Slowly but surely, the U.S. dollar strengthened against the Japanese yen

Drawing attention to the 4 hours chart, you will notice that for the second consecutive day, continuing the slow but steady growth (after the currency was able to penetrate the upper limit of the symmetrical triangle) of the American dollar against the Japanese yen

USD/JPY

Current price levels are still located above the moving averages with periods of 34, 55, 89 and 144, which is directed upwards and point to the continuing bullish sentiment.

The MACD histogram is located in the positive zone, located above its signal line, continues to rise and thus sends a signal to buy the dollar / yen.

Stochastic Oscillator re-entered the overbought zone and formed a similar signal, since the beginning of the% K line rises above the% D.

Therefore, we expect that growth in dollar / yen will continue, but the immediate goal of bulls is located on 92.50.

Levels of resistance: 92.00/10, 92.50, 92.70, 93.00

Support levels: 91.50, 91.00, 90.70, 90.50, 90.20/00

Strengthening of the ruble could become a problem

Financial Analyst FxPro Alexander Kuptsikevich: Today, the dollar fell below a mark of 29 rubles. The reason for this building served as the weakening U.S. currency, as well as skyrocketing oil prices to $ 81. Strengthening of the ruble could become a significant problem for the restoration of Russia's economy, and the authorities know about it.

A little over a year has passed since the Central Bank has used an arsenal of non-standard methods to support the ruble and a bailout of the banking system with smaller losses. In October, the Central Bank once again become actively replenish gold reserves to prevent excessive strengthening of the ruble. However, monetary authorities seem unable to take action to influence the market movement. Thus, following the decline of the dollar, which is clearly in favor of the States, and rising oil prices, domestic currency becomes more expensive.

Encourage the reduction of the ruble may be three factors:

Short-term, seasonal - often stops ruble strengthened after the 20's numbers before the end of the month, which is associated with the period of tax payments.

Short-term, foreign - as an adjustment to the growth sites. Already we see how willing investors are to get rid of the shares on bad data. They later redeemed, but short-term speculators clearly record profits before the publication of data on the level of U.S. GDP in the third quarter, which will be next week.

Long - Oil prices are unlikely to show an equally impressive dynamics due to high unemployment in the world, greater caution by financial institutions to use leverage, as well as banal impossibility increase export of petroleum products, that is, the further growth of revenues is limited.

As a result, a higher inflation rate in comparison with developed countries would put pressure on the ruble, but a very moderate pace of recovery in economic activity because of falling costs and a slowdown in lending may reinforce this trend. As a result, year-end pair dollar / ruble might revisit the region above 30, and next week "seasonal" decline in interest in the ruble may discard a pair of 29,10.

Number of applications for unemployment benefits in the United States rose to 531 thousand

The number of primary applications for unemployment insurance in the United States increased over the past week for the first time after two weeks of decline.
Index rose for the week of October 17 to 11 thousand to 531 thousand, being at the highest level since 26 September.
At the same time, the number of Americans continuing to receive unemployment benefits fell for the week to October 10 to 98 thousand to 5.92 million. This indicator is at record low level since March this year.

The truth about indicators of economic sentiment

At any given time, the theoretical value of the shares - this is just your present value of future dividends. Because the company earns money, theoretically, the profits will be paid to investors.

The task of the investor is to determine which company is going to profit and invest before the profit will be known.

Once the economic data becomes available, investors analyze them, and make forecasts for future profits.

Macro economists take account of these technical data, mainly in order to monitor investor sentiment. We try to focus on macroeconomic developments, which are driven by the market.

What seems meaningless to us, so that's why the markets reacted so strongly to indicators of moods.

These variables, as a rule, have no influence on consumer data, while investors often use them as important indicators for economic performance. In part, the sentiment indicators can be tracked in the media, which use them in their "intelligence forecasts. However, many educated and influential scholars, such as Christina Romer (Christina Romer), chairman of the Council of Economic Advisers, stated that economic recovery is directly related to the growth of consumer sentiment.

It would be wrong to think that sentiment indicators - this is empty talk, while they may raise the market on the same day the report was published, but is just as important to understand that the purchase should not be based on a simple interpretation of these indicators.

Consumer sentiment
The two main indicators of sentiment are University of Michigan Consumer Sentiment Index and the Conference Board Consumer Confidence Indicator. Both sources of data trying to explain the same thing: consumer behavior.

Consumer sentiment is very volatile. The chart above takes into account the three-month average of monthly changes in each of the indices from January 1979 to August 2009.

One of the biggest problems associated with the use of sentiment indicator is the ignorance of precisely what the indicator gives a correct estimate of consumer behavior. Of the 377 months, as reflected in the chart, 115 months show indicators that move in the opposite direction. How can we trust that, what they believe consumers if 31% of the time we are confronted with contradictory information

In fact, indicators of consumer sentiment - it's just snapshot of consumer sentiment. As you know, advertising can significantly affect the way that people will buy. Similarly, then, in the light of what the media convey news, plays an important role in determining consumer sentiment. The above graph shows two indicators of attitudes that are associated with reading a certain number of news in the title of which used the word "recession", according to Google.

Indicators sentiment began a trend to decrease smoothly when the word "recession" has entered the lexicon in the mid-2007. As soon as the line of this trend took off, the index of sentiment began to decline more rapidly. Similarly, when the word "recession" began to eat less often in the media, the indicators again moved up. We can see a similar relationship in the context of the indicators of sentiment, if we use "economic recovery" or "green shoots" as the search words.

Also, such relationships in terms of attitudes can be attributed to fuel prices.

Mainly, sentiment indicators point to media reports, fuel prices, unemployment and stock indices.

Consumer sentiment and consumption
Objective indicators of sentiment is to explain potrebitelelskoe behavior. Often means that consumer sentiment and consumption are inextricably linked. Consequently, consumer sentiment should reflect the growth in consumer spending.

Unfortunately, consumption and attitudes have nothing in common.

Using a simple statistical regression chart above predicts real personal consumption expenditures, based on an index of consumer sentiment. The obvious result is that there is no indicator of sentiment not cope with predicting actual consumption.

It is likely that the cause of the impossibility of predicting any indicator of overall consumer spending is that the mood dramatically volatility. Instead, perhaps they would be better used to predict changes in consumer spending. Thus, if the consumer feels better this month, it will increase their costs.

Using the same statistical method, changes in consumption can not be predicted a change in sentiment.

Consumption can not be predicted using simple indicators of mood.

What really predicts the level of consumption?
The best indicator for predicting consumption has always been profit.

As you can see, the prediction of consumption by means of real personal income is very close to the actual personal expenses.

Relationship should be very close. There are only two choices as consumers can do with income: save or spend.

The difference between projected and actual personal expenses is the difference between the rate of actual and intermediate savings. When in 2008 in connection with the beginning of the process of reducing leverage soared savings rate, the expected value of real private consumption expenditure differed from the existing one.

What it all means
Media have a tendency to over-inflate the importance of indicators of consumer sentiment and as a result, it causes an acute reaction in the markets is the day when the news sounded.

Economists think this is strange. Sentiment index simply demonstrate how the consumer responds to media reports, fuel prices, unemployment and stock prices.

For those who are going to work in the market in the long run, these indicators are not linked to the prediction of consumption. You should not use the positive developments and the mood as an indicator that the consumer back to consumption.

If you need to predict the level of consumption, the best indicator may be the level of income.

The Truth About Economic Sentiment Indicators
Briefing
October 12

The current account deficit of balance of payments euro-zone 1.3 billion euros in August

In August this year the current account deficit of balance of payments euro-zone seasonally adjusted amounted to 1.3 billion euros (equivalent to a deficit of 5.0 billion euros excluding seasonal and calendar factors), said the European Central Bank. Previous value of the index revised downward - with seasonal and calendar factors balance of payments surplus amounted to 3.7 billion euros (previously reported surplus of 6.6 billion euros).
On an annual basis, taking into account factors consecutive current account deficit balance for August was 106.5 billion euros (about 1,2% of GDP), compared with a deficit of 56.1 billion euros a year earlier.
The total inflow of foreign direct and portfolio investment in the euro area without taking into account seasonal variations in composition for August 57 billion euros, compared with 18 billion euros in July.

UK retail sales index remained unchanged in September

The volume of retail sales in Britain have not changed for September, reported the National Statistics Office. Thus analysts predicted an increase in rate of 0,5%. Recall that in August, the index of retail sales was also 0.0%.
In annual terms, the index of retail sales was 2.4% in September compared with 2.1% a month earlier. The annual rate was forecast at 2.8%.

Japanese yen is under sales pressure

The U.S. dollar may be in a more advantageous position due to recent concerns about the recovery of the world economy, which is not the Japanese yen. Analysts said Commerzbank, the reason may lie in the fact that the Japanese currency is under pressure from the general sales due to the increasing amount of negative currency transactions carry trade. Since the beginning of October 2-year swap spreads have increased to nearly 20 bp, while spreads between Australia and Japan over the same period increased by almost 50 bps Analysts said the bank, the increase in spreads would lead to the resumption of purchases denominated in foreign currency bonds by Japanese investors, thus, the pace of repatriation of capital, observed in recent years to slow down. Pair dollar / yen has established today a new one-month maximum at 91.58, the euro / yen reached a 2-month high at around 137.10. Now the dollar / yen is trading at 91.32, the euro / yen - at 136.76.