17.11.2014 - Japanese GDP fell unexpectedly
The price of euro on Friday started to grow on the background of fixing positions before the weekend. Positive for investors was the data for GDP growth in the euro area in the 3rd quarter by 0.2%, which is two times better than analysts' expectations. The consumer price index remained at 0.4%, despite the drop in oil prices. At the same time, the data from the United States was also positive. Thus, retail sales rose by 0.3%, which is 0.1% better than expected, and the consumer confidence index rose to 89.4, compared with an expected 87.3. Today, the focus will be on data on the trade balance of the Eurozone (09:00 GMT) and industrial production in the US (14:15 GMT). Despite the current growth potential of increasing is limited and we expect a resumption of the downward movement and maintain a medium-term negative outlook for the euro.
The price of the British pound started to grow on Friday against the weakening of the US currency in connection with fixing positions before the weekend. Growth was constrained by production volume indicators in the UK construction sector, which in September showed a growth of only 1.8%, versus the expected 3.7%. Tomorrow is expected the rise of volatility in connection with the publication of the block statistics on the consumer price index, producer prices and housing prices. The slowdown of economic indicators the UK, as well as the weakness of the euro area has led to the fall of quotations of the British pound, which may continue in the coming months.
The Japanese yen strengthened today after the publication of statistics on the country's GDP in the 3rd quarter. Thus, the economy showed an unexpected decline of 0.4%, versus the expected increase of 0.5%. Private consumption grew by 0.4%, which is twice as worse than expected, and business expenses decreased by 0.2% against the expected growth of 0.9%. After the publication of these statistics, the quotes of the yen fell to a seven-year low, but later began to be corrected. Given the loose monetary policy of the Bank of Japan and the weak data on economic growth, we expect the decline of the yen in the medium term.
The price of the Australian dollar continued to rise against the weakening US dollar. The reason for the growth also was the signing of a free trade agreement between Australia and China at the summit of G20. It is worth mentioning that China is a major consumer of Australian products and this agreement will help to strengthen the position of Australian manufacturers in China, but can be negatively displayed on the Australian engineering and other industries. Tomorrow we should pay attention to the data on the index of leading economic indicators of the country and the publication of the minutes of the previous meeting of the Reserve Bank of Australia. Also tomorrow, will make a statement the head of the Reserve Bank of Australia. Despite the current growth, we keep negative medium-term outlook for the Australian currency.
The New Zealand dollar extended gains following the Australian currency, and also due to the weakening of the US dollar. Positive for investors have also become the data on the growth of retail sales in the country. This week will be published data on producer price index, which may lead to increased volatility. The course of trading will be affected by the dynamics of the US dollar, and the price of the main export commodities of the country, the fall of which has led to a deterioration of the trade balance. We anticipate resuming the downward price movement in the near future.