07.11.2014 - Today is expected the increase in volatility after the release of statistics on the labor market in the US
The price of euro accelerated the fall after the statements of the ECB on monetary policy. Thus, interest rates remained unchanged. In addition, Mr. Draghi said about the imminent start of the secured asset repurchase program, which is quantitative easing, the volume of which will be about 1 trillion euros and will last about 2 years. Together with the TLTRO program on 400 billion, this program is to support the region's economy and to reduce deflationary risks. Among other risks, the head of the ECB noted the geopolitical crisis. At the same time, the US dollar strengthened against the background of data on the number of initial unemployment claims in the US, which fell to 278 thousand that is 7 thousand better than expected. Today, we are forecasting an increase in volatility after the publication of data on the labor market in the US (13:30 GMT). We should also pay attention to the data on the trade balance and industrial production in Germany (07:00 GMT) and France (7:45 GMT). We maintain a medium-term negative outlook for the euro.
The price of the British pound continues to fall on the background of weakening euro and the US dollar strengthening. Positive data on the growth of industrial production in the UK in September by 0.6%, against a decline of 0.1% in August, could not change the negative dynamics of prices. Today, the focus will be on the data on unemployment in the US and the UK trade balance for September (9:30 GMT). In the near future downward price movement is likely to continue under the pressure of falling euro. We revise medium-term positive outlook and expect renewed growth after the Bank of England's statement on the rise of interest rates.
The Japanese yen continued to decline against the dollar strengthening after the publication of positive data on unemployment claims, as well as due to the expected statistics on unemployment in the US today. Despite this, the main reason for the fall of the yen remains the decision of the Bank of Japan to increase the purchase of government securities to 80 trillion yen. On the next week in Japan will be published a lot of macro data that will lead to increased volatility. We maintain a medium-term negative outlook on the yen.
The Australian dollar continues to decline due to the strengthening dollar, as well as thanks to the publication of the report of the Reserve Bank of Australia on monetary policy in which was noted the growth forecast of inflation to 2.5-3.5% to the end of 2016, GDP growth in 2015 at a level of 2,5-3,5%. The unemployment rate is projected to remain increased, and the main risk remains a problem in the housing market in China, which resulted in lower demand and prices for iron ore. We predict further price decline of the Australian dollar in the medium term and recommend holding short positions.
The price of the New Zealand dollar continues to decline gradually following the Australian currency. The reasons for the negative dynamics remain the strengthening of the US dollar, the decline in export prices of New Zealand, the key of which are agricultural products. The main risks for the further growth of the New Zealand economy are slowing industry growth and the problems in the construction sector in China. Today is expected the increase of volatility. We maintain a medium-term negative forecasts and recommend holding short positions on the New Zealand dollar.