- Analytics
- Market Overview
Strengthening of the U.S. dollar continued on Tuesday in the absence of major macroeconomic news - 5.3.2014
Strengthening of the U. S. dollar continued on Tuesday in the absence of major macroeconomic news. The situation around the peninsula of Crimea, formerly owned by Ukraine, gradually calms down. Now it is under control of Russian military forces. We believe that there will be no special intervention by NATO or the United Nations and this issue will gradually cease to influence world markets. The Euro (EURUSD) weakened slightly ( fall on the chart) after the announcement made by the IMF head, Christine Lagarde that inflation in the EU can remain below 2% for a long time. The ECB President, Mario Draghi said that inflation below 1% may adversely affect European economy. Some of Forex market participants do not exclude the ECB monetary emission increase by 300-500 billion euro for lending and maintaining the GDP growth. In this case it will be necessary to lower interest rates, for making the cost of debt servicing not high. In other words, the ECB wants to do the same thing as the Fed did in the United States. Perhaps the rate cuts will occur at tomorrow's ECB meeting. The important macroeconomic news of the EZ are coming out tomorrow. At 9-00 GMT, we will see the PMI for February and the GDP for the fourth quarter at 10-00 GMT. The preliminary forecasts are neutral, so noticeable reaction of the Euro price will only occur if they are not met.
Today, there are the ADP labor market data from In the U.S and the ISM Non-Manufacutring for February coming out at 13-15 GMT. In our opinion the preliminary forecasts are negative for the U.S. Dollar.
Australian Dollar strengthened (growth on the AUDUSD chart) after reports on the GDP growth in the fourth quarter by 2.8% on an annualized basis. This is more than expected. Australia is one of the few developed countries that successfully has been avoiding recession for 22 years. Recall that tomorrow night at 00-30 GMT Australia will announce the Retail Sales and the Trade Balance for January. The preliminary forecasts are negative, and this factor limits the strengthening of the Australian Dollar. The Canadian dollar is in the neutral trend before today's meeting of the Bank of Canada that is to be held at 15-00 GMT. According to forecasts, the discount rate will remain at the current level of 1%. Investors expect the Canadian Central Bank statements regarding the further economy and monetary policy development.
The Gold prices and prices for other commodity futures are correcting downwards due to the weakening of political tensions in Ukraine. Since the beginning of this year they have increased by 11%. Investors consider precious metals as safe heaven in case of any global economic and political problems. Meanwhile, the demand for gold in China is reduced now. Premium to its price in Shanghai compared to London, the Gold fell from $20 per ounce at the beginning of the year to its current level $1. However, the Gold demand increase is expected in India. The import duties over there have been increased by 10% for the last year. This led to the reduction in exports of Indian jewelry by 50% at the beginning of this year. Now the Ministry of Commerce is going to lower import duties on the Gold for India.
The Corn prices rose after reports that China may approve genetically-modified corn imports from North America. Earlier, China refused to purchase 887 tons of maize containing the MIR162 transgene. Negotiations on the grain supply have been conducted since 2010. The transgenic maize is mainly used as a food for poultry, pigs and other farm animals. Note that this news also boosted prices for soybeans (Soyb). Market participants believe that China may also approve the transgenic soya import, which is already bought by Japan and South Korea. An additional positive factor for soybeans are forecasts of reducing its harvest in Brazil due to bad weather. The price of the Coffee (Coffee) started correcting down after strong speculative rise on Monday. In previous reports we noted the possibility of reducing the Coffee prices due to improved weather in Brazil. Additional negative fact for the quotations was a message about the growth of the Coffee production in Colombia for February to the last 6 years, maximum 874 thousand standard bags, 60kg. each. This is 40% more than it was in February last year. Once the Coffee price rose from the beginning of 2014 by 70%, Brazil increased its exports from the last Coffee crop by 36% to 976 thousand bags per month.
Australian Dollar strengthened (growth on the AUDUSD chart) after reports on the GDP growth in the fourth quarter by 2.8% on an annualized basis. This is more than expected. Australia is one of the few developed countries that successfully has been avoiding recession for 22 years. Recall that tomorrow night at 00-30 GMT Australia will announce the Retail Sales and the Trade Balance for January. The preliminary forecasts are negative, and this factor limits the strengthening of the Australian Dollar. The Canadian dollar is in the neutral trend before today's meeting of the Bank of Canada that is to be held at 15-00 GMT. According to forecasts, the discount rate will remain at the current level of 1%. Investors expect the Canadian Central Bank statements regarding the further economy and monetary policy development.
The Gold prices and prices for other commodity futures are correcting downwards due to the weakening of political tensions in Ukraine. Since the beginning of this year they have increased by 11%. Investors consider precious metals as safe heaven in case of any global economic and political problems. Meanwhile, the demand for gold in China is reduced now. Premium to its price in Shanghai compared to London, the Gold fell from $20 per ounce at the beginning of the year to its current level $1. However, the Gold demand increase is expected in India. The import duties over there have been increased by 10% for the last year. This led to the reduction in exports of Indian jewelry by 50% at the beginning of this year. Now the Ministry of Commerce is going to lower import duties on the Gold for India.
The Corn prices rose after reports that China may approve genetically-modified corn imports from North America. Earlier, China refused to purchase 887 tons of maize containing the MIR162 transgene. Negotiations on the grain supply have been conducted since 2010. The transgenic maize is mainly used as a food for poultry, pigs and other farm animals. Note that this news also boosted prices for soybeans (Soyb). Market participants believe that China may also approve the transgenic soya import, which is already bought by Japan and South Korea. An additional positive factor for soybeans are forecasts of reducing its harvest in Brazil due to bad weather. The price of the Coffee (Coffee) started correcting down after strong speculative rise on Monday. In previous reports we noted the possibility of reducing the Coffee prices due to improved weather in Brazil. Additional negative fact for the quotations was a message about the growth of the Coffee production in Colombia for February to the last 6 years, maximum 874 thousand standard bags, 60kg. each. This is 40% more than it was in February last year. Once the Coffee price rose from the beginning of 2014 by 70%, Brazil increased its exports from the last Coffee crop by 36% to 976 thousand bags per month.
- Get Certificate
See Also
Follow the Market with Our Live Tools and Calendars
Market Analysis Lab from Our Top Experts