03.07.2014 - The U.S. dollar has strengthened after the release of data on the labor market
of euro continued to fall yesterday against the U.S. dollar, which was due to
positive data on the U.S. labor market. Thus, the number of non-farm payrolls
from ADP increased in June to 281 thousand, with an expected growth by 207
thousand. At the same time, the volume of factory orders fell in May by 0.5%,
which is 0.1 worse than the forecast. The final data on the Eurozone GDP in Q1
showed an increase by 0.2%, in line with previous estimates. Today, the course
of trading will depend on the ECB's decision on interest rate (11:45 GMT) and
statements of Mario Draghi (12:30 GMT). In the U.S., will be released the data
on the labor market (12:30 GMT). Today we expect a high level of volatility,
and tomorrow in the U.S. is a holiday. We maintain our negative view on euro in
the medium-term with targets at 1.35 and 1.34, but today we do not exclude the
The growth of the British pound slowed on the background of strong data on the labor market in America. Statistics on the construction PMI, which rose in June to 62.6 against 60.0 in May, supported the national currency of the UK. Today will be published a report on services PMI (8:30 GMT), in which is employed the largest number of workers. Despite the decline in the growth potential of the British pound, we maintain a positive outlook for the medium-term with targets at 1.72 and 1.73.
Strengthening of the U.S. dollar has led to an acceleration of USD/JPY growth. Labor market data in the U.S. showed that the economy has created more jobs than expected. In addition, monetary policy in Japan is ultra-soft, despite the slowdown of the monetary base growth, and the fact that improvement in the U.S. leads to more rapid increase in interest rates. We expect a decline of the Japanese yen in the medium term, but we can see a correction tomorrow due to the holiday in the U.S., where will celebrate the Independence Day.
The price of the Australian dollar, which began to decline due to negative data on the growth of the trade deficit of the country in May to 1.91 billion against the forecast of 0.16 billion, continued to fall against the U.S. dollar strengthening. Also traders were disappointed by the drop in retail sales in May by 0.5%. The mood of investors could not change the positive data on the growth of permits new construction by 9.9% in May, against the expected 3.1%. We maintain a medium-term negative outlook for the Australian dollar with the objectives near 0.92.
The amplitude of price fluctuations of the New Zealand dollar declines and the price does not fall despite the strengthening of the U.S. dollar and the downward movement of the Australian dollar. Currency quotes were supported by the news from China, where the index of business activity in the services sector rose to 53.1 in June from 50.7 in May. On the one hand the New Zealand economy shows a steady growth and a trade surplus, on the other, the growth of quotations of the national currency is restricted by the policy of the Reserve Bank of New Zealand, where had previously stated the readiness to control the growth of the national currency, which could hurt economic growth. We expect a price decline of the New Zealand dollar in the medium term.