01, December 2015

Fundamental analysis

Fundamental analysis

The 10-year German government bond yields decreased by 5 basis points in November. The average earnings growth contributes to the consumer spending increase which is the inflation welcome factor. The debt market showed mixed dynamics: the German 10-year government bond yields are decreasing relative to their US counterparts, while the Gilts growth supported the EUR/GBP quotations moderate growth. Meanwhile the pair EUR/USD showed a slight decrease.

The US and the UK government bond yields exceeded 40 basis points last Friday. The UK GDP second estimate remained unchanged at the level of 0.5% that has deprived the Cable for the short-term corrective growth continuation. The investment volume has been revised by 0.7% in the positive side, compared with the previous quarter and by 6.6% compared to the same last year period. The British companies are increasing their investments. The commodity market sales had a positive impact on the US dollar value as the raw materials cost is denominated in dollars. The pair GBP/USD was decreasing and only by the end of the trades it slightly corrected upwards.

The Chinese stock market panic sent the Asian markets downwards and contributed to the carry trade operations closure which caused demand for the Japanese yen as a funding currency. The oil and industrial metals’ prices declined which supported the US dollar as the commodities value is denominated in dollars. The Japanese and the US government bond yields showed growth in the bond market having formed the first signal on the technical correction completion. The pair USD/JPY increased on the Monday’s trades.