New York: 10:14 || London: 15:14 || Mumbai: 18:44 || Singapore: 21:14

Forex

Australian dollar strengthened, despite the increased geopolitical risks associated with the Crimea

March 18, 2014, Tuesday, 13:12 GMT | 09:12 EST | 17:42 IST | 20:12 SGT
Contributed by Forex-Metal

Asian and European trading sessions:

Euro: The Euro traded with little change against the dollar, which was associated with the release of weak data for the euro area and the United States. Traders ignored until the outcome of yesterday's referendum in the Crimea, as they were predictable. Now market participants' attention focused on the U.S. data, namely industrial production, which will soon be presented.

As for the report on the euro area, it showed that the growth of inflation in February slowed to 0.7% per annum after an increase of 0.8 % in January. This was stated in the final data of the Statistical Office. Analysts did not expect the revision of growth from previously reported 0.8%. Prices excluding the cost of fuel and food in the euro zone rose in February compared to February 2013 to 1 %, as predicted by experts. On a monthly basis, consumer prices in February rose 0.3 %, compared with a decline of 1.1% a month earlier.

Inflation in the 28 countries of the EU in annual terms slowed to 0.8% after 0.9 % in January. From the previous month, consumer prices rose by 0.3%. In February annualized deflation observed in Bulgaria (-2.1 % ), Cyprus (-1.3 %) , Greece (-0.9 % ), Croatia ( -0.2 %) , Portugal and Slovakia ( -0.1 %). The highest growth rate of consumer prices recorded in Malta and Finland (1.6%) and Austria (1.5%). Recall that the ECB's target level of less was than 2 %. In early November last year at a similar level, the ECB cut its inflation rate to a record low of 0.25 % to 0.5%. Meanwhile, U.S. data showed that the index of activity in the manufacturing sector of the Federal Reserve Bank of New York rose to 5.6 to 4.48, which was below the forecast of 6.6.  The EUR / USD pair fell to $ 1.3875, but then recovered to $ 1.3912 during the European session.

Japanese Yen: The yen has fallen markedly against the U.S. dollar. This is due to Kuroda statement on the possible extension of the leniency program. According to him, the Bank of Japan should be ready to apply measures of monetary policy easing in the event of any hint of problems in achieving the inflation target due to the economic downturn. He also noted that consideration of further measures will be made at an early stage - depending on how the economy will react by increasing the tax rate on consumption. The CB Head Kuroda said with confidence that the increased sales tax in April will not have a significant negative impact on the economy. He explained also that the record level measures easing monetary policy, begun in April 2013, has been applied with the assumption that the consumption tax rate should eventually reach 10%. Kuroda said hardly consumption will be significantly reduced. The USD / JPY pair rose to Y101.85 during the European session.

Australian dollar: Australian dollar strengthened against the U.S. currency, despite the increased geopolitical risks associated with the Crimea, who last weekend called for the annexation to Russia. More than 93 % of Crimeans voted to become part of the Russian Federation, according to preliminary results of the referendum, which raises the likelihood of acute confrontation between East and West.

U.S. and European Union quickly denounced the referendum, calling it illegal. U.S. President Barack Obama in a telephone conversation with Russian President Vladimir Putin said the vote was held “under duress and threat of Russian military intervention " and will not be acknowledged . Attention will now be focused on sanctions against Russia from the West, and how Russia will react to this. Traders were expected that the strong Australian dollar exchange rate was partly the result of rising expectations that the central bank will raise interest rates at its next meeting .


American trading session:

U.S. Dollar: The U.S. dollar lowered on a background of mixed American economic statistics. The survey revealed that the Fed - New York manufacturing index in the region rose slightly in March compared to the previous month. According to the data, the production index in March rose to 5.6 against 4.48 in February. Note the January value has not been revised. Economists expected the index to rise to the level of 6.6 points.

U.S. industrial production volume increased markedly in February, exceeding forecasts of experts with and fully compensate for the decline recorded in the previous month. This was reported by the Federal Reserve in its latest report. According to the data, seasonally adjusted industrial production increased by 0.6 % in February compared with the decline of 0.2% in the previous month (revised from -0.3 %). Capacity utilization rate, meanwhile, rose by 0.3 percentage points - to 78.8%. Economists forecast that industrial production increased by 0.2%, while capacity utilization was 78.7 %.

Data presented by the National Association of Home Builders , showed in the current month, U.S. builders continued to exercise caution in relation to the housing market , suggesting that problems with the restoration were associated not only with severe weather conditions . According to the report, the seasonally adjusted March housing market index rose by only 1 point, reaching 47 points. Values ??below 50 indicate that more builders assessed conditions as poor than good. Slight increase occurred after the fall of 10 points in February - the largest monthly decline in the history of this research. Many economists predicted that in March the index to rise to 50 points. Builders reported: complexity in the work was associated not only with the bad weather, but also problems with obtaining labor and land. Earlier pressure on the euro have data showing: February inflation slowed to 0.7% per annum after an increase of 0.8 % in January. This was stated in the final data of the Statistical Office. Analysts do not expect the revision of growth from previously reported 0.8%. Prices excluding the cost of fuel and food in the euro zone rose in February compared to February 2013 to 1 %, as predicted by experts. We also add that on a monthly basis, consumer prices in February rose 0.3 % compared with a decline of 1.1% a month earlier. Inflation in the 28 countries of the EU in annual terms slowed to 0.8% after 0.9 % in January.

Gold: Gold prices updated annual maximum and retreated during volatile trading. In the markets continues to grow the demand for safe assets, which is the gold, in the light of the ongoing conflict in the Crimea. At the same time, markets reacted ambiguously mixed U.S. statistics. The cost of the April gold futures rose to $ 1392.60 per ounce, and then dropped to $ 1375.00 per ounce on the COMEX today.

Oil: The cost of oil was down on speculation that the vote on the Crimea to leave Ukraine and join Russia is unlikely to disrupt oil supplies. April futures price for U.S. light crude oil WTI fell to $ 97.70 a barrel on the New York Mercantile Exchange.