15.07.2014 - Dollar is strengthening before the speech of Janet Yellen

The price of euro after the strong growth at the beginning of yesterday's session, rolled back due to weak data on industrial production in the euro area. Thus, the index fell in May by 1.1%, which was 1.4% worse than the forecast. The annual growth rate slowed to 0.5%. Also yesterday, Mario Draghi repeated theses about the negative impact of a revalued euro, high unemployment and reducing the risks to the economy. Today we should pay attention to the index business sentiment Eurozone (09:00 GMT), retail sales (12:30 GMT) and inventories in the U.S. (14:00 GMT). At 14:00 GMT, the head of the Federal Reserve Janet Yellen will m We maintain a medium-term negative outlook for the euro.

British pound after a long consolidation started to decrease in anticipation of the release of data on consumer and producer’s inflation (8:30 GMT), and the speech of the Head of Bank of England Governor Mark Carney (09:00 GMT). Reason for the decline was the news of the fall in retail sales in June by 0.8%, compared with growth of 0.5% in May. Tomorrow we expect an increase in volatility after the release of data on unemployment in the UK. We maintain our positive outlook for the medium-term, but in the near future, the price drop of the pound may continue.

Japanese yen started to fall after the Bank of Japan lowered its GDP growth forecast by 0.1% to 1.0% in 2014. It was stated the intention to increase the monetary base by 60-70 trillion. yen and leave the target inflation rate of 2.0%. In addition, many analysts expect that the Bank of Japan may in October introduce new measures for easing of monetary policy in Japan. We maintain a medium-term negative outlook for the yen, which may intensify devaluation against the dollar strengthening.

Publication of the minutes of the meeting of the Reserve Bank of England had almost no effect on the dynamics of the Australian dollar as there were repeated long-known thesis that interest rates will remain at 2.50%, while the Australian dollar is overvalued amid falling prices for export commodities like iron ore. Meanwhile, car sales in June rose by 1.7%, versus 0.4% in the previous month. We do not see the drivers for the further growth of the Australian dollar and expect a decrease in its price in the medium term.

The price of the New Zealand dollar continues to move along the level of 0.88. Support to the quotations today had the data on credit growth in China up to 1080 billion in June, against 871 billion in May. The growth rate of foreign direct investment in China slowed to 2.2%, which is 0.6% less than in the previous month. Today at 22:45 GMT, will be released the data on the consumer price index in New Zealand that can change the mood of investors. Potential for further growth is limited, but there also no reasons for the decline of the national currency in New Zealand. We expect the new signals on the New Zealand dollar.

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