14.08.2014 - Statement of the Bank of England has led to the fall of the pound
The price of euro yesterday rose sharply on the background of the lack of growth in retail sales in the United States in July, despite the growth forecast of 0.2%. Retail sales excluding auto sales grew by only 0.1%, compared with an expected growth of 0.4%. Also, yesterday was published the data on the decline in industrial production in the euro area by 0.3% in June, against the expected growth of 0.5%. As a result, the euro quotes returned to previous levels, and now investors are waiting for statistics on GDP in France (5:30 GMT), Germany (06:00 GMT), and the euro area, as well as data on consumer price inflation in the Eurozone (09:00 GMT ). Low inflation is pushing the ECB to additional measures of quantitative easing, which lead to the devaluation of the euro. We maintain a medium-term negative outlook and recommend holding short positions on the euro.
The price of the British pound fell sharply after the statement of the Bank of England, Mark Carney, who said that interest rates will probably increase at the beginning of next year, but only in case of wage growth. It should be noted that data on wages showed a decrease of 0.2% compared with an expected decline of 0.1%. Thus, the statement of Mr. Carney was offsetting gains from reduction of unemployment by 0.1% in June to 6.4%. In addition, it was noted that the high exchange rate hurts exports, which gives reason to expect stimulation of the depreciation of the Bank of England. The growth of quotations will probably resume after the referendum on Scottish independence, which will be held in September. We look forward to continuing the downward price movement in the coming weeks.
The price of the Japanese yen continues to gradually fall in price on the background of low activity of traders in Japan, reduced geopolitical tensions and the strengthening dollar against world currencies. In addition, data on the reduction of the country's GDP by 1.7% have a negative impact on investor sentiment, despite the fact that the decrease is due to an increase in sales tax. Domestic orders for machinery rose only by 8.8 in June, compared with an expected growth of 15.5%. We maintain our positive medium-term outlook for the yen.
The price of the Australian dollar stopped growing after a confident increase yesterday caused by rising consumer confidence index by 3.8% in August compared to 1.9% in June. Data from China showed a slight slowdown in industrial growth to 9.0%, retail sales up to 12.2% and investment in capital assets to 17.0%. We expect the resumption of downward dynamics of the Australian dollar and maintain a medium-term negative outlook.
The New Zealand dollar strengthened after the release of statistics on retail sales, which rose by 1.2%, that is 0.2% better than expected. Today the course of trading will be affected by the labor market data in the United States. Considering long-term decline in quotations of the New Zealand dollar, we expect further price correction, but we predict that the price will continue to move around current levels in the near future.