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20.01.2016 19:21

American focus: the Canadian dollar rose

The Canadian dollar regained ground lost against the US dollar after the Bank of Canada left its key interest rate unchanged. However, the bank was downgraded forecast GDP growth in 2016.

The Bank of Canada left the target value of the one-day interest rate unchanged at 0.50%. So he ignored the appeals of a number of economists to mitigate the monetary policy to stimulate the slowing national economy.

According to the Bank of Canada, the country's economic growth in the 4th quarter of 2015, probably stopped "due to a temporary deterioration of the US economy, low investment companies and a number of other temporary factors." In addition, the central bank of the country believe that now the Canadian economy is in the midst of transition, during which the economy is reoriented to export energy to the industry that are not related to resources. Growth in non-oil sectors of activity due to the increase in demand from the United States, a decrease in the Canadian dollar and soft policies in the monetary and fiscal spheres.

The US dollar shows decline against other major currencies after the publication of weak US economic data, while concern about falling oil prices continue to support demand for the yen and the Swiss franc as a safe haven.

The US Labor Department reported that consumer prices unexpectedly fell in December, as the rise in prices in the service sector has been offset by falling energy prices. According to the consumer price index decreased by 0.1 percent after no change in November. Despite the fall in the last month, the consumer price index rose by 0.7 per cent per annum, recording the biggest gain in a year. This change followed an increase of 0.5 percent per annum in November. Experts note that the faster growth in prices due to the effect of the comparison. However, further growth can be limited due to lower oil prices, which are now close to 12-year lows. Economists had expected the CPI to remain unchanged in monthly terms, but increased by 0.8 per cent per annum.

Housing starts and building permits fell at the end of December after a significant increase in the previous month. The last change, along with other weak data reinforces concerns about the state of the economy. The report from the Commerce Department showed that, taking into account fluctuations bookmark new homes fell by 2.5 percent, amounting to 1,149 thousand at the same time. (In terms of annual growth). Meanwhile, the index for November was revised upward - up to 1179 thousand. To 1173 thousand. Experts expect that to grow to 1,200 bookmarks thousand.

The yen was supported as a safe haven, as oil again dropped below the price of $ 28 a barrel to the lowest since 2003 after the International Energy Agency said that the off-season warm weather and increase in supply will keep oversaturation of the oil market, at least until the end of 2016. A significant decrease in the stock markets of Asia also boosted demand for safe haven. Meanwhile, Chief Cabinet Secretary of Japan Suga said that the drop in oil prices favorably affects the Japanese economy. Earlier the head of the Bank of Japan Kuroda assured markets that the Bank shall immediately take steps, including the easing of monetary policy if inflation worsens the situation.

Focus was also the January economic report the government of Japan. As it became known, the government left unchanged overall assessment of the economic situation in the country, saying that the economic recovery continues at a moderate pace. In addition, the Government has recognized the presence of some of the weaknesses of the economy and the need to monitor market fluctuations. In addition, the government raised the assessment of the situation in industrial production, while noting some weakness in other segments of the economy, such as the export sector.

The pound traded mixed against the dollar, but in general remained within a narrow range. Moderate pressure is applied to data on the labor market in Britain. The Office for National Statistics reported that during the three months (to November) wage growth in the UK slowed to the lowest level since February 2015. This change indicates that the Bank of England is likely to will not rush to increase interest rates. The report stated that the average earnings of workers (including bonuses) increased by 2.0 percent in the three months to November. Experts forecast an increase of 2.1% after rising 2.4% in the period from August to October. Average earnings excluding bonuses rose by 1.9%, which was above analysts' estimates (1.8%), but more slowly than in the previous three months (2.0). Separately, in November, the total wages in the private sector, for a change which is closely following the Bank of England increased by 2.2 per cent against 2.1 per cent in October. The unemployment rate fell to 5.1 percent (the lowest value since the beginning of 2006), compared with 5.2 percent in the three months to October. The ONS also said that employment jumped by 267,000, recording the third largest gain since the beginning of statistics in 1971. Given the recent changes in the employment rate rose to a new high of 74.0 percent. The number of unemployed was 1.68 million, up 99 thousand. Less than in the period of June to August and 239 thousand. Less than the same period in 2014.

The Swiss franc fell against the dollar, having lost almost all previously earned position. The pressure on the currency was data published by ZEW institute and Credit Suisse. They showed that the index of Swiss economic expectations declined significantly in January, its lowest level since July 2015, which was caused by deteriorating assessments on economic growth and stock market returns. The survey was conducted among 37 analysts from 4 to 18 January. According to the index of investor expectations fell this month to -3 points compared to 16.6 points in December. The indicator of the current situation worsened in January, from 5.8 points to -8.5 points. The report also reported that nearly half of analysts expect growth in gross domestic product of Switzerland from 1% to 1.5% this year. Recall that in October 2015, about 60% of the analysts foresee growth in 2016 more than 1%. In addition, 87% of respondents said they expected to reduce or zero change in consumer prices this year against 71% in the previous survey in October.

Market Focus

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  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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