17.10.2014 - Labor market data pleased investors

The price of euro yesterday showed a strong increase in volatility on the background of the release of data to the minimum in the 14 years number of initial unemployment claims in the United States, which dropped to 264 thousand, that is 22 thousand better than the forecast of analysts. At the same time, industrial production in the United States in January increased by 1.0%, compared with an expected growth of 0.4%. Investors in the euro area have been pleased with the data on the growth of the trade surplus in the region to 15.8 billion, compared with an expected 13.8. It is also worth noting yesterday's statement by the head of the Federal Reserve Bank of St. Louis James Bullard, who said that the Fed should consider the continuation of bond purchases. The consumer price index in the euro area remained at 0.3%. Today the course of trading will be affected by the data on the housing market (12:30 GMT) and the index of consumer confidence in the United States (13:55 GMT). We maintain a medium-term negative outlook for the euro.

The price of the British pound rose against the background of a weakening of the dollar, following statements by Fed officials on the need of consideration continuation of the asset purchasing program. At the same time British investors overestimated the data on unemployment, which fell by 0.2% to 6.0%. Despite a number of risks associated with a slowdown in the euro area, the UK economy continues to show strong growth and the Bank of England in the next year plans to raise interest rates. Today in the UK is not planned to be released any important macro. The price of a pound may continue to decline in the coming days, but we keep the medium-term positive outlook.

The Japanese yen started to fall due to lower demand for defensive assets after the publication of strong data on the labor market in the United States. In addition, quotes of the yen adjusted downwards after the previous reinforcement. At the moment, the price of the Japanese yen is strongly dependent on the mood of investors concerning the risks associated with the fall of the stock markets of the world. Despite this, the tightening of monetary policy in the United States and its softening in Japan leads to a further devaluation of the yen. We maintain a medium-term negative outlook for the yen.

The price of the Australian dollar continues to consolidate around 0,87-0,88 levels. Positive for the market yesterday was the data on inflation slowdown in China, which gives the government of the second largest economy in the world the possibility to stimulate the economy. At the same time, it is worth noting the strong volatility of the American currency, which has led to price volatility of the Australian dollar. The potential for the further fall of the Australian dollar fell, but given the low price of iron ore, and slowing growth in China, we maintain a medium-term negative outlook.

The New Zealand dollar fell despite a slight decline in the US dollar. Investors do not run the risk of accumulating long positions due to the policy of the Reserve Bank of New Zealand, which can use interventions to reduce the price of the national currency. In addition, quotes are under pressure of deterioration in the trade balance of the country and low export prices. We maintain a medium-term negative outlook and recommend holding short positions on the New Zealand dollar.

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