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    Weekly Technical Analysis Report week 23/02/2015

    In Europe. The eurozone economy perked up again this month, a private sector report showed on Friday, powered by continuing strength in Germany and surprisingly strong growth in France.Purchasing managers across the eurozone, the 19-nation currency union, reported increased backlogs of work and an improvement in demand, leading companies to add workers at the fastest pace since August 2011, according to a survey by Markit Economics, a data analysis firm in London.Markit’s composite output index for the eurozone came in at 53.5 for February, up from 52.6 in January. A number above 50 signals that the economy is expanding, while a figure below that suggests contraction. The purchasing managers’ data is thought by economists to provide one of the best snapshots of the economy.Production of official data for the eurozone, compiled from the 19 countries’ national statistics agencies, tends to lag behind similar data for the United States and other developed countries.The eurozone economy expanded at a 1.4 percent annual rate in the fourth quarter, an official report showed last week. While that number was stronger than economists had expected, it was still behind the 2.6 percent annual pace in the United States. With demand crimped by high joblessness and limits on government spending, Europe is still struggling to leave behind the 2008 financial crisis and its debt aftereffects.Such concerns are currently subservient to the tense negotiations over Greece’s finances, amid fears that the country could leave the Eurozone.

    UK retail sales fell 0.3% in January from the previous month, according to figures from the Office for National Statistics.The decline in sales follows a 0.2% rise in December 2014.The January figure was a 5.4% rise on a year earlier, the ONS said.UK High Street shops have been reducing their prices in an effort to attract customers, the figures indicate. Average store prices were 3.1% cheaper than last January.This was the largest year-on-year fall since consistent records began in 1997, the ONS added.Online sales in January were up 12% on January 2014.

    Eurozone finance ministers were meeting Friday to thrash out a deal to avert a potential Greek exit from the eurozone. Greece’s finance minister expressed optimism that a deal on his country’s financial issues could be reached during crucial talks Friday, as the leaders of France and Germany warned that more work needs to be done to close the gaps. The negotiations have caused a few brief wobbles in markets, but generally investors have bet a last-minute deal can be reached.

    In U.S.A. U.S. stock futures pointed to a weaker open on Wall Street Friday as investors remained on the sidelines ahead of U.S. PMI data and what looks like a last-chance meeting for Greece.The main indexes were on track to finish the holiday-shortened week roughly where they started it.Futures for the Dow Jones Industrial Average DJH5, -0.16% dropped 30 points to 17,929, while those for the S&P 500 index SPH5, -0.24% slipped 4 points to 2,089.50. Futures for the Nasdaq 100 index NDH5, -0.10% were off 4 points to 4,409.

    The rush for Treasuries over German bunds fizzled out this month -- even after the U.S. yield premium exploded to the most in a quarter-century. Now it’s all about jobs and Janet Yellen.Holders of U.S. bonds are suffering as a result. Treasuries have plunged 2.4 percent in February through Thursday, heading for the steepest monthly loss in five years, based on Bank of America Merrill Lynch data. After the U.S. reported job and wage gains for January earlier this month, traders are betting the Federal Reserve that Yellen heads will raise rates around September, based on a Morgan Stanley index.

    Productivity is probably the most important measure of economic health that policy makers know the least about.Its pace will help determine how soon Federal Reserve Chair Janet Yellen and her colleagues increase interest rates and how far rates ultimately will rise.A quicker advance would argue for a later lift-off because the economy would have more room to run before bumping up against capacity constraints. It also eventually would require a higher ending point to prevent the more-vibrant expansion from overheating. Slower productivity would call for the opposite strategy.

    FOMC latest minutes showed members remain reluctant to raise rates even when economic conditions have improved. According to the minutes, FOMC officials discussed the tradeoffs of the risks associated with the timing of the beginning of policy normalization and “many” were inclined to keep the federal funds rate at its effective lower bound “for a longer time”.Minutes showed Fed officials continue to assess incoming information and the path of future rates will be data dependant. However, the Committee noted the difficult to specify in advance a list of economic indicators and their appropriate values in order to start the normalization process. Nevertheless, further improvement in labor market conditions and continued growth in real activity would be necessary conditions.FOMC members agreed that if it is communicated in an effective manner to markets and general public the idea that federal funds rates path will continue to rely on economic data, the precise date at which the first hike takes place would have “ a less important bearing on economic outcomes”.

    In Asia. Investors concerned that the Bank of Japan’s unprecedented bond buying pushed Japanese yields to record lows and boosted volatility should cut the central bank some slack, said Takatoshi Kato, a former top currency official.Yields on 10-year Japanese government bonds fell to a record low 0.195 percent last month and swung back to a three-month high of 0.45 percent as the BOJ purchases as much as 12 trillion yen ($101 billion) in JGBs a month, reducing debt available to private investors. Historical volatility for JGBs reached the highest since April 2013 this month.While the BOJ must keep the target to maintain inflationary expectations, it would be natural to change the timing after oil prices plunged, according to Kato, who is now the president of Japan’s Center for International Finance.Governor Haruhiko Kuroda said on Feb. 18 that he doesn’t see any change in the price trend at the moment, so there is no need to consider changing policy. He reiterated that the central bank is ready to adjust if that trend changes.The case for a consistent monetary policy is backed by signs that Japanese authorities are comfortable with the currency’s current level, said Kato, who served as deputy managing director of the International Monetary Fund 2004-2010.The yen fell to a seven-year low of 121.85 against the dollar in December after the central bank expanded its stimulus on Oct. 31. The pair has been trading in a range from 115.57 to 121.85 over the past three months. Japan’s currency was at 118.93 yen as of 12:32 p.m. in Tokyo Friday.

    On the Commodities markets . Brent crude oil rose towards $61 (40 pounds) a barrel on Friday as expectations of falling U.S. rig count numbers outweighed concerns about oversupply.The number of rigs drilling for oil in the United States fell to its lowest since August 2011 last week.Brent crude futures (LCOc1) for April were up 56 cents at $60.77 by 1315 GMT, having hit an intraweek low of $57.80 in the previous session.U.S. crude for March delivery (CLc1) was up 29 cents at $51.45. The contract expires on Friday.

    Gold futures rose Friday, lifted by anxiety over Greece’s debt standoff with its eurozone partners, but the yellow metal remained on track for a fourth consecutive weekly decline.Gold for April delivery GCJ5, 0.04% rose $5.10, or 0.4%, to $1,212.70 an ounce on Comex. March silver SIH5, -0.10% advanced nearly 6 cents, or 0.4%, to $16.44 an ounce.Gold found modest support as eurozone finance ministers prepared to meet Friday in Brussels in another attempt to work out a deal that would avert a default and potential euro exit by Greece.

     

     

    NZD was the strongest currency against USD, appreciated by1.35% on Friday (weekly basis), while NZDUSDtraded around 0.7534area.CHF was the weakest currency against greenbacks, depreciated by -0.86% and USDCHFtraded around0.9400.

     

     
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