11.08.2014 - Volatility on the first trading day of the week is likely to be low
Euro price in the last trading day of the week has corrected up against the fixing positions before the weekend and the release of positive data on industrial production in France, which grew by 1.3% in June after falling by 1.6% in May. Germany's trade surplus narrowed in June to 16.2 billion, which is 3.6 billion less than the forecast. Wholesale inventories in the United States grew by only 0.3%, which is two times less than the forecast and indicates a decline of imbalances between production and consumption. Today, the course of trading will be of low volatility. Traders expect the speech of the member of the Federal Open Market Committee of the Federal Reserve - Fisher (7:15 GMT). At the moment, there is no reason to change the negative trend and we expect a further fall in prices of the euro in the medium term with the objectives near 1.32 and 1.28.
The British pound continued its decline on weak data on the trade balance of the country. Thus, the figure rose to 9.4 billion, in June, compared with an expected decline to 8.9 billion. The main reason for the deterioration of the trade balance was a reduction in the supply of oil and industrial equipment. Today, little impact on the course of trading may provide data on the index of leading economic indicators of the UK (09:00 GMT). Considering significant reduction and reaching of a strong support level at 1.6770, the chance of upward correction and the stop of decline substantially increased. We maintain our positive outlook for the medium-term and forecast the beginning of the upward correction in the near future.
The price of the Japanese yen falls due to lower demand for defensive assets after the announcement of the completion of Russian military exercises near the border with Ukraine. The M2 monetary base in Japan increased by 3.0%, which coincided with forecasts of analysts. The tertiary index of business activity in the services sector fell by 0.1% in June, compared with an expected growth by 0.2%. Also on the course of trading today will influence the data on the index of consumer confidence (05:00 GMT) and orders for machinery equipment (06:00 GMT). We maintain a medium-term negative outlook for the yen.
The price of the Australian dollar corrected upwards due to technical factors and news from the Gaza Strip, where agreed on the next cease-fire and from Russia which ended military exercises near the Ukrainian border. Tomorrow trading dynamics will depend on the index of business sentiment of the country and house prices. Our medium-term view on the Australian currency remains negative.
The price of the New Zealand dollar has stabilized around the level of 0.8470 near which is now consolidating. The potential for further reduction is limited, and this week's trading dynamics will depend on the index of business sentiment in the manufacturing sector on Thursday and data from China and Australia. In the near future we can see a minor upward correction, after which we will need new signals to determine future price movements.