The U.S. Dollar Index has fallen to a six-month low on Tuesday - 7.5.2014

The U.S.Dollar Index has fallen to a six-month low on Tuesday. Investors fear that the Fed chief, Janet Yellen could declare the monetary policy continuation during the sessions in the U.S. Congress today and tomorrow. That means maintenance of low interest rates for a long time. Yesterday's trade balance for March was slightly better than expected. Today at 12-30 CET, we will see the preliminary labor productivity data for the first quarter. In our opinion, it is not very important information, but we take a note that its outlook is negative. Janet Yellen’s speech is expected at 14-00 CET.

All yesterday's EZ economic indicators were positive and exceeding the forecasts. Moreover, the composite PMI rose to the peak of the last 35 months, and the services PMI rose to the maximum of 34 months. This has strengthened the Euro (EURUSD) against the U.S. Dollar. Investors believe that the ECB will not soften the economic policy (start the emission) at the end of its next meeting on May 8th. There are important economic data expected from the EU for today. The releases of PMI and other indicators for individual countries are to be continued. The industrial orders in Germany for March fell in the morning which slightly limited the Euro growth on the chart.

The Australian Dollar (AUDUSD) got stronger (increased) after the optimistic statements made at the RBA meeting. The discount rate remained unchanged at 2.5%. The weak retail sales data for March came out in Australia this morning. It limited the further Aussie growth for the moment. The retail sales provide 17% of Australian GDP and 10% of employment. Tomorrow night at 0-30 CET, we will see the important labor market data coming out in Australia. In our opinion, they can affect the exchange rate, if the figure markedly deviates from the neutral forecasts. We should pay attention to yesterday's unemployment rate decline in New Zealand for the first quarter to the minimum of 5 years. As a result, the New Zealand Dollar (NZDUSD) rose to the maximum of 33 months.

The British Pound (GBPUSD) rose to nearly 5-year high. Yesterday it was supported by the positive composite and service PMI data for April. There is no significant economic information expected from the UK for today. It will appear tomorrow (the Bank of England meeting on Friday). Note that most of market participants are not counting on confident exceeding the level 1.7 by the Pound yet. According to them, this can happen only in case of positive BOE inflation report on Wednesday and good unemployment data.

According to the Association of Indonesian Coffee Exporters and Industries, the domestic Coffee consumption in Indonesia for this year may increase by 33% over the next two years due to population growth and its income. By the year 2016, the domestic demand could rise to 400 thousand tons from 300 thousand tons, expected this year and 260 thousand tons in 2013. In our opinion, it may not have any significant negative impact on the stock of coffee. Since this association simultaneously raised its forecast for the crop in Indonesia this year by 50 thousand tons to 700 thousand tons. Note that since the beginning of the year the Robusta coffee, which is 80% of production in the country, rose by 28%. The association expects the share of the cheaper and more productive Arabica coffee to increase in the total yield in Indonesia from 19% to 25% over the next three years. The Arabica share is 59% in the world.

The Soyb prices kept falling after the forecast release from the Agriculture Ministry of Brazil that the corp for this year could rise to 89-90 million tons from 81.5 million tons last year.