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21.04.2016 18:19

American focus: The US dollar rose against most major currencies

The euro has appreciated sharply against the US dollar, updating yesterday's high, but almost immediately lost all positions. The reason for such dynamics were the statements of the ECB Draghi and profit taking on the euro. As expected, the Central Bank left unchanged the monetary policy settings change, and Draghi statements tone in the press conference as a whole was the "pigeon". Trichet said that interest rates will remain unchanged or will be reduced for a longer time. He also noted that the Central Bank will continue to closely monitor the situation with inflation and, if necessary, will use all available instruments in the framework of the mandate to reach the target level. "Under the available tools meant a change of key interest rates, but the rates on deposits, which are already negative, can not be reduced indefinitely." - Said Draghi. In addition, the head of the Central Bank made it clear that we should not wait for the new measures unless the conditions in the financial sector and the inflation outlook is not significantly deteriorate in the near future. Draghi even called markets for patience, noting that the action taken is enough, we just have to wait.

The dollar also helped the US market statistics. US Department of Labor said the number of initial applications for unemployment benefits dropped fell on 6000 and reached a seasonally adjusted 247,000 in the week ended April 16. It was the low level of applications for unemployment benefits, since the week ending November 24, 1973. Data last week also noted the 59th week in a row, when the primary applications for unemployment benefits remained below 300 000. Economists had expected 263,000 initial claims last week. Data last week have not been revised (253,000). The moving average of four weeks, which smooths out volatility, fell by 4,500 last week to 260 500. Fed policy is likely to take into account the relative health of the labor market at a meeting next week. Nevertheless, central banks have shown that they are concerned about the weakness in the global economy and a close look at inflation and wages. Most economists expect that during the April meeting the Fed will leave its key interest rate unchanged.

The pound depreciated significantly against the dollar, returning to the level of opening of the session, which was due to the resumption of purchases of US currency on background of labor and the outcome of the ECB meeting market data. Additional pressure on the pound has previously published statistics on Britain. The Office for National Statistics said that on a monthly basis, retail sales fell by 1.3 percent, which is higher than the 0.5 percent drop in February and the expected decline of 0.1 percent. It was the second consecutive drop in sales. Excluding automotive fuel, retail sales fell by 1.6 percent, after falling 0.3 percent in February. Economists had forecast a decline of 0.3 percent. In annual terms, total retail sales unexpectedly fell to 2.7 percent in March, compared with 3.6 percent a month earlier. Sales are expected to grow by 4.4 per cent. In addition, another report showed that net borrowing of the public sector with the exception of the public sector banks decreased by 2.6 billion pounds to 4.8 billion pounds sterling last year in March. This was less than the expected 5.5 billion pounds sterling deficit. In the fiscal year that ended in March 2016, the budget deficit fell to 17.7 billion pounds to 74 billion pounds. However, the finance minister was targeted deficit of 72.2 billion pounds.

The Canadian dollar fell against the US dollar, updating the minimum of yesterday's session, which was due to the correction in the oil market. Oil futures fell moderately, departing from five-month high, driven by the strengthening of the US dollar in response to labor market data and statements of the ECB Draghi. According to experts, lower prices - a sign that the market has reached unsustainable high after recent gains, and that traders are going to take profits.

The pressure on the Canadian dollar also had a report from Statistics Canada, which showed that the number of Canadians receiving unemployment benefits rose by the end of February, which was mainly due to an increase in resource provinces. Last change indicates that the fall in commodity prices continues to put pressure on the economy. In Alberta, where the number of unemployment applications for benefits increased from the end of 2014, there were 65.140 people receiving regular payments, which is 2.4 percent more compared to the previous month. In annual terms, the number of applications increased by 78.9 per cent. In Saskatchewan, the number of applications for benefits increased for the fourth consecutive month, by 3.5 percent, to 16740. increase of 38.6 percent was recorded on an annual basis. The Statistical Office stated that the increase in these two provinces is far ahead of figures for the country as a whole. According to the data, the number of appeals in February increased by 0.8 percent per year and 6.7 percent in monthly terms.

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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