11.07.2014 - Problems of Portuguese bank raised investors' concerns
of euro fell sharply yesterday on news from Portugal, where one of the largest
banks of the country Banco Espirito Santo has not paid interest on the bonds
and may declare a default or ask the authorities for financial assistance. Bank
of Portugal confirmed the reliability of the bank, which lowered investors'
fears, but the risks remain. At the same time, industrial production in France
in May decreased by 1.7% and in Italy by 1.2%, while analysts had expected
growth by more than 0.5% in each country. Today, will be released the data on
consumer price inflation in Germany (06:00 GMT), and the course of trading on
Monday can be influenced by data on industrial production in the euro area. We
The price of the British pound yesterday showed a decline amid weak data on the country's trade balance deficit which rose to 9.2 billion, that is 0.2 billion more than the forecast and 0.4 billion worse than expected. Interest rates and asset purchases of the Bank of England remained unchanged. Today will be published data on the index of leading economic indicators in the UK. The amplitude of price fluctuation steadily declined and we expect strong price movement in the near future. Medium-term outlook on the British pound remains positive.
Japanese Yen greatly strengthened yesterday despite contradictory data. Support for the Japanese currency had data on the growth of consumer confidence index to 41.1, which is 0.4 better than expected, as well as rising fears in the market due to situations with a Portuguese bank Banco Espirito Santo, which may declare a default. Japanese yen traditionally considered to be a defensive asset and in the case of the emergence of new risks, the demand for currency grows. We expect that the price drop will stop and the devaluation of the yen in the medium term.
After yesterday's decline of the Australian dollar due to increased unemployment in the country by 0.1% to 6.0%, today the price of the currency is regaining its positions. Support for the national currency of the country had a rise of quotations of gold, as well as the stability of the housing market in the country, which is one of the key sectors of the Australian economy. We maintain a medium-term negative outlook for the Australian dollar and expect the low activity of traders today.
Growth of the New Zealand dollar has stopped and the price is moving in the sideway trend. On the one hand the quotes are negatively impacted by the weak data on China's trade balance the surplus of which in June was 31.6 billion compared with an expected 37.3 billion On the other hand the growth of the national currency is limited by the possible steps of the Reserve Bank of New Zealand, that had previously announced its intention to deal with rising New Zealand dollar. We expect lower prices in the medium term.