The U.S. Dollar Index has not changed on Tuesday. In our opinion, the main economic data in the U.S. and the EU were not bad generally. Market participants just have not decided yet where to move. The CPI for March in annual terms in the U.S. was 1.5%, slightly above the expectations. This slightly increases the likelihood of rate hike despite the fact that inflation is still much below the Fed's target level of 2%. The less significant yesterday’s economic data from the U.S. were moderately negative, but they were not taken into account. The Empire Manufacturing production fell in April to November minimum at 1.3 points. Today at 14-15 CET, we will see the Industrial Production in the United States for March. The prognosis is not reduced and remains positive. At 13-30 CET, the real estate market data strikes out. The forecast is neutral. At 19-00 СЕТ, here comes the Beige Book economic review. At 17-15 CET, we expect the second and the last for this week speech by Janet Yellen. Perhaps this is the main event for today.
The current German ZEW investor confidence index rose in April to 59.5 points, exceeding the forecasts. The Eurozone trade surplus in February rose more than expected and amounted to 13.6B Euros. The EUR/USD exchange rate was almost unchanged against the USD as there were also good economic data from the U.S.. Today at 10:00 CET, we will find out about inflation in the EZ for March. It is projected to remain at 0.5% in February and unlikely to affect the Euro. The ZEW index for Switzerland will be released simultaneously. Its forecast is also neutral.
Inflation in the UK for March fell slightly yesterday. This caused the GBP strengthening. Today at 9:30 CET, there are the labor market data expected to come out. Their outlook is positive and the GBP/USD continues to grow slightly this morning. The next UK economic data will be released only on April 23rd.
The Chinese GDP growth in the first quarter was the lowest within 18 years, but it is still slightly higher than expected amounting to 7.4%. It has supported the commodity futures and the AUD/USD. The NZD/USD fell after reporting a decrease in inflation to 1.5%. This reduces the likelihood of further interest rate increase in New Zealand.
The USD/JPY weakened (grown on the chart) since investors consider it as a safe heaven in case of economic negative in China that was not observed yesterday. The morning industrial production data were weak. In addition, the Finance Minister, Taro Azo suggested that the state pension investment fund (GPIF) with assets of $1.26 trn. should purchase more shares of Japanese companies. After that, the Nikkei index rose 2.4%, while the Yen weakened despite the fact that the share purchasing may not start before June. Note that tomorrow morning we expect another portion of statistics and the speech by the head of the Bank of Japan.
Today at 15:00 CET, there will be the Bank of Canada meeting held. It is expected that the discount rate will remain at the current level of 1%. Market participants will be focused on the final press conference, where the forecasts for the Canadian economy are expected to be presented.
The domestic Sugar prices in India unexpectedly soared to a maximum of 14.5 months. The Indian Association of Sugar Producers lowered its forecast for sugar exports from the country in the season 2014/2015 to 1.8 million tons from 2 million tons. India is the second sugar producer in the world after Brazil and the first sugar consumer. The domestic prices are usually increased with the beginning of the summer season due to increased consumption of ice cream and soft drinks. This year the Sugar prices are likely to be limited due to the presidential elections which are to be held in May. There is $5B planed to be spent for that event. We believe that the demand from India can also provide some kind of support for the world Sugar prices till the end of May.