14.07.2016 - Traders are waiting for the decision of the Bank of England on monetary policy
Currency trading and the euro. The price of euro continues to consolidate after the market volatility has decreased. Support for the European currency was the approval of a new prime minister in the UK, which lowered the risk of political instability in the UK at the beginning of the process of the expected country’s exit from the EU. Investors are waiting for the publication of important data on consumer price inflation in the euro area and the US and retail sales in the US, which will be published tomorrow. Today, the dynamics of trading can be affected by the Bank of England's decision on monetary policy. Our medium-term outlook remains negative and we expect a decrease in quotations in the near future.
Currency trading and the British pound. The price of the British pound continues to show a high level of volatility on the background such factors as approving Theresa May to the position of Prime Minister of Great Britain, which reduced the risks to the UK economy, and expected decision of the Bank of England on monetary policy (11:00 GMT), which may lead to a sharp fall of the British currency. Thus, the country's central bank may take the decision to reduce interest rates, as well as the resume the asset purchase program, which will lead to a drop of the British pound. We maintain our medium-term negative outlook on the British pound.
Currency trading and the Japanese yen. The price of the Japanese yen continues to correct after a strong reduction of the previous days, which was due to the expectation of strong stimulus measures in the country by the Bank of Japan. In addition, the demand for defensive assets weakened on the background of updating historic highs on US stock markets. Tomorrow may increase the volatility amid publication of important statistics from China and the United States. Given the loose monetary policy of the Bank of Japan and the expected strengthening of the US dollar, we keep a medium-term negative outlook on the yen.
Currency trading and the Australian dollar. The price of the Australian dollar is corrected after the publication of statistics on the labor market in the country. Thus, the unemployment rate increased by 0.1% to 5.8%, in line with analysts' forecasts, and the level of employment increased by 7,9 thousand in June against the forecast of 10.1 thousand. China is a major trading partner for Australia and tomorrow's publication of data on industrial production and GDP growth will lead to a strong price movement. Our medium-term outlook remains negative and the growth potential in the near future has decreased significantly.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar fell today amid the weakening Australian currency, the expected strengthening of the US dollar and the decline in commodity markets. It should be noted that the index of business activity in the manufacturing sector of the industry in New Zealand rose in June to 57.7 vs. 57.2 previously. The potential for further growth decreased significantly and we expect a continuation of negative dynamics in the near future.