The negative economic data came out in the U.S. on Monday | IFCM India
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The negative economic data came out in the U.S. on Monday - 4.2.2014

The PMI (ISM) on the U.S. industry in January was much worse than the preliminary forecasts. It dropped to the lowest level in eight months at 51.3 points. This caused the weakening of the U.S. currency on Monday. The main reason for activity reduction in is delay in delivery of raw materials and equipment to enterprises due to the extreme cold weather. Theoretically, this makes it possible to rely on the improvement in the situation at the end of the winter period. Note that today 15-00 GMT (0), we expect the data on factory orders in the U.S. in December. Most of American economists lowered their forecasts significantly after the ISM release yesterday. Possible negative data on orders already partially taken into account in market quotations. Because of this, the Dollar Index (USDIDX) grows this morning.

USDJPY, Daily

The Japanese Yen (USDJPY) became the leader on strengthening among the world currencies because of the U.S. statistics. It reached two-month low. It looks like a fall on the chart. Probably a number of major market participants decided to close the short positions on the yen due to increased downside risks in the U.S. economy. Meanwhile, the Bank of Japan stated of the monetary base growth doubled in two years to 200.9 trillion yen ($ 1.97 trillion). By the end of 2014 it will increase to 270 trillion yen. We believe that large-scale emissions will prevent excessive strengthening of the yen and its rate will remain in a neutral trend.

The British purchasing managers index fell yesterday lower than expected. At the same time, the similar indicator for the EZ was better than expected. In addition, the Hometrack agency showed a slowdown in property prices. Investors decided that the UK economy is slowing. As a result, there was a noticeable weakening of the Pound (GBPUSD). Today we expect the UK construction PMI. The forecast is negative. Besides it, government bonds are to be placed in the amount of 4 billion pounds. The Bank of England announced that interest rates will be kept unchanged at least until the inflation data release on February 12. In other words, the rate is not likely to change at its next meeting this week.

As it was expected, the Reserve Bank of Australia (RBA) has kept interest rates at 2.5%. The more important factor was the statement of its representatives that rates should remain stable. The RBA previously stated that the Australian dollar is too high. There were no such statements this time. Market participants believe that the RBA does not want further weakening of the currency, and will maintain its rate. As a result, the Australian dollar has strengthened significantly (growth on the chart)

AUDUSD, Daily

USDCAD, Weekly

Canadian authorities are concerned about the economy of the country before the elections in 2015. Recall that in January - September Canadian Dollar (USDCAD) collapsed (growth rate on the chart) to five-year high. The Finance Minister, Jim Flaherty is ready to abandon his of economy and can keep the budget deficit in 2015. Prime Minister Stephen Harper promises to reduce the number of taxes. The governor of the Bank of Canada, Stephen Poloz is ready to postpone the scheduled increase in the discount rate by 1%. The IMF expects its growth in 2019 to 4% from the current level at 1%. All this causes the strengthening of the Canadian dollar (fall on the chart). Recall that the approval of the Canadian budget for the next year is scheduled for February 11.

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