04.12.2014 - Traders are waiting for the speech of Mario Draghi
The price of euro has updated a minimum and is trading near minimum values in 2 years. Investors are waiting for today's ECB meeting and speech, of Mario Draghi (13:30 GMT) in which it may be declared on intensifying the measures to fight low inflation. Negative for the euro has become the weak data on services PMI in the euro area, which in November fell to 51.1 against the previous value 53.3. Retail sales in October increased by only 0.4%, which is 0.2% worse than the forecast. Non-manufacturing PMI in the US rose to 59.3, which is 2.2 better than the previous figure. In addition, presentations from the Fed give hints of the Fed raising interest rates next summer. Due to the differences in monetary policies of the Fed and the ECB, we keep the medium-term negative outlook for the euro.
The British pound strengthened yesterday against the background of positive data on the service PMI, which rose to 58.6 that is better than the forecast by 2.0 and 2.4 better than analysts' expectations. An additional factor that has supported the growth of quotations was the revision of the forecast for GDP growth in the country by the British government. Minister of Finance announced an expected GDP growth of 3.0% this year and 2.4% next year, which is better than the previous forecasts of 2.7% and 2.3%. Today, the focus will be on the statement of the Bank of England on monetary policy. We expect strong price movements in the coming days, after the end of a long period of consolidation.
The Japanese yen reached a minimum level against the US dollar since 2007. The reason for the fall remains weak economic data from Japan, whose economy in the last quarter showed a decline of 0.4%. At the same time, the US GDP continues to grow steadily. Statement by the Fed indicates an increase in interest rates next year, which also leads to the strengthening of the dollar. Tomorrow is expected the increase in volatility after the publication of a report on the US labor market. We maintain our medium-term negative outlook on the yen.
The price of the Australian dollar continued to fall despite the improvement in the trade balance deficit which in November totaled 1.32 billion compared with an expected 1.85 billion. At the same time, retail sales in the country grew by 0.4%, which is 0.3% better than expected. Yesterday was published the data on GDP growth, which slowed to 0.3%, against expected growth of 0.7%. Tomorrow is expected the increase of volatility in connection with the release of data on the US labor market. We expect a continuation of the current downward momentum in the medium term and recommend holding short positions.
The New Zealand dollar extended losses against the strengthening of the US dollar. It is worth noting that the quotes continue to be under the pressure of low prices for raw materials and agricultural products. Low export prices lead to deterioration of the trade balance of the country. Strengthening of the dollar is an additional factor for reducing the prices of the New Zealand dollar. We maintain our medium-term negative outlook and recommend holding short positions on the New Zealand currency.