Brief review of the market. by OpenForex.com

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Brief review of the market.

09:39 06/14/2004

Brief review of the market. The dollar dropped a bit against major currencies after the recent rapid growth. Investors are closing their long positions on the dollar prior to long weekend in the U.S. On Thursday, the yen continued strengthening against major currencies. The rise of Nikkei stock exchange index and the signs of recovery of Japanese economy supported the rate of the yen. The Bank of England decision to raise interest rate 0,25% higher rendered only short-term support to pound sterling. It had been noted that great number of investors started closing out their long positions on pound upon the decision of the Bank of England, as in the nearest months the Bank might take a break in raising interest rates Japan’s trade balance made up 1.264 trillion yen in April. Japan’s balance of payments made up 1.583 trillion yen in April, though forecasted +1.570 trillion yen. The last indicator came out better than expected and rose 23.1% compared to the similar period of the last year. In Japan, engineering orders index rose 11.8% per month in April from the previous -3.2% per month. Earlier, economists had looked for 1.9% gain. The given indicator had come out better than expected and higher than the average forecast. Wholesale prices index for May made up +0.1% per month, +1.1% per year in Japan against the previous +0.1% per month, +0.5% per year. Index had been coming out positive for the seventh straight month. In May, its annual value was maximal since October 1997. The U.S. Department of Trade reported that import prices for import rose 1.6% in May compared to the previous month, when they rose 0.2% (revised April Data). May indicator was much higher than the average forecast that had looked for 0.8% gain. Prices for imported oil and oil products rose 10.3% in May after 0.4% dip in April. Excluding oil and oil products, import prices rose 0.4% in May. Prices for exported goods rose 0.3% in Amy compared to 0,7% gain in April. Prices for agricultural exports rose 0.5%. Excluding agricultural exports, export prices rose 0,2%. Import prices had risen for the eighth straight month in May, whereas export prices had risen for the ninth straight month. On Thursday, the U.S. Department of Labor reported jobless claims to equal 352 000 claims in the week ended June 5, thus having increased on 12 000 claims compared to the revised indicator of the previous week that equaled 340 000 claims (earlier reported as 339 000). In average, economists had looked for a dip to 335 000 claims. Economists think jobless claims on the level of 350 000 to indicate improvements in labor market situation. The overall number of Americans receiving state unemployment benefits decreased on 106 000 people to 2,881 million people during the week ended May 28 (the most recent data). Analysts think that labor market situation improvement has a positive impact on country’s economy, as it contributes to increase in consumer income and spending. In France, the volume of industrial production had steeply fallen 0,4% in April. Compared to the previous April, industrial production rose 1.1%. Analysts had looked for industrial production to increase 0.3% per month and 1.6% per year. Industrial production reduction occurred for the first time in the last three months and was conditioned by reduction in energy branch production. Excluding energy branch and foodstuffs, industrial production rose 0,4% in April compared to March. Thursday was the final day of the meeting of G8 heads in the U.S. G8 talks touched upon the issue possible expansion of G8 composition. The president of France, Jacque Shiraque stated that “such countries, as Brazil, China and SAR should be draw in this or the other way”. French leader said that economic decisions could not be made without participation of the listed countries. Paul Martin, the prime minister of Canada, said G8 could expand to G20. In his opinion, such countries, as India, China and Brazil could join G8. Italy’s Silvio Berlusconi agreed with the stated above opinions. France and some other participants of the meeting expressed their concern in terms of possible negative effect that the U.S. budget and trade deficit might produce on the world economy. That’s what Jacque Shiraque said: “There were some concerns and statements – and I was not alone here – in terms of possible consequences that the U.S. budget and trade deficit might entail, especially for currency and interest rates”. “President Bush is clearly aware of the situation”, - he added. Current accounts’ deficit was the main reason of American dollar reduction this year.

The forecast was created by trans1.