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    Market rearrangements

    February 22, 2016 - 10:25am

    USD index featuring the dollar’s strength relative to the trade-weighted basket of six key currencies has increased 0.23% to 96.85.

    On Saturday, China removed Xiao Gang from his post as Chairman of the China Securities Regulatory Commission. He is to be replaced with Liu Shiyu, Chairman of the Agricultural Bank of China. The shake-up might be due to a recent failure of automatic trading halt at the Chinese stock market.

    Meanwhile, there are rumors that the People’s Bank of China is going to decrease the reserve ratio in the mid-term as the daily short-term open market operations are considered to be insufficient to stabilize the market’s expectations. On the weekend China announced also about their plans to change the content of the consumer basket by decreasing the share of food products, tobacco, alcohol for 3.4 percentage points and increasing the shares of other goods to show changes in consumer habits.

    On Monday investors are to wait for the data on business activity index of euro-zone which will enable to understand the economic status of the region.

    The data on business behavior in euro-zone and USA will also be released this week, and the Thursday report on durable goods orders in the U.S. will make it clear for investors how strong the manufacturing sector is.

    Last Friday the dollar fell relative to most key currencies and yen got stronger after another decrease in oil and share prices had fueled worries about the world economic outlook.

    The dollar was supported much early week when mostly positive data on the U.S. economy confirmed the opinion that the U.S. FED would go on tightening the monetary policy this year.

    On Friday it was reported that the U.S. consumer prices index had increased 1.4% year-on-year in January, exceeding expectations regarding the increase of 1.3%. Core inflation excluding the food products and energy resources has increased 2.2% which is higher than expected as well.


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