17.09.2014 - People's Bank of China has decided to support the country's economy
The price of euro rose slightly yesterday on the weakening of the dollar, which is corrected in anticipation of the Fed's decision on monetary policy. Traders are waiting for clues on the timing of interest rate increase. Among the statistics that was published yesterday we should mention decrease in the index of business confidence of the Eurozone in September to 14.2, against 23.7 in August. The reasons for the decline are both weak macroeconomic indicators and the Ukrainian crisis. Today, in addition to the Fed's decision (18:00 GMT), we should pay attention to the data on the index of consumer prices in the euro area in August (09:00 GMT) and the USA (12:30 GMT). We maintain a medium-term negative outlook for the euro and expect increased volatility today.
Volatility of the British pound rose amid speculation about the results of the future referendum on Scottish independence. Inflation data that was released yesterday have been contradictory but have led to a weakening of the pound, which was offset by the forecasts on preservation of Scotland as a part of the UK. Today we expect strong price movements due to the release of data on unemployment and the voting of the Monetary Policy Committee of the Bank of England (08:30 GMT). We recommend to wait for tomorrow's results of the referendum on Scottish independence, but more likely is to expect an increase in the pound in the medium term.
The Japanese Yen continues to consolidate around the levels of the previous trading sessions. Investors are in no hurry to build up positions in anticipation of the Fed's decision on monetary policy, as well as the results of the referendum in Scotland, which is a risk factor for the stability of the British and European financial system. Tomorrow in Japan, will be released the data on the trade balance of the country. We expect a further fall in the price of the Japanese yen in the absence of new risks for global markets.
The price of the Australian dollar strengthened sharply on the background of the People's Bank of China on its intention for injections of 500 billion Yuan into the banking system of the main trading partner of Australia, to deal with more-than-expected slowdown in the Chinese economy. Despite this, iron ore prices remain at low levels. Data on the index of leading economic indicators in Australia in July repeated the results of the previous month and totaled -0.1%. We maintain a medium-term negative outlook for the Australian dollar.
The New Zealand dollar despite the gains on the expected injection into the banking system of China resumed the downward movement due to the negative balance of payments data for New Zealand. Thus, the balance of payments deficit in the second quarter rose to 1.07 billion against the expected 1.04 billion. Surplus was 1.47 billion in the first quarter. The reason for the deterioration of the index was the fall in export prices, the key of which are agricultural products and raw materials. We expect a further fall in prices of the New Zealand dollar in the medium term.