12.05.2014 - ​Euro falls in anticipation of new moves from the ECB

The price of euro continued its decline that began after statement of the head of the ECB Mario Draghi regarding the fact that new measures to fight inflation may be introduced by the Central Bank in June. Also, on Friday, investors were disappointed by the trade balance of Germany, whose surplus fell to 14.8 billion, compared with an expected 16.9 billion. Today we expect low activity of traders due to the lack of important macro. We keep medium and long term negative outlook for the euro.

The price of the British pound fell sharply on the background of negative data on industrial production in the country, which in March fell by 0.1%, against 0.8% growth in February. UK trade deficit narrowed to 8.5 billion, compared with an expected 9.0 billion. In addition, the decline of the pound was caused by the fall of euro. We expect renewed growth in the near future with the target at about 1.70 and keep a long-term positive outlook.

The Japanese yen fell against the strengthening of the U.S. dollar and the balance of payments data in Japan the deficit of which in March increased to 0.78 trillion., against the forecast of 0.54 trillion. Furthermore, the volume of bank lending for the year increased by 2.1%, which coincided with the previous indicator. We expect the growth of USD/JPY due to loose monetary policy of the Bank of Japan and the reduction of quantitative easing in the U.S. We maintain our medium and long-term positive outlook for the pair.

The price of the Australian dollar has corrected downwards after strong growth against the publication of the report of the Reserve Bank of Australia in which was noted the growth forecast of the economy and inflation at 3.0%, and the recovery in the housing sector. Today was released positive data on the index business confidence in Australia, which increased to 6 in April versus 4 in March. Potential for further growth is limited, and we keep medium-term negative outlook for the Australian dollar.

The price of the New Zealand dollar continues to decline after the statement of the Reserve Bank of New Zealand on its readiness to deal with a high price of national currency at lower export prices. Let us recall that foods are the main export commodity of New Zealand. This week, we should pay attention to report on the financial stability of the Reserve Bank of New Zealand (Tuesday). We revised our forecast and do not expect a significant increase in the price of the New Zealand dollar in the medium term.

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