02.09.2014 - Australia's trade deficit has strongly grown
The price of euro continues to fall against the background of a number of factors including the strengthening of the dollar on expectations of positive data on the labor market in the United States, which may lead to earlier Fed rate hike, weak data on the manufacturing PMI in the euro area, which decreased by 0.1 to 50 , 7 August. Also on euro quotes pushes expectation of launching new measures to deal with low inflation in the euro area, the solution of which can be taken on Thursday at a meeting of the ECB. The focus of investors also remains on the tense situation in Ukraine and the sanctions against Russia. Today, the course of trading may be affected by the data on producer price index in the Eurozone (09:00 GMT) and the manufacturing PMI and construction spending in the United States (14:00 GMT). We maintain a medium-term negative outlook and look forward to continuing the downward movement in the near future.
The British pound resumed its decline, despite yesterday's attempts to grow before the release of data on the manufacturing PMI, which disappointed investors. Thus, the figure had fallen to its lowest level in the past 14 months and totaled 52.5, with an expected growth to 55.1. Today we should pay attention to the details on the construction PMI in the UK (08:30 GMT). Growth potential in the medium term has dropped significantly, but we keep the medium-term positive outlook for the British pound and forecast price growth after the referendum on Scottish independence on 18 September.
The Japanese yen continued to fall against the strengthening of the American currency, as well as in connection with the appointment of former Deputy of Prime Minister Shinzo Abe, the head of the ministry is responsible for the implementation of the pension reform. Data released today showed a decrease in the growth rate of the monetary base to 40.7%, against the forecast of 43.7%. We expect a further fall in the yen and maintain a medium-term negative outlook.
The Australian dollar fell sharply after the release of statistics on the growth of payments deficit in the country to 13.7 billion in the second quarter against 7.8 billion in the previous period. At the same time, the number of permits issued for construction of new homes in Australia increased by 2.5% in July, which is 0.8% better than the forecast of analysts. Reserve Bank of Australia left interest rates steady at 2.50%. Tomorrow will be published GDP data of Australia and the head of RBA will make a statement. We expect a further decline of the Australian dollar and maintain a medium-term negative outlook.
The price of the New Zealand dollar continued to decline gradually following the Australian currency. Deterioration of the trade balance in Australia indicates general worsening in the region, which is heavily dependent on the main trading partner - China. Tomorrow the course of trading will be affected by the data on service PMI in China. Bulls on the New Zealand dollar look rather weak and we expect continued downward trend in the near future.