Binary Options Markets Review

Weak economic data around the globe

Weak data in Europe, Japan introduces new quantitative easing program

Europe: economic data continue to point at the recession prevailing in Europe. The unemployment rate in the Eurozone increased in February, for the 20^th consecutive month, to a peak level of 12%. The volume of loans to the business sector decreased during February to a level indicating an annual shrinkage of 4.2%. The final estimate of the Eurozone’s Composite Purchasing Managers Index decreased during March, for the second consecutive month, to a level of 46.5. The estimate was consistent with preliminary data and lower than February’s 47.9 figure, serving as an indication that the recession will probably continue in the coming months.

Italy: it has been over a month since the elections, but a government in Italy is yet to be formed. After the “Centre-left” leader, Pier Luigi Bersani, informed president Napolitano that he was unable to form a government, Napolitano retorted with forming a “task force”, hoping it will be able to establish a reform plan that would be acceptable by all parties. These developments contributed to a sharp decrease of 39 basis points at the 10-year bond yields. Nonetheless, it remains uncertain if parties would be able to conclude on the reforms Italy needs. Moreover, due to the ideological gap between parties, even if a coalition aimed at promoting reforms is established, it may not be able to do so, and in this case, new elections will take place within a couple of months.

Japan: Japan’s central bank (BoJ) met investor’s expectations in its recent monetary meeting as it decided to substantially increase the volume of bond purchases and extend the duration of bond purchased. The meeting was led by the new BoJ governor, Haruhiko Kuroda. Kuroda estimated the quantitative easing program would succeed at increasing inflation rate to the new 2% target within two years. Prior to the bank’s announcement, concerns grew that the new governor will not increase substantially the quantitative easing program. Due to that, the announcement of the new program led to a renewed decrease at the Japanese Yen versus the Dollar and to a very sharp decrease at Japan’s long-term bond yields. Since the beginning of the year a pattern was recorded in the Japanese financial markets, of positive correlation between stock and bond prices, namely due to the increase of both, It’s similar to that of other countries where the central bank implements a slew of monetary expansions, such as the U.S.

Disappointing data from the U.S.

Economic data published last week in the U.S. were mostly weak, contrary to last months’ trend. The data indicates an expected moderation of the U.S. economy’s growth rate during the second quarter. U.S. Non-Farm Payrolls employment survey was disappointing as it indicated a low recruitment of only 88K jobs during March, versus expectations of about 190K. March’s data indicate that the U.S. economy is still far from an average monthly recruitment rate of 200K, however, one month’s data may not suffice to form a solid conclusion regarding the developments at the U.S. economy. Examining the trend during the last three months indicates an average monthly recruitment rate of 168K jobs, similar to the 180K average of 2012. Hence, the U.S. economy continues to grow, but at a moderate rate.

Events of the coming week

Europe: industrial production data will be published on Monday in Germany, Tuesday in the U.K and Wednesday in France. All are expected to present an improvement compared to the previous month. On Friday, industrial production data will be published for the Eurozone as a whole, with an expected increase of about 0.2%, compared with a decrease of 0.4% last month. More on Tuesday, export data in Germany will be published, with an expected decrease of 0.3%, following a 1.3% increase in the last month. Europe’s week of economic events will be concluded in Friday with a joint meeting of the Eurozone’s finance ministers.

U.S.: on Wednesday, the Fed will publish its Minutes report for the month of March. On Thursday, initial jobless claims’ figure will draw much attention after last week’s sharp increase to 386K, with expectations for a milder 360K this week. On Friday, retail sales data for the month of March will be published, with no change expected, and the University of Michgan’s Consumer Confidence Index, with an expected slight decrease to 78.3 from 78.6.

China: inflation data for March will be published on Tuesday, with an expected increase at the consumer price index, and foreign trade data on Wednesday.

From http://binaryoptionsdailyreview.com/