05.08.2016 - The pound fell after lowering the interest rate of the Bank of England
Currency trading and the euro. The price of euro continued to consolidate despite the sharp drop of the British pound. Investors’ activity is constrained by the expectation of the publication of important statistics on the US labor market for July (12:30 GMT). Positive employment data will lead to an increase in the probability of the Fed raising interest rates this year, which is negative for the euro. On Monday, we should pay attention to the data on the industry in Germany and the index of investor confidence in the Eurozone. Our medium-term outlook remains negative, and today, we expect a rise in volatility.
Currency trading and the British pound. The price of the British pound fell sharply yesterday after the Bank of England announced the reduction of the key interest rate from 0.50% to 0.25%, and the beginning of purchases of government bonds within the program of economic support. It should be noted that in connection with the exit of the UK from the EU, economic growth will slow down significantly and the pound will continue to decline in price. The main factors that will put pressure on the British currency in the medium term will be the negotiations regarding the exit of the country of the EU. Today, volatility will be increased. We maintain our medium-term negative outlook.
Currency trading and the Japanese yen. The price of the Japanese yen continued to consolidate due to investor caution before the publication of an important labor market report in the US that will affect investors' expectations regarding the timing of the Fed raising interest rates. Support for the yen today will become data on average wages in Japan, which grew by 1.3% in June compared with the same month last year, which is 0.9% more than the forecast. On Monday will be released the big news on the balance of payments and credit volume in the country. Our medium-term outlook remains negative, and today, we expect a strong price movement.
Currency trading and the Australian dollar. The price of the Australian dollar continued to rise today. Earlier, the Reserve Bank of Australia said that inflation will remain within the range of 1.5-2.5% till the end of 2018 and remains the likelihood of further interest rate cuts. On Monday, the course of trading will affect the news on China's trade surplus, which has a strong impact on the dynamics of the Australian dollar. According to our estimates, the growth potential is low and we expect the resumption of the negative dynamics in the near future.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar after the recent correction has resumed growth and may continue it in the near future. On the one hand the volatility of today could grow up in connection with the publication of important data in the United States, but on the other hand investors will not rush to open new positions ahead of the decision of the Reserve Bank of New Zealand on monetary policy next week. After the RBA's recent decline in interest rates, the possibility of such a move by the central bank of New Zealand has grown significantly. We maintain our medium-term negative outlook and expect a high level of volatility in the near future.