12.11.2014 - Data on labor market and report on inflation in the UK will lead to increased volatility of the pound
The price of euro corrected upwards yesterday after the weakening of the US dollar. Thus, despite the day off and the low activity of trading the quotations reached the level of 1.25, but for the continued price growth are needed new incentives. Today the course of trading on the euro will be affected by data on industrial production in the euro area (10:00 GMT) and wholesale inventories in the US (15:00 GMT), which indicates the growth of imbalances of supply and demand in the country and is a risk for further GDP growth. At the moment, we see no reason for changing negative trend on the euro and given the increase in liquidity on the euro and monetary tightening in the US, we expect a further decline in the medium term.
The price of the British pound began to rise gradually yesterday amid a weakening of the US dollar, as well as in connection with the anticipation of the publication of the quarterly report of the Bank of England on inflation and the speech of Mark Carney (10:30 GMT). Particular attention should be paid today to the block of macrostatistics on the labor market in the country (09:30 GMT) on which depend the timing of interest rate increases, which is expected in Q1 2015. We forecast the growth of price volatility today and admit the possibility of strong price growth. Despite the current downward trend and the possibility of continuing the downward trend in the near future we keep positive medium-term outlook on the British pound.
The price of the Japanese yen continued to decline yesterday on the background of statements of Prime Minister Abe on the possibility of postponing of raising sales tax in October 2015 in connection with the negative impact of the previous raising taxes in April this year from 5% to 8%. In addition, quotes of the Japanese yen continues to be under the pressure of decision taken earlier regarding increase in asset purchases to 80 trillion yen a year. Support for the national currency of Japan today was the data on the growth of the tertiary activity index in the service sector of the country by 1.0% in September, compared with an expected growth of 0.9%. We keep negative medium-term outlook on the Japanese yen.
The Australian dollar has shown steady growth amid a weakening American currency, and also due to the positive statistics on the country's consumer confidence index in November by 1.9% against the previous figure of 0.9%. Despite this, quotations of currency remain under the pressure of a number of negative factors, including the deterioration in the trade balance of the country due to the fall in export prices, the decline in investment in the mining sector, weak growth on the labor market, as well as risks associated with the crisis in the construction sector of China. We maintain a medium-term negative outlook for the Australian dollar.
The price of the New Zealand dollar rose following the Australian currency against the background of the Reserve Bank of New Zealand on the fact that the country's financial system remains strong, but the key risks associated with the economy of China and falling prices for agricultural products are remained. In addition, the RBNZ announced maintaining restrictions on the mortgage lending market to fight inflation in the housing market. Taking into account deterioration in the trade balance of the country we keep medium-term negative outlook.