18.11.2014 - The yen again approached the seven-year low
The price of euro yesterday could not continue the upward movement and started to correct despite the positive statistics on euro area trade balance surplus which rose to 17.7 billion, that is 1.5 billion better than analysts' forecasts. Negative for traders was a report of the Central Bank of Germany, which noted the deterioration of business forecasts, due to the lack of new industrial orders in Germany. This situation according to the bank will continue until the end of 2014. Meanwhile, Mario Draghi noted the positive effect of the program lending on the economy of the region. Also in the Eurozone was reached the consensus on structural reforms. Today will be published data on the index of business Confidence in Germany and the Eurozone (10:00 GMT) and the producer price index in the US (13:30 GMT). We maintain a medium-term negative outlook for the euro and recommend holding short positions.
The price of the British pound fell yesterday against the background of the Bank of England's comments regarding that external factors continue to put pressure on inflation in the country, leading to a continuation of the policy of low interest rates. It is worth noting that inflation in September was 1.2%, against a target of 1.2%. In addition, last week the Bank of England announced a possible decline in inflation below 1.0% in the coming months. Today, volatility will increase after the publication of data on producer price index, consumer price index, house price index and retail price index (09:30 GMT). We forecast a decrease in quotations of the British pound in the coming months.
The Japanese yen resumed its decline after a minor correction and continues to be about seven-year low. In addition, investors expect the Prime Minister Shinzo Abe statement on postponing raising the sales tax, launching new stimulus measures on 2-3 trillion yen. In addition, Mr. Abe may declare the dissolution of parliament and new elections. Dynamics of the yen continues to be negative due to the stimulus measures of the Bank of Japan, as well as the strengthening of the US dollar. Our medium-term outlook remains negative.
Australian dollar after strong growth in the previous days began to decline sharply against the background of fixation positions, as well as in connection with the publication of data on the index of leading economic indicators in Australia, which fell by 0.3%. At the same time, the main negative factor for the quotations of the Australian currency is the deterioration in the housing market in China, which leads to a decrease in demand for Australian commodities. Thus, it became known that in October, the price of new housing in China fell by 0.8%. We maintain a medium-term negative outlook for the Australian dollar and recommend holding short positions.
The New Zealand dollar has stopped growing and corrected yesterday. Dynamics of prices still depend on export prices and today we have seen the rise of quotes against the background of the expected results of the auction on dairy products, which is one of the main export goods of the country. The main risk to the New Zealand economy remains the crisis in the construction sector in China, which negatively affects the economy of the country as a whole. We maintain a medium-term negative outlook on the New Zealand currency.