Yesterday neutral trend continued in Forex market | IFCM India
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Yesterday neutral trend continued in Forex market - 11.3.2014

Yesterday the neutral trend in Forex market continued in the absence of significant macroeconomic information. Investors do not want to buy the Euro (EURUSD) due to political tensions in Ukraine. Recall that during the war in Yugoslavia in 1999, the European currency plummeted by 30% against the U.S. dollar and reached 0,823. The U.S. may take any steps to support the Dollar by the Yugoslav scenario. We do not exclude that the Euro will move down on the chart. Today at 14-00 GMT the data on wholesale inventories in the U.S. will come out. They can affect the exchange rate only if they do not coincide with the preliminary neutral forecasts.



After the meeting the BOJ statements were mixed and as a result the Yen (USDJPY) has maintained a neutral trend. The BOJ confirmed its basic principles of monetary stimulus in order to support the economic growth and control inflation. It expects their dynamics as well as the industrial production to be positive. At the same time it lowered the export forecast and warned that foreign demand for the Japanese goods may keep lowering. This is a negative factor. As for domestic demand, the BOJ said that it will remain at a high level before increasing the sales tax since April 1st from 5% to 8%. However, investors do not believe that raising taxes after domestic demand is sufficient for continued economic growth. Now they are waiting for the final speech of Haruhiko Kuroda at the press conference at 7-15 GMT where he can discuss about the future plans of the department and uncover additional volumes of monetary stimulus, if it is to be needed after April 1st. Note that the next BOJ meeting will be held on April 30. Today Japan will reveal the indices of the industrial production and prices at 23-50 GMT.

The Australian Dollar (AUDUSD) is likely to retain a neutral trend, or will come even slightly strengthened (growth on the chart) before placement of government bonds on March 19th maturing in 2026. The minimum redemption amount could reach A$2bln., and the profit may be amounted to 4.35%. Accordingly, a strong drop of the Aussie before the auction is hardly probable. The exchange rate may be affected by the macroeconomic data in case of turning out better or worse than the neutral forecasts. Today at 23-30 GMT, we expect the consumer confidence index to be released (Westpac consumer confidence), and the mortgage data striking up tomorrow at 00-30 GMT.



The British Pound (GBPUSD) fell after the statement made by the BOE Deputy Governor, Charlie Bean that may prevent further strengthening of the economic recovery. Today at 9-30 GMT, we expect the industrial production data for January, which can support the Pound. A more important indicator (trade balance) is expected tomorrow.

As we suggested in yesterday's review, the Copper has risen slightly due to increased demand in China. According to the Chinese Association of car manufacturers, the production of cars in China increased by 18% in February. The industry uses a lot of copper. Note that since the beginning of the year the Copper prices dropped by 9.6% and became the leader of the fall among the other six base metals traded on the London Metal Exchange (LME). The price decrease occurred because of the fears concerning the global economic slowdown.



The Corn prices fell on Monday after the USDA overview release. It raised its forecast for world production this year by more than 12% compared to the previous year up to 967.5 million tons. As a result, the world corn stocks may be increased at the end of the current agriculture season to 158.5 million tons, compared to 134.7 million tons a year earlier. The Wheat and Soyb prices also decreased. We believe that investors decided to take profits on the basis of "technical analysis", as the USDA overview slightly changed the production outlook for this year.
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