18.06.2014 - Traders are waiting for the statement of Janet Yellen
The price of euro fell again yesterday amid strong growth in consumer price inflation in the United States. Thus, the consumer price index in May increased by 0.4%, the fastest pace since February 2013. This growth rate has led to expectations that the Fed will reconsider plans to increase short-term interest rates sooner than expected. On the other hand, data on the housing market in the U.S. disappointed investors. Thus, the number of new home building permits have dropped to 0.99 million, that is 0.08 million worse than expected, and the number of housing starts fell in May to 1.0 million vs. 1.04 million of the pair today will grow Volatility after the press conference the head of the Federal Reserve Janet Yellen (18:30 GMT) in which she will announce further monetary policy in the United States. We maintain a medium-term negative outlook for the euro, but do not exclude a slight increase in the price today.
The price of the British pound fell slightly yesterday against the U.S. dollar and in connection with the release of data on consumer price inflation in the UK. Thus, the index in May showed a slowdown in consumer prices to 1.5%, which is 0.2% less than the forecast of analysts. This event had a negative impact on the prospects for a rapid increase in rates, which is expected in November-December of this year. Today, will be released the info on the vote on the monetary policy of the Bank of England (8:30 GMT), at which it is expected that one of the officials of the Bank of England will vote for higher rates. We maintain a medium-term positive outlook for the British pound.
The Japanese yen fell against the strengthening of the U.S. dollar due to the fact that high inflation will spur the Fed to an earlier rate hike. In addition, in May, Japanese exports fell by 2.7%, which was worse than expected, but the trade deficit narrowed to 0.86 trillion. against the expected growth to 1.01 trillion. Traders are waiting for the statement of FOMC of the U.S. Fed which will help to determine further price movement of the pair. We reserve the medium and long term positive outlook on the quotations of USD/JPY.
The quotes of the Australian dollar slowed its decline, but will likely continue to fall in the medium term due to low prices of iron ore, which is the main export commodity of the country. Tomorrow we should pay attention to the release of the quarterly Economic Bulletin of the Reserve Bank of Australia. We maintain a medium-term negative outlook and recommend holding short positions on the Australian dollar.
The price of the New Zealand dollar started to recover on the background of stopping the fall of the Australian dollar. Investors prefer not to accumulate positions before the statement of the Federal Open Market Committee of the U.S. Federal Reserve tonight. Also, tonight (22:45 GMT), will be published data on GDP growth in the 1st quarter. Upside is limited by the policy of the Reserve Bank of New Zealand, but in case of positive GDP data we can see continued growth of rates.