01.03.2016 - Deflation in the euro zone is the euro down
Currency trading and the euro. The price of euro continued to fall on Monday against the publication of weak statistics on the consumer price index in the euro zone, which fell to -0.2% in February, according to preliminary data, against an increase of 0.3% in January compared with the same period last year. It is worth noting that the weak data on Chicago’s manufacturing PMI, which fell to 47.6 in February against the forecast of 52.1, weakened the US dollar. Today, it is worth paying attention to the data on manufacturing PMI in the Eurozone (09:00 GMT) and the US (15:00 GMT), as well as news on unemployment in the Eurozone (10:00 GMT) and construction spending in the US (15: 00 GMT). We expect a further fall of the price of euro against the background of the expected enhancing the ECB’s incentives in the euro area. Our medium-term outlook is also negative.
Currency trading and the British pound. The price of the British pound is corrected upwards amid the weakening of the US dollar, as well as due to technical factors. Today, the dynamics of trading will affect the news on the manufacturing PMI (09:30 GMT). The main reasons for the further reduction of quotations are speculations regarding a possible of the country exit from the European Union, after the referendum on 23 June. We expect a further price decline, but in case of the fall to the levels of 1,35-1,36, we recommend to accumulate long positions.
Currency trading and the Japanese yen. The price of the Japanese yen strengthened today after the publication of statistics on unemployment in the country, the level of which decreased by 0.1% to 3.2%. On the other hand, household spending in February fell by 3.1% compared with the same month last year, which was 0.6% below the forecast of analysts. It is worth noting the deterioration in the country's manufacturing PMI, which fell by 0.1 to 50.1. The comparable figure in China fell to 59.0, which is 0.4 less than in January. The demand for defensive assets will continue to have a positive impact on the yen, but we expect the resumption of the fall in the near future and maintain the medium-term pessimistic outlook on the yen.
Currency trading and the Australian dollar. The price of the Australian dollar showed insignificant growth against the background of the RBA decision to keep interest rates at 2.0%, but the head of the central bank Glen Stevens said about a possible easing of monetary policy against a background of low inflation. The deficit of the balance of payments of the country in the 4th quarter rose to 21.1 billion against 19.8 billion expected. The manufacturing PMI rose by 2,0, to 53.5 in February. Tomorrow will be published important statistics on Australia's GDP. We forecast a drop in prices in the medium term and expect a strong price move tomorrow.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar showed growth following the Australian dollar despite weak data on business activity in China, which is the main trading partner of the country. Weak inflation in the country may lead to a decrease in interest rates during the next RBNZ meeting of the New Zealand’s regulator. This fact, together with the low prices for commodities will continue to put pressure on the New Zealand currency quotes. Our medium-term outlook remains negative.