Brief review of the market. by OpenForex.com

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Brief review of the market.

18:50 06/10/2004

Brief review of the market. On Wednesday, American currency strengthened against major currencies, as FRS chairman’s statements arouse excitement about discount rate hike. Analysts are looking for stronger than earlier expected tightening of FRS policy directed at fighting inflation. Greenspan said that decision about raising the rate gradually should be made at Thursday meeting. However, FRS would do its best to restrain inflation. British currency also strengthened against common European currency, as it is expected that the Bank of England would raise discount rate due to release of strong April data on production. According to official data published on Wednesday, production rose at the quickest tempo since April 2002 in Britain. Analysts assume that the given data can affect the decision of Monetary Policy Committee as regards raising the rate one-fourth points to 4.50%. Industrial production in Britain in May made up +0.7% per month, +0.5% per year. The previous value of the given index equaled 0.0% per month, -0.6% per year. The outcome was higher than forecasted and reached maximal level since previous October. In May in Britain, industrial production in processing industry made up +0,9% per month, +1.0% per year against the previous values of -0.3% per month, +0.4%per year. The given index came out higher than expected and has also reached its maximum since August 2002. It was noted that industrial production had been rising for the first time in three months. In Britain, deficit of foreign trade balance rose to 3,6 billion pounds sterling in April from the revised 3.0 billion pounds in March. In February-April, deficit dropped to 9.7 billion pounds from 10.9 billion pounds in the previous three-month period. Commodity trading deficit made up 4.7 billion pounds in April against 4.2 billion pounds in March; services-trading profocit made up 1.1 billion pounds against 1.2 billion pounds. Trade balance deficit in trading with the EU countries made up 2.2 billion pounds against 2.1 billion pounds. Trade balance deficit in trading with non-EU countries made up 2.5 billion pounds against 2.1 billion pounds. On Wednesday, the U.S. Department of Trade reported that American companies’ wholesale inventories’ reduced 0,1% compared to March. According to revised data, inventories rose 0,5% and not 0,6%, as earlier reported. Revised data shows that bulk sales rose 2,9% in March and not 2,7%, as reported earlier. In April, bulk sales rose 0,8%. Wholesale inventories’ reduction was a surprise for the economists. In average, they expected that inventories would rise 0,5% in April. Inventories’ reduction accompanied by sales’ growth presupposes that companies will increase inventories so that to keep up with demand and that, in its turn, will result in production growth. Inventories/ sales coefficient, indicating the number of months during which current wholesale inventories were sold out at the current level of bulk sales, dropped to 1,12 in April against 1,13 in March. In the U.S., raw oil reserves rose 0,4 million barrels to 302.1 million barrels during the week ended June 4. The given data was published by the U.S. Department of Energy. Oil reserves are 18.5 million barrels higher than the last year’s level. During the week, gaz reserves rose 2.1 million barrels to 206.4 million barrels, which is 1.6 million barrels lower than last year. Black mineral oil and diesel fuel reserves reduced 0.6 million barrels to 108.3 million barrels, which is 1.6 million barrels higher than last year. Work load level of oil-processing plants rose from 94.9% to 96.0% in the U.S. In Germany, consumer prices rose 2,0% in May against the last year’s level. Consumer prices rose 1,6% in April, says Federal Statistical Services. Compared to the previous month, consumer prices rose 0,2%. Prices for food stuffs rose 0,3% in May compared to the previous month; however, they dropped 0,2% compared to the last year’s level. Harmonized index of consumer prices, calculated according to the common technique of the European Union, rose 2,1% per year and rose 0,2% compared to the previous month.

The forecast was created by trans1.