16.06.2014 - ​Consumer inflation will affect the movement of the euro

Prices of euro gradually increased on the background of data from the Eurozone, where employment rose by 0.1% in Q1, and the trade surplus in April increased by 0.4 billion to 15.8 billion. By the end of the last trading session of the week the quotes of euro fell amid the refusal of U.S. President Barack Obama from the air strikes against anti-government militias in Iraq. Today, the dynamics of trading will depend on the consumer price index in the euro area (09:00 GMT), capacity utilization and industrial production in the U.S. (13:15 GMT). In the medium term we expect further decline of the euro and the U.S. dollar strengthening.

The price of the British pound continues to consolidate below the psychological mark of 1.70. The strong growth of the British currency last week was caused by the statement of the Bank of England concerning earlier increase in interest rates than was previously expected. Analysts predicted that the rate increase will occur in February of 2015, but now revising their forecasts and expect growth of rates in late 2014. We expect further strengthening of the British pound in the medium and long term, but at the same time growth potential is limited.

The Japanese yen stabilized and has strengthened this morning before the release of the monthly economic report of the Bank of Japan. It should be noted that the Bank of Japan kept its monetary policy unchanged last week and the price of USD/JPY is likely to continue to consolidate near the level of 102 with a tendency to a slight increase. We keep medium and long term positive outlook for the price of a pair.

After the strong growth of quotations of the Australian dollar last week, traders started to fix its position. We recall that the reason for buying was positive data from China and the stable performance of the labor market in Australia. Despite this, the market ignored the fall in prices of iron ore at the world markets and probably the price of the Australian dollar will decline in the near future due to the falling value of the country's main export commodity. Tomorrow will be released the minutes of the previous meeting of the Reserve Bank of Australia. We expect a decline of price in the coming days, and in the medium term.

The quotes of the New Zealand dollar continued to rise, despite a decline in consumer confidence index to 121.2 in the second quarter that is 0.5 worse compared to the first quarter. Investors continue to buy the national currency of New Zealand, after the announcement of plans to increase the RBNZ interest rate by 1.0% in the next 12 months. Tomorrow night is expected the increase in volatility after the release of balance of payments data in New Zealand.

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