25, November 2015

Fundamental analysis

Fundamental analysis

The IFO Institute published the November Germany business climate data. The data came out better then forecasted 108,2 at the level of 109,0. The Markit PMI composite index shows the number of optimists’ growth among the purchasing managers. The US GDP was revised upwards amid the positive macroeconomic indicators. This factor has spurred the US two –year Treasury bonds growth which supported the dollar. However the pair closed the trades with a slight increase.

The Britain inflation parliamentary hearings results were interpreted quite negatively by traders. The medium-term forecast was revised to the negative side amid the oil prices decline, the British currency growth against the main trading partner (euro). In the light of this, the monetary authorities have stated once again that interest rates will not be raised in 2016. the pair pound/dollar sharply fell.

The US third quarter GDP revised data made investors open long positions as the Japanese and the US indicators’ differential has been expanded even further in favor of the latter as Japan has slipped into the technical recession. The current trend is reflected in the debt market which has led to the US Treasury bonds growth for a short-time which is traditionally a strong positive factor for the dollar. We cannot ignore the demand dynamics for the "risky assets". However the dollar’s strengthening was short-term and the pair USD/JPY decreased.