17.03.2015 - Bank of Japan has kept monetary policy parameters

The price of euro continues to consolidate above 1.05 after the sharp fall last week, which was due to expectations of the Fed raising interest rates in June this year. It is worth noting that today begins a meeting of the Federal Open Market Committee of the Fed, and tomorrow will be published economic forecasts and the statement of the US Federal Reserve. Yesterday, the reason for the weakening of the dollar was the data on industrial production, which showed growth of only 0.1% in February against an expected increase of 0.3%. Today, the focus will be on the data on the level of employment, consumer price index and the index of business confidence in the business circles of the Eurozone (10:00 GMT), as well as statistics on the housing market in the US (12:30 GMT). We maintain our medium-term negative outlook for the euro and recommend holding short positions.

The price of the British pound showed correction on weak statistics on industrial production in the US. In addition, the price of housing in the UK in March and rose by 1.0%, while the index of leading economic indicators UK in January was 0.2%, against 0.0% in the previous period. Tomorrow volatility will increase in connection with the publication of statistics on the labor market in the country, which traditionally leads to a strong price movement. We expect the price growth within the correction in the near future, but in the medium term, the decline of the British pound may continue until 1.44.

The Japanese yen continued movement around the previous close levels despite the statement of the Bank of Japan. The reason for the lack of a strong price movement was keeping of the parameters of monetary policy. So, super soft monetary policy is maintained until the inflation target of 2.0%. At the same time the Bank of Japan will continue to buy assets worth 80 trillion yen annually. In a statement, the Bank of Japan also stated that the economy continues to recover gradually. Given the expectation of monetary tightening in the US and the current loose monetary policy of the Bank of Japan, we maintain a medium-term negative outlook.

The price of the Australian dollar has shown moderate growth in connection with the publication of minutes of the previous meeting of the Reserve Bank of Australia. For example, in the minutes was noted a desire of the regulator to observe the influence previous decline in interest rates on the economy. In addition, the controller continues to believe the Australian dollar overvalued and noted the positive impact from the fall of the national currency. We expect a further drop in prices of Australian currency in the medium term.

The price of the New Zealand dollar has stabilized around the level of 0.74. Investors did not rush to accumulate positions before the publication of statistics on the balance of payments (21:45 GMT), as well as due to the release of statistics on the growth of GDP in the medium. Earlier data on GDP growth showed a steady growth of the economy and in the keeping of the trend, the New Zealand currency quotes may show strong growth. We expect increased volatility in the coming days.

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