03.02.2015 - Reserve Bank of Australia lowered its interest rate
The price of euro continues to consolidate in the range 1,13-1,14 despite a number of factors that contribute to the growth of the currency against the US dollar. So, yesterday have been published data on the manufacturing PMI in the US, which fell to 53.5 in January, against 55.5 in December. At the same time, the government refused of Greece to call debt cut and asked for a new loan program. Despite this, investors do not believe in the growth of the euro in connection with the launch of quantitative easing in the euro area in March. Today, the course of trading will be affected by the data on the producer price index in the euro area in December (10:00 GMT) and the volume of factory orders in the US (15:00 GMT). Our medium-term outlook for the euro remains negative and we recommend holding short positions.
The price of the British pound failed to show growth despite the stronger data on the manufacturing PMI in the country, which in January rose to 53.0, which is 0.1 better than expected, while the same indicator in the US fell to 53.5, which is 2.0 worse than the previous figure. Today, the focus will be on the construction PMI data in the UK (09:30 GMT) and factory orders in the US (15:00 GMT). It should be noted that further movement of the pound will depend on the dynamics of euro, which has been steadily decreasing, as well as the timing of interest rate increase in the UK, which is expected in late 2015 or early 2016. We maintain a negative outlook on the British pound in the medium term, but we can see the short-term growth in the near future.
The Japanese yen strengthened against the background of statistics from the US, which disappointed investors. Thus, the production figures were worse than expected, and consumer spending in the US showed a decline of 0.3%, compared with an expected decline of 0.1%. The monetary base in Japan showed a decrease in growth to 37.4% in January compared with the same period of the last year. Analysts had expected acceleration of growth to 40.0%. At the moment, we see a tendency to strengthen the yen, which may continue in the near future, but keep medium-term negative outlook due to the difference in the monetary policy of the US and Japan.
The price of the Australian dollar fell sharply after the statement of the Reserve Bank of Australia which lowered interest rates by 0.25% to 2.25%. The reason for this step was the slowdown in the economy, which remains lower than forecasted, weak domestic demand and rising unemployment. Lower interest rates should support the growth of economic activity and improve the situation on the labor market. Earlier, Canada has reduced interest rates. Country's trade deficit totaled 0.44 billion in December, compared with an expected 0.85 billion. Our medium-term outlook for the Australian dollar remains negative.
The price the New Zealand dollar dropped sharply after the statement of the Reserve Bank of Australia regarding the reduction in interest rates by 0.25%. This step in Australia encourages Reserve Bank of New Zealand to lower interest rates at the next meeting. We recall that last week RBNZ refused to lower interest rates. Today is expected the increase of volatility in connection with the publication of data on the unemployment rate in the country, as well as the speech of the Reserve Bank of New Zealand Graeme Wheeler. We maintain our medium-term negative outlook and recommend holding short positions.