18.07.2014 - News from Ukraine are again in the spotlight
of euro after trying to correct upwards resumed the downward movement. After a
sharp fall on the previous day, traders were expecting a more substantial
correction. Indicators of consumer inflation in the euro area remained at 0.5%,
and statistics on the U.S. housing market was worse than expected. Thus, the
number of building permits fell to 0.96 million, that is 0.08 million worse
than expected, and the number of housing starts fell by 0.13 million to 0.89
million euro The growth of quotations was stopped by news about the downed
passenger liner over the territory of Ukraine on board of which were 298
people. This situation carries risks escalation of the conflict in Ukraine.
Today, the course of trading may be affected by the data on the euro area
balance of payments (08:00 GMT), the index of consumer confidence in the U.S.
(13:55 GMT) and the index of leading U.S. economic indicators (14:00 GMT). We
The price of the British pound fell yesterday against the U.S. dollar, after the message that over the territory of Ukraine was shot down a Malaysian Boeing-777, which was carrying 298 people. This situation leads to increased tension between Russia and the West. Moreover on the eve the U.S. has introduced next package of sanctions against Russia, which relate to defense and energy sector, which will be negatively influence the Eurozone's economy. On Monday, we should pay attention to the data on the index of house prices in the UK, and today in the country is not expected to be released the important macro. We maintain our positive medium-term outlook, despite the decline in the growth potential of the pound.
Japanese Yen decline accelerated after it became known about the downed passenger airliner over the Ukraine. Demand for defensive assets as the yen rose again on the background of another deterioration in relations between the West and Russia. In addition, the Ukrainian president said about the possibility of the use of foreign military forces on the territory of the country that will lead to protests from Russia. In addition, Israel launched a ground operation in Gaza. Minutes of the Bank of Japan did not bring any surprises and further movement of the yen will depend on the level of geopolitical tensions in the world. If the voltage drops, the yen will resume devaluation.
Australian dollar after a sharp decline began to correct. The amplitude of the price fluctuations of the Australian dollar decreases, which indicates a strong price movement in the future. Support for the national currency of Australia is provided by higher gold prices. Among the factors that put pressure on the Australian currency is falling home prices in 55 of 70 surveyed cities in China. We maintain a medium-term negative outlook for the Australian dollar with a view about 0.9220.
The price of the New Zealand dollar declined following the Australian currency, amid evidence of weakness of the housing market in China. On the other hand, the Chinese government may intensify in its efforts to combat low housing prices. Further movement of the New Zealand dollar will depend on the statements of the Reserve Bank of New Zealand and the trade balance of the country, which will be published on Tuesday. We expect that the decline in the New Zealand dollar will stop in the near future.