26, October 2015

Fundamental analysis

Fundamental analysis

The dollar has sharply grown against all its major opponents last week. The reason for the growth activity was the ECB meeting where they decided the Eurozone monetary policy prospects. The European Central Bank did not change the monetary parameters, however, the governor M. Draghi's "dovish" tone supported the US dollar not only against the euro, but also against other majors. Also the Chinese central bank cut its interest rates to 4.35% which is primarily affected the oil market.

Draghi signaled about his readiness to expand the incentive programs and hinted that this decision may be taken this December.The euro fell after his words against the dollar and other reserve currencies

The British pound also fell against the dollar amid the ECB news, still it suffered fewer losses than its main currency colleagues. Obviously, the pound relative stability was due the fact that even before the European Bank recent reports the UK economic data marked the September retail trade very impressive results. The UK retail sales rose up by 1.9% m/m compared to the previous month, but in annual terms it rose up by 6.5% y/y which was much better than the forecast, it was expected 0.3% m/m and + 4.8% y/y after -0.4% m/m, 3.5% y/y in August.

The Bank of Japan further monetary policy easing continues to put pressure on the yen. The October manufacturing sector business activity index preliminary data was published, the result turned out to be much stronger than the forecasts 52.5 after 51.0 while it was expected to see 50.6. Still this indicator did not have significant impact on the market.