07.01.2016 - Trading session in Shanghai has been stopped again
Currency trading and the euro. The price of euro today showed strong growth due to the fall in the Chinese stock market, and also due to correction after the sharp fall in the previous days. The minutes of the previous meeting of the Federal Reserve noted that some members of the Federal Open Market Committee noted, that regulators should closely monitor the real rate of inflation and expressed concerns about the beginning of the process of raising interest rates. Today, the dynamics of trading will affect data on retail sales and unemployment in the euro area (10:00 GMT) and the number of initial unemployment claims in the US (13:30 GMT). Our medium-term outlook remains negative and we are waiting for the resumption of the negative dynamics after the stabilization of the situation in China.
Currency trading and the British pound. The price of the British pound continues to consolidate around the target level of 1.46, despite the weakening of the US dollar in relation to the situation in China. Negative for the British currency yesterday was weak data on service PMI, which fell by 0.4, to 55.5, but remains above the level of 50.0 that indicates expansion in the sector. Tomorrow, in the country will be published statistics on the trade balance, which will increase volatility. In addition, investors are waiting for the publication of an important report on the labor market in the US tomorrow. Our medium-term outlook for the British pound remains negative and we do not exclude the correction of prices in the near future.
Currency trading and the Japanese yen. The price of the Japanese yen continued to strengthen against the background of increased demand for defensive assets due to a number of factors. The main reason for the increased interest for the yen was the weakening of the yuan and fall on China's stock market, where trading on the Shanghai Stock Exchange was again stopped due to fall by more than 7%. Also yesterday, the DPRK said about hydrogenous bomb test, and earlier, Saudi Arabia broke off diplomatic relations with Iran. After stabilization of the yen the decline will resume against the US dollar, and we maintain a negative medium-term outlook despite the possibility of continuing the current growth.
Currency trading and the Australian dollar. The price of the Australian dollar continued to decline against the background of lowering the price of the Chinese yuan, as well as the fall in the stock markets in China. Statistics on the Australian trade balance deficit which totaled 2.91 billion vs. expected 2.98 billion, was not able to improve investor sentiment. Falling oil prices also puts pressure on the national currency of the country. After a strong decline, we do not exclude correction of prices in the near future. Tomorrow we should pay attention to the statistics on retail sales, but the main impact will be the news on the situation in China. Our medium-term outlook remains negative and we are waiting for the fall in the near future.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar continued to decline following the Australian currency against the background of the collapse of stock markets in China, the weakening of the yuan and the fall in commodity prices. Divergence of monetary policy of the Fed and RBNZ will continue to push the price is not the New Zealand currency. We expect a continuation of the negative dynamics of prices in the medium term.