10.09.2014 - Strengthening of the dollar has stopped
The price of Euro corrected upwards due the increasing demand for the euro, which is caused by converting the assets of the British pound to the euro due to the fear of exit of Scotland from the United Kingdom. In addition, traders fix long dollar positions after reaching 14-month high. Improvement in the trade deficit of France slightly supported the quotes of the pair. Potential for further growth of the euro is limited. Today, the course of trading may be affected by the data on wholesale inventories in the United States (14:00 GMT), the growth of which is negatively perceived by American investors. We maintain a medium-term negative outlook for the euro.
The price of the British pound rose slightly within the correction and due to the weakening of the dollar. The price of the British currency was supported by data on industrial production in the country, which in July rose by 0.5%, vs. expected 0.2%. At the same time, the country's trade deficit rose to $ 10.2 billion, against the forecast of decline to 9.1 billion. Today the course of trading may be affected by the news from the British Parliament, which will host the meeting on inflation. A negative for the pound remains a referendum on Scottish independence, where the majority of the population supports the independence of the country. We expect a decline of the pound in the coming days and will revise the medium-term outlook after the referendum on 18 September.
The price of the Japanese yen is consolidating around 6-year lows. Decrease in quotations is promoted by speculation about the possibility of an earlier increase in interest rates by the Fed that was said yesterday by the representative of the Federal Reserve Bank of San Francisco. In addition, weak economic performance in Japan increases the possibility of additional stimulus from the Bank of Japan. Producer price index in August fell to 3.9%, which is 0.4% less than last month. We expect continued devaluation of the yen in the medium term.
Fall in the price of the Australian dollar continues due to lower prices for the main export commodity - iron ore and negative data on consumer confidence, which in September fell by 4.6%, compared with growth of 3.8% in August. Acceleration of reduction is also due the closure of long positions after breaking the strong support levels. We maintain a medium-term negative outlook for the Australian dollar and recommend holding short positions with the target of 0.89.
The price of the New Zealand dollar fell slightly amid weakening of the Australian currency, but the drop was insignificant due to the correction of the dollar and sales of the Australian currency in the pair AUD/NZD. It is worth noting that investors do not rush to open new positions before the statement of the Reserve Bank of New Zealand on monetary policy, which may cause us to reconsider the current short-term negative outlook. We recommend you to wait the RBNZ statement for opening positions.