05.01.2015 - Investors are waiting for quantitative easing from the ECB
The price of euro reached the psychologically important mark of 1.20 and continued to decline on a background of two main factors. On the one hand according to the polls, in the elections in Greece can win opposition alliance Syriza, in connection with what the German chancellor declared readiness for a possible Greek exit from the euro zone. At the same time, investors look forward to the publication of data on consumer price inflation, which may push the ECB to intensify its asset purchasing program. Earlier it was reported that the volume of purchases may reach 1 trillion euros, but according to the head of the ECB at the moment is hard to say what will be the volume of the program. Today, the course of trading will be affected by the data on unemployment in Spain (08:00 GMT) and the index of investor confidence in the Eurozone (09:30 GMT). We recommend holding short positions on the euro and maintain a medium-term negative outlook.
The price of the British pound fell sharply on Friday after the release of weak statistics in the UK. Thus, the manufacturing PMI in the country fell to 52.5, compared with an expected 53.7, while the number of permits for mortgage lending fell to 59 thousand in November, which coincided with forecasts of analysts. Decline in the euro and the strengthening of the US dollar also contributed to the downward price trend. Today we see a price correction. The course of trading may be affected by the data on construction PMI (09:30 GMT), as well as the dynamics of the euro. According to our estimates quotes of the British pound will continue to decline after correction with the target at 1.50.
The price of the Japanese yen against the US dollar stabilized amid growing demand for defensive assets in connection with the political crisis in Greece, which may adversely affect the euro area as a whole. In addition, the yen was supported by data on the manufacturing PMI, which in December was 52.0, which is 0.1 worse than the previous figure. Further movement of the yen will depend on demand for defensive assets, as well as the dynamics of the US dollar, which will increase the volatility in the second half of the week. We predict a weakening of the yen in the medium term due to the expected new measures to stimulate the economy and inflation, by the Bank of Japan and the government.
The price of the Australian dollar continued to decline against the strengthening of the US dollar against other major currencies, as well as in connection with the negative statistics on the country's manufacturing PMI, which in December fell to 46.9 against 50.1 in November. It is worth recalling that the value below 50.0 indicates contraction in the sector. At the moment, the quotes are approaching the psychologically important level of 0.80, and may continue to fall due to the low prices of exports, slowing growth in China and the strengthening of the US dollar. We recommend holding short positions and maintain a medium-term negative outlook.
The price of the New Zealand dollar continues to decline rapidly after the publication of statistics on China's manufacturing PMI, which fell to 50.1 in December, which is 0.2 less than the previous figure. The fall in prices for dairy products and other agricultural commodities continues to negatively affect the country's trade balance. Strengthening of the US dollar also helps to reduce prices. We maintain our medium-term negative outlook and recommend holding short positions.