17.12.2014 - Investors are waiting for the Fed statement
The price of euro yesterday showed growth against the background of positive statistics on manufacturing and service PMI in the euro area, which rose in December by 0.7 and 0.8, to 50.8 and 51.9 respectively. The index of business confidence raised to 31.8 in the Eurozone, against the forecast of 20.1, and the trade surplus in October rose to 19.4 billion, compared with an expected 18.2 billion. Data on the housing market in the US was worse than analysts' forecasts, but despite this, the price of the dollar has strengthened in relation to the expectations of today's Fed statement on monetary policy and publication of forecasts on the US economy (19:00 GMT). Also today, is worth paying attention to data on the consumer price index in the euro area (10:00 GMT) and the USA (13:30 GMT). In case of a hint of earlier Fed raising interest rates, we expect the dollar strengthening. Our medium-term outlook for the euro remains negative.
The price of the British pound continues to be near the levels of 1,5600-1,5750. The reason for yesterday's growth of the pound became the data on inflation in the country. Thus, the consumer price index fell to 1.0% in November, compared to 1.3% in October. The retail price index dropped to 2.0% compared with an expected 2.2%. Despite this, the growth at the end of the session has changed to the fall against the dollar strengthening and fixing positions before the publication of the Fed's monetary policy. Today, it is worth paying attention to data on the labor market in the country and the results of voting on monetary policy by the Bank of England (09:30 GMT). We expect increased volatility today and recommend to wait for the signals for opening positions.
The Japanese yen continued to strengthen gradually against the background of closing of short positions by investors, as well as due to the increased demand for defensive assets due to weak data on production in China and the economic crisis in Russia, where has dropped the national currency and stock indexes. The yen was also supported by data on the reduction of the trade deficit of the country to 0.93 trillion, compared with an expected 0.99 trillion. This decrease was due to lower oil prices. Today, the price dynamics will depend on the Fed statement, which can change the rhetoric regarding the timing of interest rate increases to more "hawkish". We are revising the medium-term negative outlook on the yen and recommend to wait for the Fed's decision to open new positions.
The price of the Australian dollar fell sharply against the background of today’s release of data on the index of leading economic indicators in Australia that fell in October by 0.1%, against a 0.1% increase in September. The weakness of the Chinese industry leads to a decrease in commodity prices, which are the main export goods in Australia. It is worth noting that earlier in the Reserve Bank of Australia announced the positive effect of reducing the national currency for the country's economy. We recommend holding short positions with the target 0.80 and keep medium-term negative outlook for the Australian dollar.
The price of the New Zealand dollar after yesterday's strengthening against the weakening US dollar resumed its fall today after the publication of statistics on the trade balance of the country. Thus, the trade deficit rose to a maximum of more than 6 years mark of 5.01 billion. Analysts predicted deterioration of figure to 5.32 billion. Reasons for the decline of the national currency of the country remain the same - low prices for export commodities and policy of the Reserve Bank of New Zealand, aimed at reducing the prices of the New Zealand dollar. We recommend holding short positions and maintain a medium-term negative outlook for the New Zealand dollar.