07.07.2014 - ​Volatility on the markets sharply declined

The price of euro during the last trading session of the week continued to decline, despite the celebration of Independence Day in the United States, which has led to reduced trade volumes. The reasons for the continuation of negative trends were both long-term expectations, and the data on slowing industrial production in Germany which is the largest economy in Europe. Thus the figure dropped by 1.7%, which is 0.9% less than the forecast of analysts. Today the situation on the market will depend on the statistics on the volume of industrial production in Germany in May (06:00 GMT) and the index of investor confidence in the euro area (8:30 GMT). We expect a negative price dynamics of the euro in the medium term.

Due to the lack of important macro and low activity of American investors on the market, the price of the pound has not changed much during the last trading session of the week. Tomorrow is possible the growth of activity after the release of data on house price index and the GDP growth forecast of the UK. In the long term, the dynamics of price can be negatively affected by the results of the referendum on independence of Scotland, which will be held in September. We maintain a medium-term positive outlook for the British pound with the objectives at 1.72 and 1.73.

The Japanese yen on Friday after the correction, continued to depreciate due to the long-term trend, which is caused by the tightening of monetary policy in the U.S. and ultra-soft policy in Japan. Tomorrow will increase the price volatility in connection with the publication of data on the balance of payments and the current economic situation in the country. We look forward to continuing ascending trend in the medium term with targets at 102.70 and 104.00.

The price of the Australian dollar after a sharp decline on the previous week continues to consolidate above the strong level of 0.9330. The reason for the price drop last week has become negative trade balance of the country and the statement of the Reserve Bank of Australia about possible significant price reduction of the national currency. In the coming days we may see an upward correction, but in the medium term expect continued downward price movement.

The price of the New Zealand dollar with the low volatility continues a gradual decline. On the one hand the country's economy has strong economic performance that strengthens New Zealand dollar, but on the other hand the Reserve Bank of New Zealand is ready to cope with a high exchange rate, which can harm further economic growth. Tonight (22:00 GMT), we should pay attention to the data on the index business sentiment in New Zealand. We expect that in the near future the price will continue to move near the current levels.

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