16.07.2014 - China's GDP grew more than expected
of euro fell yesterday on the background of the sharp fall in the index of
business sentiment of the euro area to 48.1 in July, compared with an expected
growth to 62.3. In addition, the dollar strengthened after the publication of
reports on the growth of the index of business activity in the manufacturing
sector of New York in July to 25.6, against an expected decline to 17.2, while
the growth in inventories declined in May to 0.5%, which 0.1% less than the
previous figure. The Fed Chairman said yesterday that rising interest rates
will depend on the macroeconomic indicators and may start earlier than
expected. Today in the euro area we should pay attention to the trade balance
(09:00 GMT) and in the U.S. to the data on industrial production (17:15 GMT).
We expect the continued decline in the coming days and maintain a medium-term
The price of the British pound rose sharply yesterday after the release of data on inflation in the country. Thus, consumer price inflation in June rose to 1.9%, which was 0.3% more than the forecast and 0.4% higher than in the previous month. Despite the sustained growth, the Bank of England was in no hurry to raise interest rates, but now this moment is probably closer. In addition, the head of the Bank of England said yesterday about the risks associated with the housing market due to rising prices against the background of limited offer. Today is also expected the increase in volatility after the release of data on the labor market in the country (8:30 GMT). We expect that the price of the British pound will continue to grow in the medium term with goals 1.72 and 1.73.
The Japanese yen continued to fall gradually against the U.S. dollar. The reason for this has been the strengthening of the U.S. dollar on the back of strong economic data and statements by the head of FED Janet Yellen on the possibility of an earlier interest rate hikes. Today will be published monthly economic report of the Bank of Japan (05:00 GMT) and on Friday - the minutes of the previous meeting of the Bank of Japan. We maintain a medium-term negative outlook for the Japanese yen on expectations of strengthening of the U.S. currency and soft monetary policy in Japan.
The Australian dollar continued to decline against the publication of the minutes of the previous meeting of the Reserve Bank of Australia which indicated that GDP growth will be slightly below trend, employment growth is minimal and expensive Australian Dollar hinders the development of the economy. The index of leading economic indicators rose in May by 0.1%, which coincided with the previous indicator. Falling Australian currency may slow amid positive indicators from China, which is the main trading partner. We maintain a medium-term negative outlook with the closest targets at 0.9330 and 0.9220.
The price of the New Zealand dollar after prolonged consolidation started to decline sharply on the background of a stable level of consumer price inflation that was 0.3% in the second quarter, which is 0.1% less than the forecast of analysts. Positive data on the growth of China's GDP in the second quarter to 7.5%, which is 0.1% better than the forecast and in industrial production up to 9.2% against the forecast of 9.0% were partially offset by a fall in the housing market by 9.2% in a first half. Fall of the national currency of New Zealand is likely to slow down in the near future, but may continue in the medium term.