17.07.2014 - Euro decline slows down
of euro confirmed our predictions and reached 1.3530. The reason for the drop
in prices of the euro against the U.S. dollar was the speech by the head of the
FED Janet Yellen to Congress in which she stated that in case of improving
macroeconomic indicators, interest rates may be raised sooner than expected by
experts. The course of trading yesterday also was influenced by trade balance
data in the Eurozone, the surplus was increased by 0.1 billion to 15.3 billion
in May, the volume of industrial production in the U.S. increased by 0.2%,
which is two times lower than expected and the index of business activity in
the housing market in the United States that increased to 53 with an expected
growth to 51. Today trade dynamics will depend on the consumer price inflation
in the Eurozone (09:00 GMT), data on the labor market and the housing market in
the U.S. (12:30 GMT). We expect the price rebound today but keep medium-term
The price of the British pound continued to consolidate near the level of 1.7140. Positive data on the labor market in the UK could not lead to a significant increase in prices. So the unemployment rate in May fell to its lowest level since the end of 2008 - 6.5%. The number of unemployed in June fell by 36.3 thousand people, but investors were disappointed by weak wage growth, which rose by 0.3% against the expected 0.5%. Today is not expected the release of important macro in the UK and the course of trading will be affected by data from America. We maintain our positive outlook for the medium-term, despite the fact that the growth potential has dropped significantly.
The Japanese yen started strengthening today after yesterday it stopped to decline. It is worth recalling that in addition to macroeconomic indicators the movement of the Japanese yen is affected by geopolitical risks, which have recently increased significantly and support the demand for the yen, which is considered a defensive asset. Investors expect the labor and housing market data from the United States, as well as the publication of minutes of the previous meeting of the Bank of Japan. We expect that in the medium term, the yen will resume downward movement due to loose monetary policy of the Bank of Japan and the strengthening of the U.S. dollar.
After yesterday's rebound, the price of the Australian dollar is consolidating near the strong level of 0.9360. The course of trading today was influenced by data on the growth of the index of leading economic indicators in Australia by 0.2% in May against a decline of 0.2% in April. In addition, in the second quarter, the index of business confidence of the country fell to 6, against 7in the previous period. In the medium term, we expect a price drop of the Australian dollar with the target near 0.9220.
The price of the New Zealand dollar resumed its downward movement after a minor correction. The reason for the fall was the strengthening of the U.S. dollar and after a long consolidation, downward impulse was quite strong. Pessimism of investors in China, which is a major trading partner of the country, continues to put pressure on quotations of the national currency of New Zealand. Despite this macroeconomic indicators remain strong and the price decline is likely to end soon. We expect the new signal for further actions.