter.

The euro was traded downwards at the beginning of the day amid euro-zone weak industrial output data and it fell after ECB's Praet’s statements – but then recovered its losses and even grew. Euro-zone industrial output fell in September more than forecasted – by 0.5% while a decrease by 0.3% was expected. ECB's Praet said that negative deposit rate and asset purchases are potential options if needed to stimulate economy and ensure economic growth.

Australian dollar rose on Wednesday for the first time after 4-day decrease amid consumer confidence growth. Westpac Consumer Confidence Index rose by 1.9% in November after the decrease by 2.1% in October. Compared with last November the index rose by 5.8%.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 15/11/2013

The Dollar Stopped Falling

The US dollar suspended falling on Thursday as Yellen’s speech had no surprises. The dollar dropped Vs the pound but grew Vs the yen, euro and Australian dollar. The euro stopped 3-day growth amid economic growth rate slowdown in the third quarter. The pound grew despite a weak retail sales report. The yen fell amid weak economic growth data of Japan for the third quarter.

Making speech before the Senate, Fed Chairperson-Designate Yellen said that there would be no considerable changes in the central bank’s policy if she became the next chair. The Fed will continue soft monetary policy as it is necessary for American economic recovery and employment growth. It is important to keep the support especially within the terms of still fragile recovery, she said. Morgan Stanley governor said that QE tapering could be expected within the nearest two months.

The US Unemployment Claims fell by 2 thousand last week to 339 thousand as it was expected to fall by 11 thousand to 330 thousand. The indicator has been falling for five weeks in a row. Four week average of Unemployment Claims fell to 344 thousand from 348.5 thousand. The US Trade deficit increased by 8% in September up to its high since May - $41.8 billion, while a decrease to $39 billion was forecasted.

The euro slowed down its 3-day growth and slightly dropped after the euro-zone first estimate GDP for the third quarter. European economy grew by 0.1%, which met most forecasts. German GDP rose by 0.3% q/q and in Italy it fell by 0.1% which met the expectations. At the same time French GDP fell unexpectedly in the third quarter by 0.1% although no changes were expected.

The pound ignored a weak retail sales report and rose for the second day. The UK retail sales decreased by 0.7% in October while no changes were expected. New Zeeland retail sales for the third quarter also turned out worse than expected – they rose only by 0.3% q/q while a growth by 0.9% was expected. New Zealand dollar was traded downwards but by the end of the day it recovered its loss. NZD was supported by Manufacturing Index growth data in October during 11 consequent months - Business NZ Manufacturing Index rose from 54.2 p. to 55.7 p.

USDJPY reached the level of 100 yen for the first time since September 11. The yen continues weakening amid the growth of Japanese stock market which has been rising for five days in a row – Nikkei rose on Thursday by 2.1% and Nikkei futures reached almost 6-month high. Japanese GDP for the third quarter turned out slightly better than expected (+0.4% q/q). Economic growth rate slowed down to 0.5% q/q from 0.9% prior quarter – Japanese economy has been decreasing for the second quarter in a row as weak personal consumption and the slowdown of exports growth rate exceeded strengthening of real estate investment. Goldman Sachs forecasts that the Bank of Japan will take extra stimulus measures in the second quarter of 2014 – just after the Fed will announce QE3tapering, which may become an accelerator in USDJPY rally.

Australian dollar was traded downwards amid Consumer Inflation Expectation decrease in November from 2% to 1.9%. Canadian dollar slightly fell – New Housing Prices in September turned out worse than expected while Canadian Trade Deficit fell considerably having exceeded the forecasts.

 

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Overview of the main economical events of the current day - 18/11/2013

The Main Events of the Week

The US dollar fell on Friday against all major currencies after negative statistics that showed the decrease of the US Industrial Output and Empire State Manufacturing Index. Industrial Output dropped by 0.1% in October while its growth by 0.2% was expected. Industrial output fell in the USA for the first time for the last six months.

Capacity Utilization Rate decreased by 0.2% to 78.1%. Meanwhile, processing industry (3/4 of all industrial output) rose by 0.3% having exceeded the expected growth by 0.2%. The US import prices fell in October at the fastest rate for almost a year by 0.7% m/m having exceeded the expected decrease by 0.5%.

Empire State Manufacturing Index slumped in November to minus 2.21 p. from 1.52 p. last month while a growth to 5 p. was expected. The index fell to its low for 10 months and for the first time in six months dropped below zero – the level that indicates index decline. New Orders and Shipments fell significantly as well as Employment Index. This report is the first to be released among production reports of regional banks and it is used to forecast manufacturing index in all country which is usually released at the beginning of the next month.

By the end of the week the dollar fell by 0.55% according to the dollar index leveling the same growth last week. The dollar slumped Vs all currencies except yen and Australian dollar and was put under pressure amid aroused expectations that the Fed new chair Janet Yellen will continue soft monetary policy after she enters upon the office at the beginning of the next year.

This week there will be rather a lot of US data including delayed data due to government shutdown. Fed Chairman Bernanke is due to speak at the National Economists Club on November 20 at 00:00 GMT. On Monday Treasury International Capital Flows and NAHB Housing Market Index will be released; on Tuesday - Employment Cost Index, on Wednesday – consumer Price Index, Retail Sales, Existing Home Sales and FOMC Meeting Minutes; on Thursday – Producer Price Index and Philadelphia Fed Manufacturing Index; on Friday – Job Openings.

The main events in the euro-zone will be the publication of German ZEW Economic Sentiment on Tuesday and IFO indexes on Friday; besides, preliminary Manufacturing and Non-Manufacturing PMI of France, Germany and the whole euro-zone. ZEW and IFO indexes are expected to grow in Germany as well as euro-zone PMI. On Monday euro-zone Trade Balance and Current Account will be released. In Germany on Tuesday there will be a release of Producer Price Index and on Friday – the Final GDP for the third quarter.

In the UK the BoE Meeting Minutes will be released on Wednesday and on Thursday - Public Sector Net Borrowing and CBI Industrial Order Expectations. In Japan Trade Balance will be released on Wednesday; on Thursday BoJ Interest Rate Decision will be announced. HSBC Flash Manufacturing PMI will be released on Thursday.

On Tuesday Meeting Minutes of the Reserve Bank of Australia will be published; and on Thursday RBA Governor Glenn Stevens is due to deliver a speech titled "The Australian Dollar: Thirty Years of Floating". In New Zealand Producer Price Index report will be released on Wednesday. In Canada Wholesale Sales will be released on Wednesday; and on Friday – inflation and retail sales. Bank of Canada governor Poloz will deliver a speech in the Parliament on Thursday.

 

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Overview of the main economical events of the current day - 19/11/2013

The Dollar Has Been Falling for Two Days

The US dollar was traded downwards on Friday falling for the second day amid almost empty calendar but by the end of the day it had recovered some losses. The dollar was supported by the comments of FOMC member Dudley who was more optimistic about the US economic outlook. Economic growth is significant amid a fiscal drag – he said. The dollar dropped Vs the euro and yen and almost didn’t change Vs the pound and Australian dollar.

NAHB Housing Market Index stayed unchanged in November compared with October – at 54 but the prior month data were lowered by 1 p. The builders are less confident at the housing market than in summer but they believe the sector still has the potential to grow further. Capital flow in September showed that Total Net TIC Flows was negative: -$101.4 billion.

The euro was traded upwards on Monday and by the end of the day it had risen slightly. Bundesbank Published Monthly Report according to which there is a good possibility that economic growth in Germany will continue next months. Euro-zone trade surplus grew to 13.1 billion euro in September against 6.9 billion in August.

At the same time, euro-zone current account surplus dropped in September after the growth in August. ECB Governing Council member Ewald Nowotny said that the improvement of the euro-zone economic situation turned out not so significant as the ECB considered it some time before.

The pound almost hadn’t changed by the end of the day amid the lack of significant macrostatistics. According to the results of a half year poll of financial organizations that was published by the Bank of England – confidence in the UK financial system grew to its high for more than five years. The yen grew and the dollar fell again on Monday below the level of 100 yen amid negative dynamics of the Japanese stock market after it had reached almost 6-month high.

Australian dollar strengthened to 6-day high amid the news from China where they announced the details of the reforms approved earlier at the Plenary Session – but at the end of the day it lost its growth. Chinese leaders promised to expand the possibilities of private investment, to raise the rivalry on the market and accomplish other economic growth stimulus measures.

Canadian dollar strengthened on Monday amid the growth of Foreign Securities Purchases which rose to 8.4 billion Canadian dollars in September and focused on Canadian shares. Foreign Securities Purchases became the highest for five months. Canadian investors decreased Investment in Foreign Securities by 1.5 billion dollars in September including shares and bonds.

 

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Overview of the main economical events of the current day - 20/11/2013

Bernanke Weakened the Dollar

The US dollar fell on Tuesday Vs the euro, Australian dollar and New Zealand dollar; grew Vs the yen and Canadian dollar and almost didn’t change Vs the pound. Fed chairman Bernanke’s speech led to further dollar’s weakening. The euro rose amid German economic sentiment growth up to 4-year high. The yen weakened before BoJ 2-day meeting which will start on Wednesday.

Speaking at the National Economists Club Fed chairman Bernanke said that interest rates would stay low significantly later than the unemployment rate reached 6.5%. After reaching 6.5%, employment, participation rate and other indicators will be of importance. The Fed will slow down bond purchases if the labour market and inflation meet the forecasts – but Bernanke didn’t give any exact terms, everything will depend on coming data.

Bernanke supported recent statements of the future Fed chair Janet Yellen that it is necessary to do everything possible today for a stable economic recovery. According to Bernanke, the Fed will adhere to stimulus policy as long as it will be necessary. Such mild comments had a negative impact on the dollar. On Wednesday the Fed meeting minutes will be published. Most experts expect the Federal Reserve to start decreasing monthly asset purchases not earlier than March, 2014.

The euro strengthened on Tuesday amid German economic sentiment growth up to 4-year high. German ZEW Economic Sentiment grew to 54.6 p. in November from 52.8 p. in October having exceeded expected growth to 54 p. The index turned out the highest since October, 2009. German Economic Sentiment has been high for the last several months, said ZEW president. Current Assessment turned out worse in November; it fell to 28.7 p. from 29.7 p. while it was expected to grow up to 31 p. On Friday there will be a release of IFO Business Climate.

ECB’s Praet supported the euro; he said on Tuesday that euro-zone economic state improved and the recovery was moderate but stable. Vice-President of the ECB Constâncio said that quantitative easing aimed to growth stimulation in the euro-zone was a possibility for the ECB and its introduction wasn’t discussed at the Governing Council on a technical level.

The yen weakened before BoJ 2-day meeting on Wednesday devoted to the discussion of monetary policy parameters. The dollar again rose above 100 yen. Almost three-quarter of economists polled by Bloomberg expect the central bank to expand stimulus programs in the first half of 2014.

Australian dollar grew on Tuesday after the publication of Reserve Bank of Australia meeting minutes which turned out neutral in general. The central bank doesn’t exclude further interest rate decrease but at the same time estimates economic state with large certainty. Australian CB Leading Index grew by 0.3% in September to 123.6 after the decrease by 0.2% in August.

 

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Overview of the main economical events of the current day - 21/11/2013

The Dollar Rose amid FOMC Meeting Minutes

The US dollar rose significantly on Wednesday Vs most major currencies amid the publication of FOMC Meeting Minutes and positive retail sales. The Fed can start QE tapering in the upcoming months already. The euro fell amid strengthened speculations on introduction of negative deposit rates. The pound grew after BoE Meeting Minutes publication but then dropped again.

FOMC Meeting Minutes showed that the Fed’s leaders expect improvement of economic situation in the country which will allow QE tapering in the upcoming months – but they also consider a possibility of tapering before the economic situation improves. The economic effect from the government shutdown was temporary and limited. Besides, unemployment threshold decrease and introduction of inflation threshold were discussed at the meeting.

The dollar was also supported by the statements of certain FOMC members. So, President of the Federal Reserve Bank of New York William Dudley said that despite fiscal problems this year, the economy continues recovering and it will grow at faster rate. Besides, he referred to October Non-Farm Payrolls, which showed the growth of new jobs, and to GDP growth in the third quarter which preliminarily accounted for 2.8%. President of the Federal Reserve Bank of St. Louis James Bullard said that the economy looked better and QE3 tapering would be discussed at the next meeting in December – and a strong employment report in October increases the chances for it.

The US macrostatistics data were mixed. The US retail sales rose more than expected while Existing Home Sales decreased and inflation data in the whole met the expectations. Retail sales rose by 0.4% in October while a growth by 0.1% was forecasted; Sales ex Autos increased by 0.2% while a growth by 0.1% was expected.

Existing Home Sales fell in October by 3.2% compared with the prior month – to 5.12 million houses at an annual rate while sales decrease by 2.9% - to 5.14 million was forecasted. Home Sales have been falling from more than 3-year high for two months. Consumer Price Index fell by 0.1% in October while no changes were expected – at an annual rate inflation fell to 4-year low of minus 1%.

The euro was traded downwards on Wednesday amid Producer Price Index decrease in Germany at a faster rate than expected – and then slumped to weekly lows Vs the dollar after Bloomberg News announced that the ECB considered introduction of a negative deposit rate at -0.1%. Recently, there aroused speculations on ECB’s introduction of a negative deposit rate, which can make commercial banks extend credits to companies and households more actively.

Earlier this month the ECB governor Draghi announced that the central bank was ready to new measures if it was needed to provide economic growth. Citi experts believe that a move towards negative deposit rates can cause a significant opposition among some ECB leaders. As an option the ECB can take into account other measures. German Bundesbank President Jens Weidmann said on Wednesday that there was no use for the ECB signaling about further softening of monetary policy now as it had just softened it.

The pound updated its monthly high after the publication of BoE Meeting Minutes but then dropped. On one hand, the meeting minutes indicated that acceleration of economic growth in short-term perspective is expected in the UK. Credit availability and the conditions for business spending have improved. The driving forces of growth acceleration are household spending and housing market. On the other hand, risk balance for the growth is shifted to the negative due to the situation in the euro-zone and balance recovery. And economic growth rate seems to decrease within the next 2-3 years.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 22/11/2013

German Manufacturing PMI Reached 29-Month High

The US dollar rose on Thursday Vs yen and commodity currencies but fell Vs the euro and the pound. The euro strengthened amid PMI growth in Germany, the largest euro-zone economy. The pound grew after CBI positive report. The yen fell amid the end of BoJ 2-day meeting. Australian dollar had been falling for two days on the back of Chinese manufacturing PMI slowdown.

The US data released on Thursday were positive in general. Unemployment Claims dropped by 21 thousand last week to 7-week low of 323 thousand more than twice exceeding the expected decrease. The indicator that smoothes the volatility of weekly data - 4 Week Average of Initial Jobless Claims – fell to 338.5 thousand from 344 thousand.

The US Flash Markit Manufacturing PMI grew to 8-month high of 54.3 p. in November compared with forecasted 52.6 p. Producer price decrease in October met the forecasts while Producer Price Index Ex Food & Energy increased slightly more than expected. Only Philadelphia Fed Manufacturing Index turned out worse; it fell in November more than forecasted – to 6.5 p. in comparison with 19.8 p. in October while a decrease only to 16 p. was forecasted. New orders, shipments and employment fell significantly.

The euro strengthened on Thursday amid German PMI growth, the largest euro-zone economy. Manufacturing PMI rose to 29-month high 52.5 p. in November from 51.7 p. in October; Services PMI – to 9-month high; PMI Composite – to 10-month high. Meanwhile, the same indexes in France dropped against the expected growth. In euro-zone manufacturing PMI slightly grew having met the expectations – while Services PMI fell. Euro-zone PMI Composite dropped to 3-month low 51.5 p. from 51.9 p. in October. The euro rocketed after the ECB Mario Draghi weakened the expectations of deposit rate decrease. Draghi said that there was "no news" on possible negative deposit rates debates.

The pound grew amid a positive CBI report which showed that CBI Industrial Order Expectations and Production reached the highest level since 1995. CBI Industrial Order Expectations reached +11 in November Vs -4 in October. Industrial output balance amounted to +24 against +9 in October. According to CBI economy director, the data became a new promising sign of manufacturing sector recovery.

The yen fell significantly and USDJPY exceeded level of 101 for the first time since July 10 – after the announcement of 2-day meeting results of BoJ that kept monetary policy line and economic state estimate unchanged. The central bank said that economic recovery was moderate amid exports increase, business spending and public investment. The CB is intended to adhere to the way of quantitative and quality easing of monetary policy further to provide access to the target inflation level of 2% per annum. Yen weakening was supported by Japanese pension fund new plan on risk assets distribution.

Australian dollar fell to its low for almost 2.5 months Vs the dollar after HSBC Flash Manufacturing PMI which fell to 50.4 p. in November against 50.9 p. in October having considerably exceeded expected decrease to 50.8 p. An extra pressure on AUD was put by the speech of RBA governor Stevens who said that Australian dollar was higher the levels which RBA expected for mid-term perspective – and sooner or later the market will return AUD to the right levels. Besides, Stevens warned that currency interventions were still part of RBA’s armory, they are reasonable and acceptable in certain circumstances, and may be effective and useful.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 25/11/2013

The Main Events of the Week

The US dollar dropped on Friday Vs the euro and the pound and grew against the yen and commodity currencies continuing the trend of the prior day amid no significant US macrostatistics. The euro grew after the release of positive Business Climate in Germany. IFO Business Climate rose by 1.9 p. to 109.3 p. in November against forecasted growth up to 107.7 p. IFO Current Assessment and Expectations also rose having exceeded the forecast significantly.

Canadian dollar fell on Friday to 3-month low Vs the dollar but then recovered some losses after Canadian report on retail sales which grew by 1% in September having exceeded the expected growth by 0.3%. However, the growth was caused mainly by auto sales increase – sales ex auto didn’t change compared with August. At the same time Canadian inflation data turned out worse: inflation slowed down in October to 0.7% at an annual rate while its decrease only to 0.8% was expected. Inflation data let the central bank keep interest rates at low further.

By the end of the week the US dollar had lost about 0.2% according to the dollar index, decreasing to DX for two weeks in a row. Last week fall happened mainly due to the growth of European currencies. The dollar fell against the Swiss franc (-0.80%), British pound (-0.62%) and the euro (-0.39%). The dollar grew against commodity currencies and the yen. Most of all the US dollar rose against the Australian dollar (+2.10%) and New Zealand dollar (+1.36%). A smaller growth was shown Vs the yen (+1.14%) and Canadian dollar (+0.82%).

The last week of the month, on Monday Pending Home Sales will be released; on Tuesday – Building Permits, Housing Starts (for two months at once – September and October), S&P/Case-Shiller and FHFA Home Price Index and CB Consumer Confidence; on Wednesday – Durable Goods Orders, Chicago PMI and Revised U. of Michigan Consumer Sentiment. Thursday is a day off in the USA and on Friday the activity at the American session may be minimal.

In the euro-zone on Thursday there will be a release of confidence indexes from the European Commission and on Friday – inflation and unemployment. In Germany Gfk Consumer Confidence will be released on Wednesday; on Thursday – labour market and inflation reports; and on Friday – retail sales. In Switzerland GDP for the third quarter will be published on Tuesday. In Japan retail sales report will be released on Thursday and on Friday – a large statistics block of the end of the month: inflation, unemployment and industrial output.

In the UK BBA Mortgage Approvals will be released on Monday; on Wednesday – the Second Estimate GDP for the third quarter; and on Friday - BoE Monetary & Financial Statistics. On Tuesday Inflation Report Hearings will be held where BoE governor Mark Carney and other central bank members will deliver a speech. On Thursday there will be a release of the BOE Financial Stability Report and BoE governor will make a speech.

In Australia Private Capital Expenditure report will be released on Thursday and on Friday - Private Sector Credit report. In New Zealand there will be a release of Trade Balance on Wednesday; on Thursday - ANZ Business Confidence Index and on Friday – Building Permits. In Canada Current Account will be released on Thursday; and on Friday - GDP for September and for the third quarter.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 26/11/2013

The ECB Has Room for Interest Rates Decrease

The US dollar was traded upwards on Monday Vs most major currencies amid the yen fall Vs the dollar to almost 6-month low and correctional decrease of European currencies. On Monday there was little significant statistics and the dollar ignored weak housing market data. The pound fell amid weak real estate market data in the UK. The yen and Swiss franc dropped after the nuclear deal with Iran had been reached due to reduced demand for safe-haven currencies.

According to the National Association of Realtors the U.S. Pending Home Sales fell in October to its low from December, 2012. Pending Home Sales Index has been falling for five months and dropped by 0.6% in October while it was expected to rise by 1.3%. Prices and borrowing cost growth has a negative impact on housing market recovery.

Dallas Fed Manufacturing Activity also turned out worse than expected and fell to 1.9 p. in November compared with 3.6 p. in October. Meanwhile, according to the opinion poll of economists held by Philadelphia Fed, the US economy will grow at faster rates next year, which will lead to labour market strengthening. A faster decrease of unemployment rate will let the Fed accelerate QE tapering.

The pound fell considerably on Monday after the release of the UK weak housing market data. According to the British Bankers' Association BBA Mortgage Approvals fell to 42.8 thousand in October from almost 4-year high of 43.2 thousand in September while its growth up to 45 thousand was expected. The euro was also traded downwards; it was negatively influenced by the statements of some ECB members. ECB Governing Council member Ardo Hansson said that the European central bank still had room to reduce interest rates and it is technically ready to take the deposit rate to the negative zone.

ECB’s Christian Noyer said that interest rates must stay low for an extended period, or even lower if need be, for price stability in the euro-zone. ECB’s Benoît Coeuré announced that inflation drop in the euro-zone continued – although there is a hope that it will not progress to deflation because the economy is recovering.

The yen fell to almost 6-month low against the dollar after reaching a nuclear deal with Iran. On November 24 after 10 years of negotiations in Geneva a deal on partial relief from some economic sanctions against Ian was reached in exchange for a partial shutdown of its nuclear program. Bank of Japan Governor Haruhiko Kuroda marked on Monday a progress on the way to reaching the target inflation level of 2% although he admitted the plan too ambitious considering 15 years of deflation in Japan. Deputy Minister of Finance said that deflation was coming to an end and the economy started recovering.

Canadian dollar reached 4.5-month low Vs dollar on Monday amid oil price decrease after Iranian nuclear program deal that allows weakening some economic sanctions against Iran. Swiss franc also dropped. Swiss National Bank chairman Jordan said on Monday that Swiss franc was still highly valued and the central bank was ready to unlimited currency interventions to defend the franc rate.

 

[MasterForex Broker]

Overview of the main economical events of the current day - 27/11/2013

The Dollar Fell amid the U.S. Weak Consumer Confidence

The dollar dropped on Tuesday against most major currencies after weak consumer confidence data which continued falling in November after a sharp decline in October connected with the government shutdown. The pound and the euro were traded upwards; the yen also strengthened a little. Australian and New Zealand dollars continued falling.

CB Consumer Confidence fell to 70.4 p. in November from 72.4 p. in October while it was expected to grow up to 72.9 p. Prior month indicator was revised from 71.2 p. to 72.4 p. The index has been falling for three months and like last month continues staying at low since this April. Expectations fell most of all.

Housing market data that were released before turned out positive in general. Building Permits in the US rose by 6.2% in October Vs prior month and amounted to 1034 thousand at an annual rate, which has become the highest level since June, 2008. Prior month indicator was expected to be at 930 thousand. Building Permits in September rose by 5.2% to 974 thousand also exceeding the expectations. New Housing Starts were not published on Tuesday. Ministry of Commerce referred to the fact that the exact figures couldn’t be collected in time.

S&P/Case-Shiller Home Price Index in 20 largest cities grew by 13.3% in September at an annual rate having exceeded the expected growth by 13%. At the same time FHFA House Price Index rose by 0.3% in September Vs prior month and turned out slightly worse than forecasted growth by 0.4%. Richmond Fed Manufacturing Index rose to 13 p. in November Vs 1 p. in October having significantly exceeded the expected growth to 4 p.

The pound was traded upwards on Tuesday having almost no reaction to BoE Inflation Report and the speech of BoE governor Mark Carney who said about a sharp economic recovery in the UK, about strong employment rate growth and improvement of business confidence. At the same time Carney said again that unemployment decrease to 7% wouldn’t be an automatic trigger for the CB to raise the rate.

The euro also strengthened on the back of Italian Consumer Confidence growth. Consumer Confidence rose to 98.3 p. in November, 2013 from 97.3 p. in October having exceeded the expected growth to 97.5 p. The euro was supported by The People's Bank of China governor’s statement that the European currency is an important part of Chinese reserves. The Australian dollar continued falling after some growth at the beginning of the day caused by the statements of RBA Deputy Governor Philip Lowe who weakened growing expectations of currency interventions – having said that the threshold at which the central bank would make interventions at the currency market was high enough.

The yen strengthened a little on Tuesday from 6-month low Vs the dollar that was reached this week after the publication of Monetary Policy Meeting Minutes which showed that three members of BoJ Policy Board opposed some provisions of central bank inflation report, which was released in October. Member of the Policy Board Kiuchi said on Tuesday that it was unreasonable to plan reaching 2% inflation within 2 years and this target of the central bank towards prices growth was inadequate. It is another sign of disagreement among the leaders of the Bank of Japan.