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04.04.2016 18:19

American focus: the US dollar significantly depreciated against the pound

The dollar traded mixed against the euro, but generally remained within a narrow range, due to the lack of significant drivers and expectations of the ECB meeting and the publication of the Fed minutes. Minutes of the ECB is likely to help you understand why the ECB Governing Council chose the stimulus measures and whether he considered there any other options for action. Also, they may contain clues as to the reasons for the revision of economic forecasts. Meanwhile, the minutes of the last FOMC meeting may provide a better idea of ​​when the Fed plans next rate hike. Futures on interest rates Fed indicate only a 5% chance of a rate hike in April and 26% probability in June. However, today the head of the Federal Reserve Bank of Boston Eric Rosengren said that the Fed's rate futures are not significantly reflect the pace of rate hikes in the short term. Rosengren sees fit gradual increase in rates, but, in his opinion, it will not be so gradual, according to market participants.

Little influence is also exerted on the US data. The Commerce Department reported that new orders for manufactured goods in the US fell in February, as business spending on capital goods were significantly weaker than initially anticipated. This recent signs that economic growth remains sluggish in the first quarter. New orders for manufactured goods fell by 1.7 percent, as demand has fallen as a whole, leveling revised down January's growth of 1.2 percent. Orders decreased in 14 of the last 19 months. The February drop in industrial orders was in line with economists' expectations. Earlier it was reported that orders rose by 1.6 percent in January.


The pound rose against the dollar significantly, restoring most of the ground lost on Friday. Analysts say that the pound strengthened, despite the absence of basic catalysts. Probably, investors are buying the currency in anticipation of the publication of important reports.

This week the focus will be the results of a survey of purchasing managers for the UK service sector, as well as data on industrial production and trade balance. The PMI for the services sector must show that the restoration of the country's economy is still dependent on the service sector. At the same time, data on industrial production is likely to point to the difficulty faced by the manufacturing sector.

Meanwhile, market participants are almost ignored the warning agency S & P on the potential loss of Britain's rating in case Brekzita, as well as data on the PMI index in the construction sector. The report from Markit Economics and the Chartered Institute of Purchasing and Supply showed that remained stable in March, contrary to expectations, decrease economists in Britain Activity in the construction sector. UK Purchasing Managers' Index in the construction sector by Markit / CIPS was 54.2 in March, at the same level as the 10-month low in February. Economists expected the index to decline slightly to 54. Any value above 50 indicates expansion in the sector. In addition, recent data indicate the slowest rate of expansion of activity since June of 2013.


The yen strengthened against the dollar, reaching a peak on March 18 due to the adjustment of its expectations of investors about the prospects for the Fed raising interest rates. Many traders use caution due to the contradiction between the strong and the data of the central bank's tendency to mitigate policy. Recall that in the course of the March meeting of the Fed's policy to keep interest rates unchanged, but noted that short-term interest rates will rise by 0.5%, implying two rate hikes to 0.25% by the end of 2016. In December, it predicted four rate hikes. The next meeting will be held April 26-27. Most traders do not expect a rate hike in April, explaining that it is not after the press conference will be held. Currently, futures on interest rates Fed indicate only a 5% chance of a rate hike in April

Market Focus

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  • U.S.: Nonfarm Payrolls, January 227 (forecast 175)
  • Eurozone: Consumer Confidence, January -4.9
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