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    Weekly review on 07.03.2016

    The market has ignored positive data on the US NFPR released last Friday. Following publication of NFPR data for February, the USD fell against the major commodity and European currencies. As it became known, in February the number of new jobs outside agricultural sector rose by 242 000 (against the forecast of 190 000 and revised number of 172 000 in the previous month) Unemployment in the USA in February has remained at the level of 4.9%.

    However, two other important indices showed the decline. Average hourly earnings fell by 0.1% (forecast: 0.2% and 0.5% in the previous month). Average weekly hours fell to 34.4 against the forecast and the previous value of 34.6).

    It seems that these two indices and increased deficit of foreign trade in January have assured market participants that the US Fed will not raise interest rate in March.

    EUR/USD:


    Last Friday the pair grew by 56 points. Volatility amounted to 140 points. Since the opening of today’s trading day the pair has traded in the narrow range. Considering movement in the pair last Friday and forthcoming meeting of ECB later this week, the pair EUR/USD will go down today.

    On Thursday 14:45 (GMT 2) the interest rate decision of ECB will become known, later at 15:30, the head of ECB, Mario Draghi will give his comments on monetary policy. Recall that after the previous meeting of ECB the pair EUR/USD rose by 5%, as the market had considered that the decision to expand QE program in Eurozone was insufficient and this fact caused sales of European stocks and the rise in the pair EUR/USD.

    Since 2008 ECB has been reducing interest rate from 4.25% to the current level of 0.05% in order to enhance incentive measures by way of upsurge of liquidity. Meanwhile these measures have not brought desired results. Mr. Draghi has already said that at the meeting of ECB in March incentives measures of economy would be revised. In the result, the pair EUR/USD fell from the highs above the level of 1.1300 to 1.0850.

    It is expected that on 10 of March the rate on deposits will be lowered by 0.1% and the volume of QE will be raised by 10 billion euro to 70 billion euro. Changes in any side will cause sharp movement in the European stocks and in the pairs with Euro, including EUR/USD in the medium-term and in the short-term.

    USD/JPY:

    On Tuesday, 8 March at 01:50 (GMT 2) Japanese GDP for Q4 will be released. It is expected that the index will fall by 1.5% against the decline of 1.4% in Q3. Japanese economy ranks the third in the world after the USA and China. Contribution of Japanese economy to global GDP is almost 10%. Currently, Japanese economy faces threat of inflation. Japanese interest rate in February was negative. Therefore, GDP in Q4 can have strong pressure on the Japanese currency and stock index Nikkey. Both the data on GDP and monetary policy decisions by the Bank of Japan, which will be known next week, can have strong influence on the market. The head of the Bank of Japan Mr. Kuroda said today that current policy of the Bank of Japan is aimed at reducing the price of the Yen and at reaching the target inflation level of 2%.

    GBP/USD:


    Last week the pair GBP/USD has won back regained almost 90% of the losses bored a week before last. Despite strong data on the US NFPR, last Friday the USD fell by 57 points against the GBP. The price approached strong resistance levels of 1.4200 and 1.4270, still remaining in the downward channel.
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    At the same time, the pair GBP/USD is near the lows of 2002, starting long-term uptrend. This level is also close to the lows of 2009 and 2010. Therefore, the pair GBP/USD is at the key support levels.

    The rise in the pair is prevented by expectations of the referendum on the membership of the UK in EU, which will be held in June. However, the pair GBP/USD is supported by successful actions by the British Prime Minister David Cameron enabling to gain benefits and statements of the European political leaders showing advisability of the UK’s membership in EU.

    Breakdown above the level of 1.4250 will enable the pair to go to levels 1.4400, 1.4500.

    Today, the pair is likely to go down after reaching the highs last Friday.

    Important news of this week will include: On Tuesday at 08:45 (GMT 2): unemployment rate in Switzerland and at 12:00 GDP for Q4 in Eurozone.

    On Wednesday at 17:00 the Bank of Canada will announce interest rate decision; at 22:00 – RBNZ will announce its decision on interest rate. At 17:30 US data on oil and oil products reserves will become known.

    On Thursday decision of the ECB on interest rate will be released and comments on QE program in Eurozone, as well as Chinese inflation data (03:30 and 04:00 GMT 2).

    On Friday at 11:30, forecast of consumer price inflation in the UK will be released; and at 15:30 GMT 2, XMPY (Export and Import Price index of the USA for February.


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