18.08.2014 - Ukrainian crisis continues to affect the mood of investors
The price of euro rose slightly against the weakening dollar, which is caused by the expectation of speech by Fed chairman Janet Yellen in Jackson Hole on August 22 at which will probably be announced further plans of the Fed on the monetary policy in the country. Also on Friday have been published contradictory economic data in the United States. Thus, industrial production grew by 0.4% in July, that is 0.1% better than expected, and the consumer confidence index fell to 79.2, with an expected growth to 82.7. Today the course of trading will be affected by the data on the trade balance of the Eurozone (09:00 GMT) and the index of business activity in the housing market in the United States (14:00 GMT). Our medium-term outlook for the euro remains negative, but we do not exclude the continuation of the growth of quotations of euro this week.
The price of the British pound rose sharply after a long consolidation amid a weakening of the dollar. Decrease in the index of housing prices in the UK in August by 2.9% negatively affected the investors, but given the long price decline without correction, we can see the continuation of the upward movement in the near future. Tomorrow is possible the rise in volatility after the release of the data on inflation. Our medium-term outlook remains positive.
Demand for the Japanese yen rose again on the aggravation of the Ukrainian crisis. Thus, NATO officials stated on crossing the border with Ukraine of Russian military equipment. On the other hand positive corporate news supported the yen. On Wednesday, to be published data on the trade balance of the country. We expect further price drop of the Japanese yen and maintain a medium-term negative outlook, but geopolitical news may lead to another increase in demand for the Japanese currency.
The growth of quotations of the Australian dollar and the price stayed slightly corrected despite the weakening of the dollar. Negative for the investors was the news on reducing new car sales in the country by 1.3% in July and a fall in the level of foreign direct investment in China by 0.4% in July against the growth of 2.2% in June. Investors are awaiting tomorrow's publication of protocols of the previous meeting of the Reserve Bank of Australia. We maintain our negative outlook for the Australian dollar and expect the acceleration of descending movement in the near future.
The price of the New Zealand dollar continues to consolidate amid expectations of release of statistics on producer price index (22:45 GMT). In addition, tomorrow the course of trading may be affected by the increased volatility of the Australian dollar. The focus of investors remains on the news from China, which is the main consumer of products from New Zealand. In the near future the price will likely continue to consolidate around current levels. Downside potential is limited.