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22.03.2016 18:15

American focus: the US dollar strengthened considerably against the pound

The euro retreated from session low against the dollar, but still trading lower. Initially, the pressure on the euro was news of the terrorist attacks in Brussels, who leveled from positive data on business activity. Analysts say the attacks may strike at an important unit for the tourism sector and strengthen the movement against migrants. Belgian broadcaster RTBF reported that in the course of attacks killed 34 people. The explosions took place four days after the arrest of a suspect in Brussels to participate in the terrorist attacks in Paris that killed 130 people. The responsibility for the current attacks have taken the militants of the terrorist group "Islamic State." The level of terrorist threat in Belgium increased to the maximum. With this level of threat is usually shuts down public transport, and people should avoid mass gatherings. Also, the authorities closed the country's borders.

With regard to statistics, the company Markit Economics reported that the euro zone private sector activity regained momentum in March, as it has grown at the fastest pace since December. The composite output index rose to 53.7 from 53.0 in February. It was expected that the index improve to 53.2. PMI index for the services sector rose to 54 from 53.3 a month ago. The expected reading was 53.3. The manufacturing PMI rose to 51.4 from 51.2 and was higher than the expected 51.3.

Meanwhile, the Ifo research institute said that German business confidence improved more than expected in March, following the deterioration in the previous three months. Indicator Ifo business climate rose to 106.7 from 105.7 in February. Economists had forecast 106. The current conditions index rose to 113.8 from 112.9. Economists had forecast a reading of 112.6. The expectations index rose to 100 from 98.9. Economists expected the index to be 99.5.

In focus were also data on the US, which fell short of forecasts and pressured the dollar. The Markit reported that the seasonally adjusted preliminary manufacturing PMI index rose to 51.4 from 51.3 in February, but remained well below the average post-crisis figure (54.1). Slightly stronger growth of output, new orders and employment have helped support the index, while the key factor to exert pressure, was the sharp drop in inventories since January, 2014. Although manufacturing output growth has pushed up by a 28-month low recorded in February, the latest increase was only modest and the weakest one of the registered in the last two and a half years. The responses suggested that the relatively restrained demand conditions and efforts to streamline post-production stocks, acted as a counter to the growth production.

The pound fell nearly 200 points against the dollar, updating at least 17 March, which was connected with the terrorist attacks in Brussels. Experts believe that after today's UK events can begin to strive for greater isolation from other EU countries, and the British are more inclined to vote for the country's exit from the bloc in a referendum on 23 June. Another factor reducing the pound was inflation data. The Office for National Statistics said consumer prices rose 0.3 percent in February compared with a year earlier, as in January. It was expected that the prices will increase by 0.4 percent. On a monthly measurement of consumer prices rose by 0.2 percent, offsetting a 0.8 percent fall in January. Economists had forecast an increase of 0.4 percent. Core inflation, excluding energy, food, alcoholic beverages and tobacco products remained stable at 1.2 percent. In another ONS report shows that sales prices fell by 1.1 percent after easing by 1 percent in January. The decline was less than the expected fall of 1.2 percent. At the same time, a month selling prices increased by 0.1 percent, offsetting the January drop by 0.1 percent. Purchasing prices continued the downward trend in February. Purchase prices fell by 8.1 percent compared with a decrease of 8 per cent in January. Prices are expected to decline by 7.4 percent. On a monthly basis, the purchase prices have risen by 0.1 percent compared to 1.1 percent decline in January.

The yen strengthened sharply against the dollar, as the news of the terrorist attacks in Brussels stepped up demand for safe-haven assets. However, the latest market sentiment began to improve and the currency lost all previously-earned positions. The attention of investors is gradually switched to the inflation data for Japan, the publication of which is scheduled for Thursday. According to the median estimate of 22 analysts who were interviewed to Reuters, the base consumer price index, which includes oil products but excludes prices of fresh food, rose 0.1 percent annually in February. Basic consumer prices in Tokyo, available a month before the nationwide data, are expected to fall by 0.2 percent in March compared to the previous year.

22.03.2016 17:09

WSE: Session Results

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • 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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