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05.04.2016 18:22

American focus: the US dollar declined significantly against the Japanese yen

The euro has appreciated strongly against the dollar, before recovering all the lost ground. The main support for the currency have had a representative of the ECB's Nowotny comments. He noted that only one action of the ECB does not help to prevent deflation, additional public investment. In addition, Nowotny added that if the ECB did not take measures, the region has long been able to deflation. The politician also said that as soon as the situation improves, monetary and interest rate policy will be reconsidered.

A further increase in the pair made it difficult to positive US data. The Markit noted that suppliers of services in the US signaled a moderate recovery in business activity growth and sustainable employment growth in March. The seasonally adjusted final index of business activity in the US services sector rose from to 51.3 in March, up from 49.7 in February and returned back above the 50.0 threshold. However, the final reading was the second lowest level since October 2013 and indicated only a small rise in output. Meanwhile, another report showed that the index of business activity in the US service sector, which is calculated by the Institute for Supply Management rose to 54.5 in March from 53.4. According to the forecast, the rate had to increase to 54.

In the course of trading is also affected by expectations the publication of minutes of meetings of the ECB and the Fed. 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 indicated only 3% probability of a rate hike in April.

The pound dropped significantly against the dollar, reaching a low of March 28th. currency fall began after the publication of PMI data services in the UK in March. Pressure on the pound also have on oil prices, which have returned to the level of $ 35 per barrel. Recall the results of a survey by Markit Economics showed that UK service sector activity accelerated in line with expectations in March. Purchasing Managers Index services grew to 53.7 in March from 52.7 in the previous month. The result coincided with the expectations of economists. Any reading above 50 indicates expansion in the sector. Nevertheless, the index remained below its long-term average of 55.2. New orders continued to rise in March, but the growth rate was the weakest since January of 2013. Service providers continued to increase their number of employees in March, but remained weaker than the trend related to the current 39-month sequence of growth. On the price front, input price inflation accelerated to the highest level since September 2014, which was due to higher labor costs, rent and fuel prices. As a result, selling prices rose at the fastest pace in more than two years.

The US dollar has fallen by almost 1% against the yen, briefly dropping below the psychological mark of Y110 (for the first time since 31 October 2014), due to an increase in demand for safe-haven assets and speculation about how much further the currency will be strengthened before the officials begin act. However, today the Japanese Prime Minister Abe said that the need to refrain from unwarranted intervention in the market and avoid competitive devaluation of currencies. At the same time, Chief Cabinet Secretary of Japan Suga said about the undesirability of excessive currency fluctuations, and added that the government will be coordinated with partners and, if necessary, take appropriate action.

The dollar continues to weaken, as upbeat data on US employment and did not change the outlook for the rate hike. Despite steady employment growth rate, most market analysts do not expect the Fed will accelerate the pace of raising rates after the recent "dovish" comments Chairman of the Fed's Yellen. On Wednesday, market participants will focus on the minutes of the March meeting of the Fed's guidance in finding prospects for growth rates in the US.

Market Focus

  • US nonfarm payrolls rise more than expected in July
  • Canada’s merchandise trade deficit widens in June
  • Canada unemployment rate falls to lowest level since October 2008
  • Canada Ivey PMI falls less than expected in July
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