02.06.2016 - The British pound showing strong volatility
Currency trading and the euro. Price of euro corrected upwards against the US dollar after declining during the previous weeks. The dynamics of the US dollar negatively impacted data on construction spending, which fell by 1.8% in April against expected growth of 0.5%. Today, in the focus of investors will be a press conference by ECB President Mario Draghi (12:30 GMT), which will be held after the announcement of the central bank's decision on interest rates. It is worth noting that the main event of this week will be tomorrow's publication of a report on the labor market in the US, which strongly affect investors' expectations regarding the timing of the Fed raising interest rates. Our medium-term outlook remains negative, despite the possibility of continuation of the current correction.
Currency trading and the British pound. The price of the British pound continued its decline against the US dollar in relation to the concerns of the UK’s exit from the EU after the referendum that will take place on 23 June. According to our forecasts, voters will not support this initiative, which will boost the British currency quotes. Pressure on the pound yesterday also had weak data on the volume of new loans to individuals, which in April was only 1.6 billion vs. expected 5.3 billion and 9.3 billion in March. This fact points to a decrease in costs, which is negatively displayed on the GDP growth. Today, the dynamics of trading can affect the data on construction PMI (08:30 GMT). We expect increased volatility in the coming weeks and the possibility of renewed growth.
Currency trading and the Japanese yen. The price of the Japanese yen continued to rise against the background of US dollar correction, as well as in connection with the statement of the Bank of Japan board member Takehiro Sato, on the need for more flexible targets for the monetary base, and noted the lack of stimulation of new investments using negative interest rates. Tomorrow will be published important statistics on the average wage in the country, the growth of which is one of the objectives of the central bank. In addition, volatility will rise after the release of US labor market report. Our medium-term outlook remains negative for the yen.
Currency trading and the Australian dollar. The price of the Australian dollar continued to consolidate after rose sharply yesterday. We recall that previously was published the data on the growth of GDP in the 1st quarter, which was 1.1% vs. expected 0.6%. Today, have been published, data on retail sales in the country which rose by 0.2% in April, that is 2 times less than the previous value. The trade deficit totaled 1.58 billion vs. expected 2.11 billion. Despite the strong figures for economic growth in the near future, the Australian dollar will be under pressure from falling commodity prices and a stronger US dollar, our medium-term outlook remains negative.
Currency trading and the New Zealand dollar. Price of the New Zealand dollar has stabilized after the strong growth of the previous days, and after the current consolidation may resume falling. The main factors that affect the course of trading remain the dynamics of the Australian and US dollars, as well as commodity prices. Our medium-term outlook remains negative.