03.12.2014 - Decline in GDP growth in Australia resulted in another fall of the Australian dollar
The price of euro fell to two-year lows against the dollar strengthening and weak data from the euro area. Thus, the producer price index in the euro area, which fell by 0.4% in October, compensated positive on reducing the number of unemployed in Spain by 14.7 thousand. In addition, the dollar was supported by data on the growth of construction costs by 1.1% in October, which is 0.5% better than expected and speeches of the Fed officials, which pointed on future rate increase after rising inflation and improving the situation on the labor market. Today we should pay attention to the service PMI (09:00 GMT) and retail sales in the euro area (10:00 GMT) labor market data in the US (13:30 GMT), non-manufacturing PMI (15:00 GMT). At 19:00 GMT will be published the Beige Book. Investors expect the central events of the week - the speech of the ECB President after the interest rate decision on Thursday and the publication of a report on unemployment in the US on Friday. Our medium-term outlook for the euro remains negative.
The price of the British pound weakened yesterday against the strengthening of the US dollar, as well as in connection with the reduction of the construction PMI to 59.4which is 0.7 and worse than prognosis and 1.0 worse than in the previous period. Today will be published service PMI (09:30 GMT). Investors are waiting for the statement of Bank of England tomorrow. Given the pressure of low oil prices on inflation in the country, we do not expect a hint of imminent rise in interest rates of the Bank of England. In this regard, as well as against the weakness of the euro area, which is the main trading partner of the country, we keep a negative outlook on the British pound in the near future.
The Japanese yen continues to fall. The reason for the continuation of the negative dynamics against the US dollar has been the growth in yields of short-term US Treasury bonds and comments of the Fed officials that indicated an intention to tighten monetary policy. Today, we expect increased volatility due to the large block of statistics from the US, but the central event of the week will be the release of data on US labor market on Friday. We maintain our medium-term negative outlook on the yen and see no reason to change the current dynamics.
The fall of the Australian dollar against the strengthening of the US dollar intensified after the publication of data on GDP growth in the 3rd quarter. Thus, the figure rose by only 0.3%, which is 0.2% less than the previous figure by 0.4% and worse than the forecast. Annual GDP growth was 2.7%, which is lower than the forecast of 3.1%. As a result, quotes fell to its lowest level since 2010. Tomorrow is also expected the increase in volatility due to release of data on retail sales and the trade balance of the country. We expect a further fall in prices in the medium term and recommend holding short positions.
The New Zealand dollar fell against the growth of the US currency. Negative for investors was the data for GDP growth in Australia, which is more than 2 times worse than expected. It should be noted that the data on the growth of China's services PMI, calculated by HSBC in November, showed an increase of 0.1 to 53.0. Further dynamics of prices will depend on the statistics from the US. At the moment, there is no reason for the growth of quotations of the New Zealand dollar, and we keep medium-term negative outlook.