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22.04.2016 18:22

American focus: the US dollar significantly higher against the euro

The US dollar strengthened significantly against the euro, updating the maximum of April. Experts point out that the European currency came under pressure after the publication of weak data on business activity. The research organization Markit Economics said the composite Purchasing Managers' Index, which combines manufacturing and services, fell to two-month low of 53.1 from 53 in March. Economists had forecast a 53.3 estimate. Production Preliminary PMI fell to two-month low of 51.5 from 51.6 in March. Economists had expected a rise to 51.8. PMI in the service sector rose to 53.2 from 53.1 in March, but did not meet analysts' expectations at 53.3. "PMI data suggest that the pace of economic growth at the beginning of the second quarter was slightly weaker than the average in the first quarter, and a little slower than average in the past year", - Markit said.

A stronger dollar has continued despite the weak data on US PMI. Preliminary manufacturing PMI from Markit was 50.8 in April from 51.5 in March, signaling the weakest rise since September 2009. Weaker industrial production and the growth of new orders, along with weaker growth in the number of staff were major factors in the PMI pressure in April. Last rise the level of production has been uneven and the slowest since the moment when the recovery began in October 2009.

Meanwhile, the results of a survey of 80 economists conducted by Reuters showed that none of them did not believe in the possibility of increasing the Fed rate in April. 50 out of 80 respondents said that they expect a rate hike in June. However, according to the forecast of the majority, to the end of 2016 the rate will increase to a level of 0.75-1.0%, which actually means a further 2 increase.

The pound rose substantially against the US dollar, setting a new April high. The main support to the pound provided the results of public opinion polls, which are somewhat eased concerns about the risk of the UK release of the EU. Also, raising the pair GBP / USD has contributed a noticeable drop in EUR / GBP and the growth of GBP / JPY on the weakening yen. Little influenced by the results of a survey by Markit Economics and Knight Frank. Sentiment against housing prices, or HPSI, by Knight Frank / Markit fell slightly to 60.1 in April from 60.5 in the previous month. However, the value above 50 indicates an increase in housing prices. This was the thirty-seventh month in a row, when the index is above 50. Housing prices in London are perceived with the strongest growth rate in April, followed by the south-east of prices. The future HPSI, the measure of house price expectations fell to 68.8 from 71.6 in March. "The study underscores another decline in the number of households who intend to buy property in the next two years, taking into account the fact that the index is significantly below its peak in February 2015," said Tim Moore, senior economist at Markit.

The Japanese yen fell more than 200 points against the US dollar, reaching a low of April 4 and fixing the maximum daily decline with the introduction of the Bank of Japan's era of negative interest rates on excess reserves with the Central Bank. Pressure on the yen strengthened to the information that the Bank of Japan is considering measures to support financial institutions. The Central Bank reported that they began to discuss the likelihood of the introduction of negative interest rates. Recall, the Central Bank is now offering loans at 0% APR. As of April 10, the Bank of Japan gave in 2013 about 24.4 trillion yen. Basically, the money went to buy government bonds.

Investors are also waiting for the Bank of Japan meeting, scheduled for 27-28 April. In addition to the decision on the monetary policy of the Bank will publish its inflation forecasts and economic growth. The latest survey of 16 analysts conducted by Reuters showed that the Bank of Japan may again soften the policy by July. 8 of them are waiting for policy easing at the meeting of 27-28 April, 3 predict that softening occurs in June, 5-Ro - in July.

The Canadian dollar has appreciated sharply against the US dollar after strong data on retail sales and consumer prices, but soon lost nearly all positions, despite the rise in oil prices. Statistics Canada reported that retail sales rose for the second month in a row, by 0.4% to $ 44.2 billion in February. Growth was recorded in 9 of 11 subsectors, representing 89% of total retail trade. The increase in February was kept lower sales at gasoline stations. Excluding sales in this subsector, retail sales advanced by 1.0%. After removing the effects of price changes, in particular, lower prices for gasoline, retail sales rose by 1.5% in real terms.

Another report showed that the consumer price index in Canada rose 1.3% in the 12 months to March, after increasing 1.4% in February. Excluding gasoline, the CPI rose by 1.9% year on year in March, matching the increase in February. Despite the monthly increase of 5.7% in gasoline prices in March, the gasoline index fell by 13.6% year on year in March, after falling 13.1% in the 12 months to February. Prices rose in six of the eight major components on an annual basis in March, with the price indices for food and accommodation contributed to the largest contribution to the increase in the consumer price index. The base consumer price index of the Bank of Canada increased by 2.1% per year, after rising 1.9% in February. The seasonally adjusted core index rose 0.3% MoM in March, after rising in February by 0.2%.

Market Focus

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  • Australian unemployment rate stable at 5.6% in June
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