03.06.2016 - Investors are waiting for the publication on the US labor market report
Currency trading and the euro. Price of euro fell yesterday against the strengthening of the US dollar, due to stronger data on the labor market in the country. Thus, the number of jobs in the US private sector from ADP grew by 173 thousand in May against the forecast of 166 thousand before. It is worth noting that the ECB did not change monetary policy parameters and said about maintaining the quantitative easing program until March 2017 or more. The forecast for growth in the euro area economy has been improved to 1.6% this year, which is 0.2% more than the previous estimate. Today, the central event of the day will be the publication of data on the labor market in the US (12:30 GMT), which strongly affect investors' expectations regarding the timing of the Fed raising interest rates. In addition, we should pay attention to the data on retail sales in the Eurozone (09:00 GMT) and the volume of factory orders in the US (14:00 GMT). Our medium-term outlook for the euro is negative and we expect a fall in the near future.
Currency trading and the British pound. The price of the British pound recently showed a decrease against the background of investors' uncertainty about the outcome of the referendum on the UK's membership in the EU, which will take place on 23 June. Today, the dynamics of trading will affect data on the UK’s service PMI (08:30 GMT), but the main attention will be focused on the US labor market news. According to our estimates, the British pound will rise before the end of the month due to the expected refusal of the British voters from the exit of the country from the Eurozone.
Currency trading and the Japanese yen. The price of the Japanese yen continued to strengthen against the backdrop of publication of weak statistics on the growth of the average wage in the country by only 0.3%, well below the forecasted increase by 0.9%. It is worth noting that the indicator points to the future growth of weak consumption in the country and will put pressure on inflation. Today, market volatility may increase in connection with the publication of an important report on the labor market in the US (12:30 GMT). Given the expected tightening of monetary policy in the US and its expected decrease in Japan, we maintain a medium-term negative outlook on the yen.
Currency trading and the Australian dollar. The price of the Australian dollar rose slightly today after yesterday's decline and continues to consolidate due to the caution of investors before the publication of statistics on the US labor market. Today, support for the Australian currency was the data on the service PMI of Australia, which rose to 51.5 in May from 49.7 in April. In the near future, a negative impact on the dynamics of trading can provide a stronger US dollar and falling commodity prices. We maintain our medium-term negative outlook for the Australian dollar.
Currency trading and the New Zealand dollar. Price of the New Zealand dollar continues to consolidate after strong growth earlier in the week. Investors are in no hurry to open new positions ahead of important events next week, including the statements of the RBNZ and the RBA on monetary policy, as well as the publication of important statistics from China, a key trading partner of the country. Our medium-term outlook remains negative and today is possible volatility growth in case of strong movements of the US dollar price.