Market is expecting the FRS chairman’s address…Brief market review. by OpenForex.com

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Market is expecting the FRS chairman’s address…Brief market review.

09:16 04/20/2004

Brief market review. By the end of yesterday’s trades, American currency recovered after the second reduction of the dollar rate, caused by disappointing Friday U.S. fundamental data and weakening of hope for near increase of FRS discount rate. Information about the availability of additional sum of credit default at Japanese UFJ Bank negatively affected the yen rate, which resulted in rise of the dollar against the Japanese yen. In its turn, the rise of USD/JPY supported the rate of American currency against the Euro. According to the forecast of Organization for Economic Cooperation and Development (OECD), published by Financial Times Deutschland, France, Italy, Germany and Portugal will violate Eurozone limits for public sector deficit for 2005. OECD forecasted that deficit will make up 3.2% in Germany in 2005. Thus, the country will violate the rules for the fourth straight year, as E-12 set budget deficit limit on the level of 3% of GDP. OECD also lowered the forecast for Germany’s economic growth for 2004 to 1.2% from 1.4%. German government thinks that growth would range from 1.5% to 2.0% and hopes to reduce the deficit to 3.25% this year and to 2.5% in 2005. Eurozone’s laws provide penalty for violating the limits but penalty payment was temporarily postponed by German and France due to serious economic crisis. “Exit” Industrial prices came out as +0.4% per month, +1.3% per year in Britain in March, whereas forecasted +0.3% per month and +1.2% per year. The previous value of the given index equaled +0.2% per month and +1.6% per year. The indicator testified price rise in Britain but the rise was not significant. “Exit” Industrial prices, excluding food products, alcohol, tobacco and fuel, came out as +0.2% per month, +1.4% per year in Britain in March, as forecasted. “Entry” Industrial prices had come out as +1.9% per month, +0.9% per year, whereas forecasted +1.1% per month and –0.3% per year. The previous value of the given index equaled –0.8% per month and –1.8% per year. The given indicator did not influence the forecast concerning 0.25% increase of the major interest rate that might occur in May and would be conducted by the Bank of England. In France, seasonally adjusted proficit of current operations account of the balance of trade made up 1.4 billion Euro in February against 409 billion Euro deficit in January. Goods account deficit made up 218 million Euro in February against the proficit of 711 million Euro in January. Services account deficit made up 133million Euro against the proficit of 219 million Euro. Income account proficit made up 1.08 billion Euro against the deficit of 252 million Euro in January. Excluding seasonal adjustments, February proficit of current operations account of the balance of trade equaled 500 million Euro against 400 million Euro proficit a year earlier. Index of leading indicators made up +0.3% in the U.S. in March, as forecasted. The previous value was revised from +0.4% to 0.0%. Positive value of the indicator supports the rate of the dollar. The address of the head of FRS Alan Greenspan, planned for Tuesday and Wednesday, will attract the attention of the investors this week. Analysts assume that Greenspan will be quite cautious about his words so that not to give additional hopes for near increase of the rate.

The forecast was created by trans1.