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07.03.2016 19:20

American focus: The US dollar fell against major currencies

The euro and the pound strengthened significantly against the US dollar, helped by the increase in risk appetite against the backdrop of rising oil prices. However, the room for growth is limited as investors remain cautious ahead of the ECB meeting and the pound under pressure on fears of output the UK from the European Union. Market participants expect that against the background against the backdrop of high economic risk and weak inflation, the ECB will launch additional measures to mitigate the monetary policy. However, once in December, the ECB disappointed markets by their actions, policies will be difficult to live up to expectations, since the bar pretty high. Most experts interviewed to Reuters, believe that in the course of the March meeting of the ECB will lower the deposit rate by another 0.1% to 0.4%, but leave unchanged its key refinancing rate - at 0.05%. Also Reuters survey results showed that the probability of increasing the amount of asset purchases (QE) is 68%. On average, it is expected that the amount will increase QE by 10 billion. Euros to 70 billion euros. Per month. However, some experts predict increase in QE to 90 billion. Per month. Also at the March meeting, the ECB will present new economic forecasts for 2016-2018 years, probably, the new forecast for inflation this year will be much lower than December, taking into account the latest data. Analysts at Goldman Sachs believe that the ECB will revise the estimates of inflation for 2016 to 0.1% from 1.0%, and for 2017 - from 1.6% to 1.5%.

Meanwhile, the pound also affected by expectations the publication of data on industrial production in the UK, which will be released on Wednesday. Probably, the statistics would indicate a recovery in industrial production in January. It can strengthen the hope that the situation in the economy at the beginning of 2016 was more positive than the results of the polls indicate. According to the forecast, compared with the previous month, the industrial production in January, likely rose 0.5% after falling 1.1% in December. Growth in industrial production eliminates concerns that emerged after the publication of Markit Economics index PMI.

The Canadian dollar rose substantially against the US dollar, reaching a maximum of 20 November 2015. In the course of trading affect the rise in price of oil and the widespread weakening of the US currency. Today, the price of a barrel of Brent crude for the first time since December 2015 exceeded the mark of $ 40 per barrel. Meanwhile, WTI crude closer to the level of 38 dollars per barrel. Support for oil quotations has improved prospects for the global economy and signs of demand reduction. On Friday, Baker Hughes reported that the number of the US oil rigs last week dropped to 392 units, the lowest level since 2009. Reducing the number of units is marked now the eleventh week in a row. At the moment, the number of installations of all types decreased by 69% from its peak in October 1609, 2014. Prospects of demand in the world oil market are also improving. On Friday it became known that in February the growth of employment in the United States resumed - the number of jobs outside agriculture rose by 242 000, and the growth of the previous two months was revised upward to 30 000. Meanwhile, the Commission on Commodity Future US announced that hedge funds and other speculators last week closed bets on falling oil prices, the fastest pace in 10 months. In the short positions in WTI crude oil decreased by 15% ended March 1 week - up to 150 thousand 718 futures and options.. Positions on the growth of oil prices fell by 753 contracts, resulting in net long positions increased by 24 thousand. 886 contracts. But analysts warn that the world oil market remains a significant oversupply, prices may well fall back.

Market Focus

  • U.S.: Industrial Production (MoM), September 0.1% (forecast 0.2%)
  • Britain can't get full single market access with free movement concessions - Merkel
  • Earnings Season in U.S.. Major Reports of the Week
  • New Zealand CPI, 3Q: 0.2% q/q (forecast 0%), 0.2% y/y (forecast 0.1%)
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