06.06.2014 - The ECB lowered the rates
The price of euro yesterday fell sharply to 1.3500, but has won back losses due to fixation of short positions. The main event of the day was the statement by Mario Draghi regarding the ECB's monetary policy easing. We recall that the European Central Bank announced a reduction from June 11 of the base interest rate from 0.25% to 0.15%, lending rates from 0.75% to 0.4% and the deposit rate has become negative and now is 0, 1%. In addition, the head of the ECB announced the launch of the program LTRO for 400 billion EUR to stimulate the growth of liquidity, to stimulate the real economy, and to reach the inflation target rate - 2.0%. Today the course of trading can be affected by the data on the trade balance and the volume of industrial production in Germany (06:00 GMT), as well as on the labor market in the U.S. (12:30 GMT). Despite the fixation positions after the statement of the ECB President, we expect a further decline of the euro in the medium and long term.
On Monday is not expected the release of important macro in the Eurozone and the U.S. in connection with
Volatility of the British pound significantly increased against the statements of the ECB and as a result, the increase of euro has led to a rise in quotations of the pound. At the same time, traders ignored the statement of the Bank of England, which left its monetary policy unchanged. Despite this, analysts are positive about the chances of rates growth in 2015 due to the fact that the growth of the British economy may be the strongest between the developed economies, while inflation remains at the target level of 2.0%. Today the course of trading will be affected by data on trade balance of the UK (8:30 GMT). We expect the growth of pound and keep medium and long term positive outlook for the British currency.
The Japanese yen strengthened against the U.S. dollar before the release of data on the labor market in the U.S. for May, before which increased the demand for defensive assets. Today will probably become known about the increase in unemployment in the U.S. by 0.1% to 6.4%, which may also weaken the dollar. Among macro statistics we should pay attention to data on the index of leading economic indicators (05:00 GMT). On Monday will be published data the Balance of Payments, GDP growth and consumer confidence in Japan. We expect growth recovery of USD/JPY and maintain medium and long-term positive outlook for the pair.
The price of the Australian dollar continued the upward movement and reached the level of 0.9340. The reason for the growth was the weakening of the U.S. dollar against the weak labor market data in the U.S. and the statement of the ECB President. Support for the Australian dollar had a rise of the price of gold, as one of the country's export goods. Today and on Monday are not expected the release of important macro, so traders will be watching the news from the USA. We expect the price correction in the near future and maintain a medium-term negative outlook for the Australian dollar.
The price of the New Zealand dollar significantly increased within the correction that has been made possible thanks to the weakening of the U.S. dollar before the release of important macroeconomic data in the U.S. housing market. Support for the New Zealand currency had a strengthening of the Australian dollar. We expect the resumption of the downward movement. Potential for growth is limited by monetary policy of the Reserve Bank of New Zealand. We maintain a medium-term negative outlook for the New Zealand dollar.