06.01.2016 - The yen rose against the demand for defensive assets
Currency trading and the euro. The price of euro continues to fall against the background of a stronger US dollar due to geopolitical tensions in the Middle East, as well as the fall on the stock markets in China. It is worth noting that the core consumer price index in the euro area was 0.9%, which is 0.1% worse than analysts' forecasts. Today, the central event will be the publication of the minutes of the previous meeting of the Fed on monetary policy, at which it was decided to raise interest rates by 0.25% (19:00 GMT). In addition, the dynamics of trading will affect the data on factory orders in the US (15:00 GMT). Our medium-term outlook for the euro remains negative.
Currency trading and the British pound. The price of the British pound continues to decline against the strengthening of US dollar and came close to the minimum level in 2015 year. It is worth noting that investors are afraid to open long positions on the British currency in connection with the expected increase in speculations about a referendum on the UK exit from the EU that can be held in 2016-2017. Today, the course of trading will affect the data on the service PMI (09:30 GMT). We expect the price decline of the British pound in the medium term, but we can see a correction in the near future.
Currency trading and the Japanese yen. The price of the Japanese yen continues to fall against the background of the weakening of the yuan and the fall on the stock markets of China, together with the geopolitical tensions in the Middle East leads to increased interest of investors in defensive assets. We expect that the situation in China will stabilize, and the geopolitical risks traditionally have a short-term impact on the dynamics of trading. Given the strengthening of the US dollar, we expect price correction of the yen.
Currency trading and the Australian dollar. The price of the Australian dollar continued to decline against the background of weakening prices of yuan, and increased investors' fears about the situation in China, where the continued decline on the stock markets is caused by fears of weak growth in the world's second largest economy. China is a major consumer of Australian goods. We maintain a negative medium-term outlook for the Australian dollar with the objectives of 0.70 and 0.68.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar continued to fall after unreasonably strong growth last month. The negative impact of the news from China and the strengthening US dollar were the main reasons for the decline of the New Zealand currency. The low level of inflation in the country may allow the RBNZ to lower interest rates to stimulate economic growth. We expect a further fall in prices in the near future and medium term.