01.07.2016 - The Bank of England may lower its benchmark interest rate

Currency trading and the euro. The price of euro showed a rise in volatility yesterday amid speculation about a possible reduction of the requirements to assets at their purchase under the program of quantitative easing in the Eurozone. It is worth noting that yesterday was published the data according to which the consumer price index in the euro area rose to 0.1% in June, which reduces the chance of increasing stimulus measures in the euro area. Today, the course of trading will affect the news on the unemployment rate in the Eurozone (08:00 GMT), construction spending in the US (14:00 GMT) and the manufacturing PMI in the Eurozone (08:00 GMT) and the USA (14:00 GMT). On Monday, in the US is a holiday. Our medium-term outlook remains negative on the background of the expected strengthening of the US dollar and the impact of the British referendum on the euro area.

Currency trading and the British pound. The price of the British pound weakened after a slight rebound. The reason for the negative dynamics of the British currency is still the country's exit from the European Union, which is likely to take place over the next 2 years. In addition, the negative impact on trading had statements of the Bank of England Governor Mark Carney, according to which the interest rates could be lowered in the near future, to stimulate the economy. Several companies announced the closure of the central offices in London and moving to other EU cities and such trend will continue in the near future. Our medium-term outlook for the British pound remains negative.

Currency trading and the Japanese yen. The price of the Japanese yen continued to fall against the US dollar amid weakening demand for defensive assets due to the revaluation of risk after a sharp decline as a result of the British referendum. It should also be noted that household spending in Japan in May fell by 1.1% against the forecast of decline by 1.3%, core CPI in Japan totaled -0.4% in May, against 0.3% in April, and the manufacturing PMI rose in June to 48.1, against 47.8 in May, which is still below 50 that indicates contraction in the sector. Our medium-term outlook remains negative.

Currency trading and the Australian dollar. The price of the Australian dollar continued its gradual growth despite the recent drop in oil prices, as well as the publication of weak statistics on the China’s manufacturing PMI from Caixin, which fell to 48.6 in June, compared with 49.2 in the previous period. The same indicator in Australia rose to 51.8, which is 0.8 more than the previous estimate. Next week, the focus will be on the statement of the Reserve Bank of Australia, but we do not expect the change the monetary policy settings in the country. Our medium-term outlook for the Australian dollar remains negative.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar continued to rise gradually following the Australian currency. The potential for further price increase is limited and uncertain situation on commodity markets may lead to a decrease in the New Zealand currency. According to our estimates, the volatility in the near future will be increased. Our medium-term negative outlook remains unchanged.

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