Currency market dynamics turn out in line with our expectations - 6.1.2014

At the end of the last week, the currency market dynamics turn out in line with our expectations. All of three types of dollar got stronger - American, Australian and Canadian, as same as Japanese Yen. European currencies continued to weaken. Gold (XAUUSD) has been going up for five days in a row and reached its highest level for three weeks. In our opinion, it is associated with a correction appeared in global stock markets and it does not mean that investors have less confidence in the US dollar. Conversely, the dollar index (USDIDX) rose to its 5-weeks peak. This was stimulated by the US Fed Chairman Ben Bernanke’s statement on Friday. By the old tradition, his speech was very vague. As Bernanke predecessor - Alan Greenspan said : " I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said." Nevertheless, investors believed that the Fed is ready to further reduction of the monetary emission for redemption of government bonds in case of economic improvement. Let us note that the Fed's balance increased by four, to about $ 4 trillion, compared with 2007, because of the three QE stages.

Today, we expect a lot of important statistics. You can read more about this on our website in the "Economic Calendar" section. However, we note the most important events. Services PMI for the UK will be announced at 9-30 GMT ( 0). Eurozone inflation data for December comes out at 13-00 GMT ( 0). In our opinion, the preliminary forecasts for both the pound (GBPUSD) and Euro (EURUSD) are negative, but GBP can be stronger. The USA services PMI for December and industrial orders for November will be found out at 15-00 GMT (0). Both indicators are expected to be positive. We do not exclude increased volatility in the forex market. The fact is that this week, the ECB and the Bank of England meeting will be held on Thursday. Attention of investors will be stuck to results of those meetings. Now most of the market participants believe that the interest rates will remain unchanged. The FOMC Minutes are expected on Wednesday. It is less important event, as it is not supposed to change key parameters.

Australian Dollar (AUDUSD) strengthened on expectations that economic data will come out positive. According to forecasts, the trade deficit in November will be reduced to A $ 300 million and retail sales will grow by 0.4% compared to October. Australian data will be released on Thursday.