Dollar Index slipped due to weak Retail Sales - 13.3.2015

US stocks advanced on Thursday following 2-day decline. As we mentioned in our previous overviews they are now moving in opposite directions with US Dollar Index. That happens because strong dollar makes manufacturers' products less competitive and produces adverse effect on their earnings. Yesterday Dollar Index slipped due to worse-than-expected January Retail Sales and because of technical rebound from "psychological" 100. Market participants expect these data to delay Fed rate hike. To be mentioned, US Retail Sales have been decreasing for 3 consequent months first time since 2012. This is hard to explain taking into consideration sustainable employment growth. Investors expect boost in Retail Sales in March. The current dynamics may pull back Dollar Index in mid-term. American stocks trade volume on Friday was below monthly average and made up 6.6 billion shares. Today at 15:00 CET Consumer Confidence Index will be released by the University of Michigan.

European stocks have been traded sideways close to their highs today and yesterday. The surge has stopped amid the growing euro. No important macroeconomic data are expected today in the EU. Our analysts believe only German economy shows signs of recovery. Investors expect that the euro emission will support other EU country-members as well. Thus, the common currency may strengthen, provided that the European Union as a whole improves macroeconomic indicators. No important statistics are anticipated in eurozone today.

Nikkei has again marked a sharp growth, rising to its 15-year strongest. The index has been closing in the green zone for 5 straight weeks. It was driven up by Fanuc Group reporting growing dividends and probable own shares buyback. Nikkei advance was assured mainly by the company shares adding as much as 12%. The Tokyo stock exchange daily turnover has risen to its highest since November. 2014. We remind that this week macroeconomic statistics in Japan were relatively weak, indicating slow economic recovery.

Oil prices fell as International Energy Agency reported global oversupply with the US showing nearly no decline in output. The agency slightly increased forecast for global demand in 2015 from 75 thousand barrels per day to 93.5 thousand barrels. Investors expect American oil workers to return to work and export from Libya to resume, producing additional pressure on oil quotes. It should be noted that on the back of the largest strike over 35 years US oil reserves have recorded their 80-year maximum.

Wheat futures edged higher as US Drought Monitor reported 70% of crops in Oklahoma and 45% of crops in Kansas to incur “moderate drought”. The weekly surge in wheat prices may reach 4-month high. Soy prices declined as AGR Brazil said that soy export may exceed 7 million tons due to truck drivers' strike ending. Yet, soy export from the US has fallen to its lowest since mid-November. No important information concerning corn crops was announced but ethanol production, marking a 8.6% increase weakly, should be taken into consideration. We do not exclude rising demand for corn.

Coffee quotes plunged to the yearly low. Meanwhile, National Coffee council forecasts production to decrease 4.5%-11% this season in Brazil. We remind that last season Brazilian manufacturers produced 44.3 million bags (60 kilograms each). Procafe Foundation also expects declining crops in the country.