Currency trading and the euro. The price of euro showed strong growth on the background of comments of the president of the Federal Reserve Bank of San Francisco John Williams on the need to increase the target level of inflation in the US that would allow the Fed to keep interest rates over a longer period of time. The growth of the euro as news of support for growth of economic sentiment index in the euro area to 4.6 vs. expected -6.3. Zero inflation in the US in July, does not encourage the Fed to raise interest rates. The strong data on industrial production in the US, which grew by 0.7% in July against the expected 0.2% was supported by the US dollar. Today, the central event of the day will be the publication of the previous Fed meeting minutes (18:00 GMT) where investors can find hints on future plans regarding the timing of interest rate increases. Our medium-term outlook for the euro remains negative.
Currency trading and the British pound. The price of the British pound strengthened yesterday against the weakening US dollar, as well as the fixing of short positions after strong reduction. The consumer price index in the UK accelerated growth to 0.6% vs. expected 0.5%. Today, volatility will increase after the publication of statistics on the labor market in the UK for July (8:30 GMT). In case of weaker data, the British currency decline will continue. We maintain our medium-term negative outlook due to the negative consequences of the future exit of Great Britain from the EU.
Currency trading and the Japanese yen. The price of the Japanese yen showed growth against the background of the weakening US dollar. Strong influence on the dynamics of trading in the near future will be the investors' expectations regarding the timing of the Fed raising interest rates. It should be noted that the divergence in the monetary policy of the Fed and the Bank of Japan is the main reason that will stimulate the reduction of the yen in the medium term. The growth of the Japanese currency in the near future is possible in case of increased demand for defensive assets against the backdrop of falling stock markets. Tomorrow will be released the most important data on the trade balance of the country, which will lead to increased volatility. Our medium-term outlook remains negative.
Currency trading and the Australian dollar. The price of the Australian dollar rose amid falling US dollar, rising oil prices and the positive statistics on the index of leading economic indicators, which rose in June by 0.1% against a decline of 0.2% in May. Investors are waiting for the important statistics on the labor market in Australia, which will be published tomorrow and will be monitoring the situation on the commodity markets. The expected easing of monetary policy of the Reserve Bank of Australia and the possibility of renewed oil price drop will boost falling Australian dollar.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar showed growth on external factors, increase in prices for dairy products, which is the main export commodity group, as well as strong data on the labor market in the country. Thus, the unemployment rate fell in the second quarter to 5.1%, which is 0.2% less than the forecast, while employment grew by 2.4%, which is significantly better than the expected increase of 0.4%. Our medium-term outlook for the New Zealand dollar is a negative, but we do not exclude a further increase in the near future.