02.07.2016 - Reserve Bank of Australia lowered its key interest rate to 1.50%
Currency trading and the euro. The price of euro continued to consolidate against the US dollar despite the publication of weak statistics from the US. Thus, the manufacturing PMI in the US fell to 52.6 in July vs. expected 53.1, while construction spending fell by 0.6% against the forecast of growth by 0.5%. Today, the focus of investors will be on the statistics on personal spending and income of consumers in the US (12:30 GMT). The potential growth of the euro is limited despite the weak data from the US. Pressure on the quotes of the European currency will have a worsening of the economic situation in the UK. Our medium-term outlook remains negative.
Currency trading and the British pound. The price of the British pound does not show strong movement in connection with the expectation of decision of the Bank of England on monetary policy, which will be published on Thursday. The probability of resumption of quantitative easing and interest rate cut from the current level of 0.50% is high. In this case, the quotes will show a sharp decline after a long consolidation. In case of saving the current settings of monetary policy, we expect the growth of the British currency. Our medium-term outlook remains negative and we expect a fall in the near future.
Currency trading and the Japanese yen. The price of the Japanese yen stabilized after the recent strengthening. On the one hand investors were cheered by the growth of the manufacturing PMI in Japan by 0.3 to 49.3, and the fall of the same index in the US to 52.6 vs. 53.2 previously. Today was released the data on consumer confidence index in Japan, which fell to 41.3 vs. 42.2. On the dynamics of trading tomorrow will affect the publication of the previous meeting of the Bank of Japan minutes, as well as the situation with the demand for defensive assets. In the near future, prices may continue to rise, but the medium-term outlook remains negative on the background of the divergence in the monetary policy of the Fed and the Bank of Japan.
Currency trading and the Australian dollar. The price of the Australian dollar today shows a negative dynamics against the background of negative statistics on the country's trade balance deficit which totaled 3.2 billion vs. predicted 2.0 billion. It is worth noting that the Reserve Bank of Australia lowered its benchmark interest rate by 0.25% to 1.50%. In addition, in the bank said about the moderate growth of the economy, reducing the risks in the housing market of the country and the forecast of low inflation against the backdrop of weak growth in wages. Given the negative dynamics in commodity markets and the easing of monetary policy in Australia, we maintain a medium-term negative outlook and expect the continuation of the current negative dynamics in the near future.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar fell following the Australian dollar. The two economies are closely linked. Lowering interest rates in Australia on the background of low inflation increases the likelihood of such a move by the Reserve Bank of New Zealand, which will lead to lower prices. Our medium-term outlook remains negative and we expect a continuation of negative dynamics in the near future against the background of the negative situation on the commodity markets.