05.09.2016 - The situation on the currency market remains uncertain
Currency trading and the euro. The price of euro shows a drop after volatility rose strongly on Friday. The reason for this movement was the publication of an important report on the labor market, which did not meet analysts' expectations. Thus, the unemployment rate in August remained at around 4.9%, vs. expected 4.8%, while the number of non-farm payrolls increased by 151 thousand, against the forecast of 180 thousand. This fact reduced the likelihood of the Fed raising interest rates this month, which is positive for the euro. Today, in the US is a holiday and activity will be reduced. Investors will continue to evaluate data on the US labor market. Among macroeconomic data we should pay attention to the index of investor confidence (08:30 GMT) and retail sales in the Eurozone (09:00 GMT). Our medium-term outlook remains negative and the growth potential in the near future is limited.
Currency trading and the British pound. The price of the British pound rose against the weakening US dollar, after the release of weaker than expected labor market statistics. Support for the British currency was also the construction PMI rise to 49.2 vs. expected 46.6, indicating a slowdown of the contraction in the sector, despite the negative impact of the UK exit from the EU. Today, the course of trading will affect the data on service the PMI (08:30 GMT). Our medium-term outlook remains negative with the targets 1.2600 and 1.2200.
Currency trading and the Japanese yen. The price of the Japanese yen shows a drop against the US dollar, despite its weakening on Friday after less strong statistics on the labor market. The reason for the decline was the statement of the Bank of Japan's chief on intention to strengthen the incentives to maintain the country's economic growth and accelerating inflation. In case of the fall on the stock markets, the demand for defensive assets will grow, which will support the price of the yen. Taking into account the divergence of the Fed’s and the Bank of Japan’s monetary policy parameters, we maintain a medium-term negative outlook on the yen.
Currency trading and the Australian dollar. The price of the Australian dollar showed growth against the US dollar amid bearish statistics on the labor market that impacted the US currency. Support for the Australian dollar also has become news on the growth of the service PMI from Caixin, which rose to 52.1 in August against 51.7 previously. The pressure on the price of the Australian dollar in the near future will have a decline in oil prices. Investors are waiting for tomorrow's RBA statement on monetary policy and data on the growth of GDP, which will be published on Wednesday. Our medium-term outlook remains negative.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar shows the gains against the dollar after data from the US that was published on Friday and did not meet expectations. Investors continue to follow the news from China and Australia, and tomorrow's RBA statement, can greatly affect the dynamics of trading. According to our estimates, the upside potential in the near future is limited and we maintain a medium-term negative outlook.