The U.S. Dollar Index rose slightly on Tuesday | IFCM India
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The U.S. Dollar Index rose slightly on Tuesday - 5.2.2014

The US dollar index (USDIDX) rose slightly Tuesday. The macroeconomic data were relatively poor. A strong increase prevented the stabilization of currencies of developing countries. Turkish Lira (USDTRY) strengthened by 2%, the South African rand (USDZAR) by 1.7%. Today, at 13-15 GMT (0) we expect the employment data in the U.S. from ADP for January, which may be negative. However, later at 15-00 GMT (0) the index of business activity in the services sector is to be come out. Its prediction, on the contrary, is positive. We believe that the employment review may strongly affect the U.S. dollar. The main economic event of this week is the information about the labor market in the United States for January (Nonfarm Payrolls). It will be released on Friday. Theoretically, the ADP release is able to change the preliminary forecasts for official statistics.

The (EURUSD) exchange rate has not changed yesterday and now it remains in a downtrend. Investors are awaiting the outcome of the ECB and the Bank of England meetings, which will take place tomorrow. Most of economists believe that the ECB will keep interest rates at 0.25%. But there are those who think that it can be lowered to 0.1%. The inflation in the EU is at 0.7%. The ECB believes that this level increases the risk of deflation. For sustainable economic development the growth in consumer prices should be at 2 %. In addition, the ECB increasing rates, can increase the money supply by providing long-term loans to banks. Today at 9-00 GMT (0) we expect the index of purchasing managers in the services sector in the EU and Germany. At 10-00 GMT (0), the retail sales data is to be announced. In our opinion, the preliminary forecasts are negative for the Euro.

EURUSD, Daily

The Australian Dollar (AUDUSD) today was slightly adjusted downwards on anticipation of tomorrow's macroeconomic data. At 00-30 GMT ( 0) we expect the trade balance and retail sales for December. We believe that the preliminary forecasts are negative. In general, the Forex market participants believe that yesterday's rise of Aussie was partially due to closing of short positions after the RBA announcement. They will follow the macroeconomic indicators .

Yesterday the strong UK construction PMI came out for January. Its rise from 62.1 to 64.6 points was the highest since August 2007. Placing the Covernment bonds also was not bad. The demand was 1.5 times increased. Nevertheless strenghthening of the Pound (GBPUSD), ( growth on the chart ) was insignificant. Investors expect the inflation data comig out next week that will affect the decision to increase interest rates. Today at 9-30 GMT ( 0) we are awaiting the index of purchasing managers in the services sector. The forecast is slightly positive.

The Canadian Dollar (USDCAD) strengthened (fall on the graph), as we assumed in the previous report. Today at 13-30 GMT (0) , there are the data on the real estate market in December expected to come out. They can cause to the continuation of the yesterday downtrend in case they match the forecasts or better than expected .

Daily rise in wheat prises (WHEAT) is 3.7% on Tuesday was the highest in the last ten months. As we predicted in previous reviews, investors win the risk of crop reduction because of extreme cold weather in the United States back. USDA lowered its forecast for the corp of winter wheat in Kansas from 58% to 35% for December.

WHEAT, Weekly

NATGAS, Weekly

The natural gas prices in the U.S. (NATGAS) are experiencing strong fluctuations, but they are still in the uptrend. The Chicago Stock Exchange (CME Group) increased the margin on futures to the highest level since October 2009. As we have noted in previous reviews, the U.S. natural gas now costs about $ 175 per thousand cubic meters. Its price is higher by more than two times in Europe and four times more expensive in Asia. In case of reduction in shale gas production in the U.S. , the cost of the (NATGAS) contract has considerable potential for growth and it is not related to the weather in America. The additional factor of increasing the gas prices is the forecast of increasing its use as a vehicle fuel in the world from 5 billion cubic meters in 2012 to 160 billion cubic meters in 2030.

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