05.09.2014 - ​ECB unexpectedly lowered the rates

The price of euro yesterday showed a sharp decline amid the unexpected decision of the ECB on monetary policy. Thus, the interest rate on loans was reduced by 0.10% to 0.05% and the deposit rate to -0.20%, against -0.10% earlier. Most experts did not expect a change in rates. In addition, Mario Draghi announced the launch of the asset purchase program ABS and mortgage bonds in the next month. It should be noted that this month will be launched the TLTRO for 400 billion. This change of monetary policy has led to a sharp fall of quotations of euro which according to our estimates will continue until the next target level of about 1.28. Today, trade dynamics will depend on the statistics on the labor market in the United States (12:30 GMT), the industry in Germany (06:00 GMT) and the euro area GDP in the second quarter (09:00 GMT). We maintain a medium-term negative outlook for the euro.

The price of the British pound fell sharply yesterday following the quotes of euro. It is worth noting that the price dynamics of the national currency of Great Britain is under the pressure of expectation of a referendum on Scottish independence, which will be held on 18 September. The Bank of England, as expected, left the monetary policy settings unchanged. Analysts expect that interest rates will be raised in May after the elections in the country. Negative for the British pound was the strengthening of the dollar against the background of positive data on the non-productive PMI, which in August rose to 59.6, compared with an expected decline to 57.3. Today we should pay attention to the statistics on the labor market in the United States (12:30 GMT). We maintain our positive outlook for the medium-term and expect the beginning of the growth of quotations after the referendum on 18 September. Until that time, a significant increase in the British pound is unlikely.

The Japanese yen continued to decline against the strengthening of the dollar in relation to the euro's decline, and after the announcement of the Bank of Japan, that the strengthening of the dollar against the yen is logical and the Bank does not see any problems with this process. Today, on the dynamics of trading will influence the data on the index of leading economic indicators and monthly economic report of the Bank of Japan (05:00 GMT). Demand for the dollar will depend on the statistics on employment in the United States. Growth of volatility is also expected on Monday in connection with the release of GDP and the trade balance of Japan. We maintain a medium-term negative outlook for the yen.

The Australian dollar was unable to continue yesterday's rise caused by a decrease in the trade deficit in July to 1.36 billion. Against an expected growth rate to 1.77 billion. Strengthening of the dollar has led to correction of the Australian currency. Today the dynamics of the pair will once again depend on the statistics of the United States. Considering weak economic performance in Australia and the improvement of the economic situation in the United States, as well as tightening of the Fed's policy, we maintain a medium-term negative outlook for the Australian dollar.

The New Zealand dollar yesterday continued a gradual decline due to the strengthening of the American currency, as well as against the background of negative sentiment caused by the growth of the trade deficit of the country, the low prices for dairy products, which is the main export commodity of the country, as well as slowing growth in China. Increased volatility in the New Zealand dollar is expected on Monday after the release of data on China's trade surplus. We maintain our negative outlook on the New Zealand dollar in the medium term.

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