The U.S. Dollar Index fell slightly yesterday within a neutral trend | IFCM Hong Kong
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The U.S. Dollar Index fell slightly yesterday within a neutral trend - 25.4.2014

The U.S. Dollar Index (USDIDX) slightly decreased within a neutral trend. This happened in spite of the good macroeconomic data. The orders for durable goods in March increased by 2.6%, beating the expectations. There have already been the positive indicators on the labor market, industrial production and retail sales coming out before. All of this, in our opinion, indicates a gradual recovery of the U.S. economy. Now the U.S. economists believe that the GDP growth in the first quarter could reach 1.5% instead of 0.6% as they previously thought. Of course, this is less than its growth by 2.6% in the fourth quarter of last year. However, the slowdown is explained by the extremely cold weather in winter months. The U.S. Dollar Index is not responding to the positive dynamics of the U.S. economic indicators. Probably the majority of market participants are awaiting the Fed meeting minutes and the GDP for the Q1 on Wednesday next week. We do not think that the aggravation of the situation in Ukraine could slow down the USD that much. Ukraine is in Europe. During the war in Yugoslavia (which is also in Europe) in 1999, the U.S. currency rose and the Euro (EURUSD), has fallen in contrast by about 30%. Today at 15-55 CET we will see the U.S. consumer confidence index released by the University of Michigan for April in the second reading. The outlook is positive, as it can grow to a maximum since last July and amout to 83 points.

The Euro strengthened yesterday due to lowering in the USDIDX. The part of the European currency in it is 57.6%. The German IFO index of business activity in April unexpectedly rose on Thursday despite the events in Ukraine. Most of German businessmen do not expect a new war in Europe. Recall that this year's economic growth in Germany is projected to be by 1.9% against 0.4% in 2013. The GDP data for the Q1 will be released on May 15th. The ECB President, Mario Draghi reiterated yesterday the continuing possibility of buying assets (by printing money) in order to eliminate deflation in the EU. The Euro logically reacted with little depreciation, but it is still grown up by the results of the day. There are no significant macroeconomic data expected from the Eurozone today. At 10-30 CET, we will receive the information from the United Kingdom such as: Retail Sales and Mortgage Lending in March. In our opinion, the prognosis is positive for the Pound (GBPUSD).

Inflation in Japan in March was lower than the preliminary forecasts. As well as the core consumer price index in Tokyo for April amounted to 2.7% instead of 2.8% as expected. The BOJ Chairman, Haruhiko Kuroda expressed his confidence that inflation in Japan is moving to the target level of 2%. Thereafter, investors decided that the BOJ will not take any measures for further monetary policy easing in the near future, despite the fact that the actual inflation data did not match expectations. Because of this, the USDJPY has not changed. We believe that investors will wait for the economic survey from the Bank of Japan coming out on Wednesday. It will contain the information that may affect the Yen. Note that now the Japanese government debt exceeds the GDP by almost 2.5 times in its magnitude. Its redemption may require further tax increases or weakening of the national currency.

Another volatility index in the currency market, calculated by the JPMorgan Chase bank, reached the lowest level since June 2007. Statistically, this may be followed by the powerful price movement in Forex market.

Corn, Daily

The Corn has risen slightly after the USDA reported that its exports from the United States last week proved to be at the maximum of 24 years and amounted to 1.6 million tons. This happened in spite of China's refusal to buy American transgenic corn. The main buyers are the countries like Japan, Mexico, South Korea, Colombia, Egypt and Saudi Arabia.

Fcattle, Weekly

The Fcattle continues to negotiations on lowering the import duties in Japan, which means the actual opening of the Japanese domestic market for foreign meat producers. Meanwhile, today at 18-00 CET, the USDA publishes its monthly market cattle meat survey (cattle). It is expected that the total herd in the U.S. is to be increased in March by 0.2% compared to last year, but it will happen for the first time since August 2012. Theoretically, there is a price downward correction possible.

Copper, Daily

The Copper refreshed its 7-weeks maximum yesterday. There was the unexpected message appeared, saying that the Chinese State Reserve Bureau (SRB) carefully acquired 200 thousand tons of the Copper in March, possibly at low prices. After that, the other investors started buying it actively. Now the difference between the spot price and three-month copper futures on the Shanghai Futures Exchange reached a peak, not seen since 2010. In our opinion, this may indicate the possibility of further upside movement.
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