21, January 2016

Fundamental analysis

EUR/USD (a 4-hour chart)

The global stock markets showed an improvement which resulted in the dollar strengthening and the risk assets weakening. The China statistics showed the slow, but overall pretty good growth – the GDP grew by 6.8% y/y against the third quarter 6.9%. Stock indices are optimistic about the China macro block due to increased expectations for the monetary authorities’ additional stimulus.

The risky assets demand had a moderate negative impact on the euro as a funding currency. However, the quote decline was temporary - investors are still willing to buy the euro on dips. The United States issued the December inflation rate release. The data came in at the level of 0,1% against the forecasted 0,2%. By the end of the yesterday’s trades the pair EUR/USD slightly fell.

Meanwhile, the UK attracted the traders with the labor market data. In particular, the regulator presented the unemployment rates (5,1% against the forecasted 5,2%), Claimant Count Change (-4,3K against the forecasted 2,5K) and Average Earnings (2,0% against the forecasted 2,1%). After a decrease the pair GBP/USD rebounded upwards.

The defensive utilities sectors were the leaders of a growth on the leading stock exchanges. That may lead to the further capital flight from the "risky assets". The "risk appetite" decrease has traditionally supported the demand for the Japanese yen as a funding currency. The pair USD/JPY fell on the yesterday’s trades.