04.06.2014 - Investors are waiting for data on the U.S. labor market
of euro rose yesterday, despite another decline of consumer inflation to 0.5%
against the forecast of 0.7%, which increases the chances of further measures
to deal with low inflation in the Eurozone. In addition, the unemployment rate
in April fell by 0.1% to 11.7%. Data from the United States was able to stop
the growth of the euro, but at the end of the session. Thus, the volume of
factory orders rose in April by 0.7% vs. expected 0.6%. Today the course of
trading the will be affected by the news on the service PMI of the Eurozone
(7:45 GMT), the euro area GDP in Q1 (09:00 GMT), data on the U.S. labor market
and trade balance (14:30 GMT). Investors expect the decision of the ECB on future
plans to deal with low inflation in the Eurozone. We expect the ECB's monetary
policy easing and forecast further decline of the euro, but are awaiting
The price of the British pound decreases against the dollar strengthening after the release of data on factory orders in the U.S., as well as reduction of construction PMI in the UK by 0.8 to 60.0. The course of trading today can be affected by the data on the service PMI of Great Britain (8:30 GMT). Tomorrow, investors will be watching the ECB decision on monetary policy, the easing of which can weaken the pound. In addition, the Bank of England tomorrow will make a statement on the monetary policy of the country. We expect a further decline in the short term, but keep a long-term positive outlook.
The Japanese yen continued to fall in price against the U.S. dollar. The reason for the continuation of movement was the strengthening of the dollar on the background of positive macro statistics. Today in Japan is not expected the release of important statistics, and the course of trading will depend on the U.S. labor market and trade balance data. Also, at 18:00 will be published the Beige Book, which contains data on the state of the U.S. economy. We expect the growth of USD/JPY in the medium and long term, but today we can see a minor correction.
The price of the Australian dollar rose sharply, but could not hold the position. The reason for the upward movement was the data on GDP growth by 1,1% in the first quarter, which is 0.2% better than expected. The main factors that contributed to GDP growth have become consumer spending (+0.3%) and exports (1.4%). Tomorrow we should pay attention to the trade balance of the country, which probably will exceed analysts' expectations and strengthen the Australian dollar. Despite this, we maintain a medium-term negative outlook for the Australian dollar.
The New Zealand dollar continued its downward movement, which accelerated yesterday after reduction in the manufacturing PMI in China to 49.4, which is 0.3 worse than the forecast. Weak growth of Australian currency, despite strong data on GDP growth also disappointed traders. Further progress will depend on the news from the U.S. and the behavior of the U.S. dollar. We maintain a medium-term negative outlook for the New Zealand dollar.