of European currency rose sharply yesterday against reduction of short
positions of traders. Consumer inflation showed an increase of 0.5% in May,
coinciding with analysts' forecasts, and strong data on industrial production
in the U.S., which, as expected, increased by 0.6% could not lead to a
strengthening of the dollar against the euro. Today the course of trading can
be influenced by data on the index of business confidence of the Eurozone
(09:00 GMT), the consumer price index and the housing market in the U.S. (12:30
GMT). Despite the fact that the downward impulse in the euro weakened, there
are no reasons for the growth of a pair. We expect that the price will continue
to move in the sideway channel in the near future, but keep medium-term
After a strong growth, the price of the British pound continues to consolidate below the four-year high of about 1.70. High prices of the British pound are caused by the statements of the representatives of the Bank of England on soon lifting rates due to steady growth of the British economy. On Wednesday will be published the minutes of the previous Bank of England meeting that will help to determine when will start raising rates. Today we should pay attention to the retail price index, the consumer price index and producer price index (8:30 GMT). Despite the high prices and limited upside potential, we maintain a medium-term positive outlook for the pound, but do not exclude a correction.
Japanese Yen continues to be in high demand among investors due to the tense situation in Iraq, where the fighting continues between Sunni terrorists and government troops. Even the positive statistics on industrial production in the U.S. was not able to significantly change the mood of traders on the market. Tonight (23:50 GMT), will be published the data on the trade balance of Japan, which may increase the volatility of prices. Demand for the yen is supported by geopolitical tension and in the case of its weakening, we expect further devaluation of the Japanese yen in the medium and long term.
The Australian dollar has accelerated decline amid continuing collapse in iron ore prices on the world markets. Thus, the price of iron ore, which is the main export commodity of the country fell to 89 dollars per ton. In addition, investors have negatively perceived statistics about the slowdown in foreign direct investment into the Chinese economy to 2.8% in May from 5.0% in April. We expect that the rapid fall in the Australian dollar will continue in the coming days and maintain a medium-term negative outlook.
The price of the New Zealand dollar fell today after the Australian currency on the background of weak data on foreign direct investment in China. The planned rate increase by 1% in the next 12 months supports the quotes of a pair at a high level, but in case of further growth, the Central Bank of New Zealand will take measures to deal with expensive New Zealand dollar. We expect a downward correction of the New Zealand dollar in the coming days.