17.10.2016 - Speech of Janet Yellen has led to an increase of the dollar

Currency trading and the euro. The price of euro continued its decline against the US dollar after was published data on retail sales in the US, which in September rose by 0.6%, in line with expectations and was much better than the previous decline by 0.2%. In addition, Fed Chairman Janet Yellen in her speech said that the policy of low interest rates may have negative effects. The probability of the Fed raising interest rates in December is about 70%. Today, the dynamics of trading will affect the data on the consumer price index in the euro area (09:00 GMT), industrial production in the US (13:15 GMT) and the speech of the ECB’s president Mario Draghi (17:35 GMT). It is worth noting that the central event of this week will be tomorrow's release of the report on the Consumer Price Index in the US, the growth of which will be a strong stimulus for an earlier increase in interest rates. We expect a further fall in the euro price in the near future and maintain the medium-term negative outlook with the targets of 1.0700 and 1.0550.

Currency trading and the British pound. The price of the British pound continues to consolidate after the sharp decline of the previous days. It is worth noting that investors negatively assess the country's exit from the EU that together with the expected strengthening of the US dollar will have a negative impact on the dynamics of trading. On the other hand, after the recent fall, there is a possibility of upward rebound of quotes within the correction. Tomorrow, the focus of investors will be on the statistics on inflation in the UK that have a major impact on the further plans of the Bank of England on the timing of interest rate increases. Our medium-term outlook remains negative with the objectives at 1.0700 and 1.0550.

Currency trading and the Japanese yen. The price of the Japanese yen weakened amid the comments the head of the Bank of Japan Haruhiko Kuroda relatively moderate growth rate of the economy and confirming the intention to use additional stimulus if necessary. In addition, the high probability of the Fed raising interest rates in December, will boost the yen decline in the coming months. It is worth noting that the growth of industrial production in Japan was 1.3% in August, which is 0.2% less than the forecast. Tomorrow the course of trading will affect the news from the US. Our medium-term outlook remains negative, but the growth in demand for the yen may rise in case of a fall on the stock markets.

Currency trading and the Australian dollar. The price of the Australian dollar resumed its fall against the strengthening of the US dollar after the recent correction of the Australian currency prices. The volatility this week will be increased in connection with the publication of a large number of important news. So, tomorrow is worth paying attention to the minutes of the previous Fed meeting, on Wednesday will be published a report on the growth of China's GDP, but on Thursday will be released the data on the labor market in Australia. We forecast a decline of the Australian currency prices in the near future and medium term.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar was unable to continue the negative dynamics and currently shows a slight increase against the US dollar. Investors are waiting for tomorrow's auction for dairy products, the price trends of which traditionally has a strong impact on the New Zealand’s currency. In addition, statistics on the Consumer Price Index for Q3 (21:45 GMT), is strongly displayed on investors' expectations regarding the further reduction of the Reserve Bank of New Zealand’s interest rates. We expect a rise in volatility this week and maintain the medium-term negative outlook.

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