Economic data can strengthen the U.S. Dollar - 18.3.2014

The inflation in the EZ fell in February despite the forecasts. This has strengthened the Euro (growth on the EURUSD chart) on Monday. Another positive factor was the news that the British telecommunications company, Vodafone buys the largest Spanish cable operator Ono for 7.2 billion Euros. That means that this volume will be converted from British Pounds (GBPUSD) into Euros in Forex market. This information boosted the Euro and caused the Pound reduction. Today at 10-00 (UTC), we will see three indices of economic confidence and economic conditions in Germany and the EZ, calculated by the Centre for European Economic Research (ZEW). In our opinion, the preliminary forecasts are generally neutral. Accordingly, a significant movement of the Euro is possible if the actual data differs from market expectations.

The U.S. industrial production in February rose more than expected. However, this did not have a positive impact on the U.S. currency yesterday. So investors have won the stronger data on the Euro back. Today we expect the opposite situation. The inflation and the real estate market data for February strike out at 12-30 (UTC), they are more important than the European macro news. In our opinion, the preliminary forecasts are positive. It may accelerate the USDIDX and make the U.S. Dollar stronger vs. other currencies.

The RBA revealed the materials (minutes) of its fourth meeting in March. It expects low unemployment and higher wages. Rising real estate prices and lending volumes may lead to the speculative "bubble" formation. However, this risk remains low for now. This helped the strengthening of the Australian Dollar (growth on the AUDUSD chart).

The Japanese Yen showed a slight easing (growth on the USDJPY chart). The Nobel Prize winning economist, Paul Krugman proposed the Adviser to Prime Minister Shinzo Abe to drop from the sales tax increase and to reduce the number of civil servants and spending for the parliament and "other bureaucrats". Recall that Abe is implementing a new economic course called Abenomics. Since April 1st, the sales tax in Japan increased from 5% to 8%. Some of Forex market participants believe that they will be increased by 10% next year. According to the IMF, Japanese total debt will reach 242% of GDP by the end of 2014. Raising taxes is necessary for its servicing and repayment.

As it was expected, the political situation in the world got stabilized after the referendum in Crimea. This caused the decline in prices on commodity futures for gold (XAUUSD), Oil and Wheat. The Copper contrarily increased.

The Corn prices fell after reporting a shipment of 700 tons from Ukraine last week. This is a record weekly amount since the beginning of the year. Investors believe that the being of Crimea under Russian jurisdiction does not affect the grain export from Ukraine.