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Today investors expect the speech by Janet Yellen - 31.3.2014

The U.S. Dollar Index (USDIDX) has been increasing this morning for the fifth consecutive day. The upward movement is slow since Friday, the U.S. and the EU macroeconomic data are in line with the preliminary forecasts. Today investors expect the speech by Janet Yellen at 14-55 CET. Particularly, no significant U.S. economic indicators are expected. However, the Chicago PMI for March, coming out at 14-45 CET, may slightly affect the exchange rate, if it does not coincide with a neutral outlook.



The EURUSD on Friday renewed its monthly low as inflation in Germany unexpectedly fell to 0.9 %, with the forecast of 1%. Previously, we have repeatedly pointed out that the single currency decrease was caused by ECB statements about the possible weakening of the monetary policy to avoid the deflation. It influences the market sentiment. On Saturday the head of the Bundesbank and the ECB Governing Council member, Jens Weidman expressed the opposite point view and said that the Eurozone is not in a deflationary cycle and the European Central Bank should not react brightly to the slowdown in inflation as it may be a temporary and a cyclical factor. Investors decided that it reduces the likelihood of further rate cuts, which is 0.25% in the EU now. Due to this, the Euro strengthened slightly this morning. Market participants expect the Eurozone inflation data for March 10-00 CET. According to forecasts, it should go down. Following the head of the Bundesbank statements, it is difficult to predict the reaction of the market with high accuracy degree, but we do not exclude a further weakening of the Euro.



As we predicted in the previous overview, the Japanese Yen (USDJPY) demonstrated attenuation (increase in the chart) due to weak macroeconomic data. The Industrial Production in February fell by 2.3% compared with January. While investors expect its growth by 0.3%. The PMI Manufacturing for March fell to 53.9 points. The real estate market indicators also proved to be weaker than expected. Tomorrow night at 00-50 CET, we will see a series of economic indicators from Japan (Tankan). In our opinion, the preliminary forecasts are negative for the Yen.

American Oil (West Texas Intermediate, OIL) is traded near 3-week high amid not completely successful negotiations of the U.S. State Secretary, John Kerry and Russian Foreign Minister, Sergei Lavrov about the situation in Ukraine. Investors fear that the possible Western sanctions against Russia may include a decrease in purchases of Russian Oil. An additional factor was the suspension of Libyan Oil supplies from the Wafa field and drop in exports in Nigeria to the minimum since 2009. The EIA Agency lowered its forecast for oil production in the U.S. in 2014 by 300 thousand barrels to 8.39 million barrels per day. However, consumers expect the production growth in Iraq (West Qurna) from 2 upto 4 million barrels per day by the end of this year. According to the Commodity Futures Trading Commission, the weekly Net long on Oil decreased by 3%.



Today at 16-00 GMT, the USDA will release a quarterly reserve report. This information can greatly affect agricultural futures, which are in the neutral trend in last few days. According to preliminary estimates, the Corn stocks may reach the highest level in 4 years and reach 7.099B bushels. The wheat stocks may drop to 5-year low and reach 1.042B bushels. The Soybean inventories may fall to the lowest level since March 2004 and reach 989 million bushels. Theoretically, futures can grow back in a few days moving in one direction. The Triangles formed on the daily chart confirm the above mentioned.
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