03, November 2015

Fundamental analysis

Fundamental analysis

The US reports showed that the consumer spending and incomes grew less than expected while the personal consumption expenditures price index has shown the biggest fall since January. The published US PMI in the manufacturing sector was better than expected - 50.1 vs the forecast of 50.0.

The statistics supported the pair EUR/USD having shown that the pre-consumer inflation justified the analysts’ forecasts, having shown 0.0% in annual terms. The basic consumer price index rose up by 1.0% y/y vs. 0.9%. The separate report has witnessed the euro area unemployment rate decrease to 10.8% against the September value of 11.0% and the August value of 10.9%.

The inflation report could cast a shadow on the Bank of England rate change decision in May 2016. If the report coincides with the economic growth forecasts decrease, the market will regard it as a "dovish" tone. The inflation is expected to grow to the level of 2% next year which makes a rate hike in May more possible. The October PMI showed a 55.5 against the expected 51.3.

The pair USD/JPY returned to its previous range at the end of the last week. The Bank of Japan decision to leave the monetary policy unchanged suggests that the Central Bank see the situation differently. The Japanese regulator avoids the monetary policy changes, keeping the QE program at the level of 80 trillion yens ($660 billion.), despite the further easing growing expectations amid the weak statistics.