To be noted, rate hike expectations boosted US Dollar Index this week. Surge in stocks looks modest against this background. In our opinion, if rate hike occurs, dollar and stock indices may move in opposite directions. This can be used for creating a Personal Composite Instrument (PCI). Trade Balance will be announced today in tandem with Non-Farm Payrolls. The outlook is positive. Trade volume on American stocks marked a sharp decrease and made up 5,7 bln shares which is 12% below 5-day average.
Despite lack of positive statistics, European stocks rose yesterday. Investors anticipate that money emission will funnel liquidity to stock market. At the regular meeting European central bank declared the bond buying program, worth €60 bln every month, to be launched on March, 9. The program will continue till September, 2016 or until inflation in eurozone reaches 2%. We remind that at the moment it amounts to -0.3%. ECB also increased its GDP forecast for the current year from 1% to 1.5%. The euro slumped in prospect of money emission. This morning the report on growing production in Germany has become public. At 11:00 CET fourth quarter GDP in eurozone will be issued. The tentative outlook is neutral.Following other global indices Nikkei rose today to its 15-year strongest. The surge has been continuing for 4 consequent weeks. On Sunday night a large block of economic statistics will be published in Japan. It will include Q4 final GDP, official Reserve Assets and Economic Vouchers indicator.
At 01:00 CET Chinese trade balance for February will be announced. According to our analysts, the tentative outlook for commodity futures is negative. To be noted, this week they generally dropped because of strong dollar.
There were grain futures that basically fell under pressure. The weekly retreat in wheat prices my become highest since September due to strong competition among the US, Germany and France over Asian importers. Corn prices declined less because it is exported from the USA to Mexico and Japan on the terms of previously concluded contracts. More than that, the prices were buoyed with Grain Council forecast, predicting plunge in Ukrainian crops to 16 mln tons from 19.9 mln tons in the previous season. Soy bean quotes ceased falling because of flood in Argentine. Buenos Aires Grains Exchange may cut soy crop forecast for the current season. At the moment it is estimated as much as 57 mln tons.
While dollar recorded 11-year high, gold slipped again below $1200 per ounce. Some market participants expect it to plummet below $1180 if today's Payrolls are above 250 thousand. The gold is supposed to edge higher over $1230 if Non-Farm turns out to be less than 230 thousand. Our analysts do not exclude high volatility of gold.
Oil quotes added due to hostilities renewal in Libya and Iraq that meddle in export. More than that, the West discusses new sanctions against Iran, demanding suspension of its nuclear program. Today Baker Hughes, oil service company, will release a weekly report on oil rigs number in the USA. It may affect oil prices.