US labor market data may affect prices | IFCM Arabic
 IFC Markets وسيط تداول العقود مقابل الفروقات (CFD) أونلاين

US labor market data may affect prices - 3.10.2014

World stock markets continued to fall on Thursday, but with a more modest pace. Probably investors considered the US macroeconomic data released yesterday to be quite ambiguous and decided to take a break before the important statistics is being published today.

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US Factory Orders in August and Initial Claims dipped more than expected yesterday. The performance of the first index is negative; meanwhile the second one appears to be positive. Note that Initial Claims went beyond the 14-year low of July only by 8 thousand people. The decline of 10,1% in Factory Orders in August was the largest one in the history of this economic indicator. The trading volume on the US stock exchanges amounted to 7,7 billion stocks and was 26% higher than the monthly average. Today the US data on labor market in September and Trade Balance in August is to come out at 12-30 СЕТ. The tentative forecasts are positive. Futures on the US indices are traded considerably upward. At 13-45 and 14-00 СЕТ less important information is to be published: two Markit Manufacturing PMIs and ISM Composite. In our opinion, their forecasts are neutral. It should be noted that quarterly reports of American companies will be coming out next week. This will rise the volatility of the stock indices and can make their moves less predictable. In general, most investors count on a more significant stock downward retracement. The dollar index has been rising for 12 weeks in a row, which was not observed in the last forty years. A part of market participants declared they would be ready to take profits if they were disappointed by the today’s US data.

European stocks slipped yesterday, the euro strengthened slightly. The daily fallen FTSEurofirst 300 by 2,4% appeared to be the biggest in the last 15 months. The ECB President Mario Draghi’s speech disappointed investors. He said that the bank can start to purchase covered bonds of commercial banks in mid-October, and the so-called, asset-backed securities in the fourth quarter of this year. Mario Draghi also confirmed that the purchase will last at least for two years. However, he said nothing about the program volume. Meanwhile, some market participants had previously declared that the purchase of securities from banks in the amount of 200 billion euros should be accomplished this year in order to provide support to the ECB European economy. This morning European stock indices have risen awaiting the US positive economic data and due to good earnings reports. The low-cost airline EasyJet raised its profit forecast and its stocks upped 5%. At 9-00 СЕТ Retail Sales in August is to be published in the Eurozone. The forecast is neutral. Note that German stock exchanges are not opened today because of the national holiday, the German Unity Day.

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Nikkei is also climbing today in line with the global trend. It was facilitated by the positive economic performance of Composite PMI and Services PMI released early in the morning. Yen weakened against the US dollar after the statement of the BOJ Haruhiko Kuroda that the low exchange rate had a positive effect on the economy. Market participants assume that the monetary policy easing would be maintained. There will be no economic data in Japan till the next Tuesday.

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Grain futures prices are increasing this week. According to the U.S. wheat association, Japan and South Korea can stop purchasing the US GMO wheat. Some experts assume that after the discovery of non-approved crops of Monsanto in Oregon, up to five million tons of wheat may contain a dangerous genome. Note that last year Japan purchased 3 million tons of wheat, and this year only 1,4 million tons; South Korea – 1,3 milion tons and 749 tons, respectively. We do not rule out a slight shortage of wheat in the world market if these countries and Taiwan buy the amounts they need from other suppliers, and not from the USA. According to the USDA, the GMO wheat was not stored in the common granary, and thus it does not imply any particular danger. Soybean and corn prices are growing along with the wheat despite the fact that several agricultural companies have raised their US crop forecasts this year. We assume that this was contributed by the increased soybean exports from the US by 21% this year, compared to last year due to strong demand. We would like to pay attention to the weather worsening as well. According to QT Weather, this weekend the temperature in the US Midwest would fall below zero, including the states of Illinois and Iowa. According to Bethesda forecast it will be raining next week, and that could impede the harvesting of corn and soybeans in some parts of the Midwest.

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