19.03.2015 - Fed forecasts has led to the fall of the dollar

The price of euro yesterday showed substantial growth against the publication of economic forecasts, and statements of the US Federal Reserve. Despite the exclusion of the wording "patience" with an increase in interest rates, negative for the dollar was the deterioration of inflation, economic growth and exports forecasts in the country. A strong dollar had a negative impact on the export of American products to world markets. It is predicted that interest rates will be raised in June, but the probability of this event fell slightly. Despite the strengthening of the euro, we expect continued downward dynamics of euro in connection with the program of quantitative easing in the Eurozone. Today, the course of trading will be affected by the news from the EU summit, ECB Economic Bulletin (09:00 GMT) and data on the labor market in the US (12:30 GMT). Our medium-term outlook for the euro remains negative and we recommend holding short positions.

Euro in January 2015

The price of the British pound fell yesterday after the publication of data on the labor market in the UK, where the unemployment rate has remained at around 5.7%. Analysts had forecast a decline to 5.6%. Despite this, the dynamics changed dramatically amid falling quotations of the US dollar after Fed statement on monetary policy and the publication of economic forecasts, which have been degraded. Today the dynamics of trading will depend on the revaluation of yesterday's statement by the Fed, which has led to a decrease in the probability of the Fed raising interest rates in June. We forecast a drop in prices today and save a medium-term negative view on the British pound.

The price of the Japanese yen rose sharply against the US dollar weakening against the background of yesterday's publication of the Fed's economic outlook and the statement on monetary policy. As a result, the probability of the Fed raising interest rates in June declined, but remains high. A strong dollar had a negative impact on the export of US goods. Despite this, monetary policy in the US will continue to tighten, and in Japan will remain ultra-soft. In this regard, we expect the resumption of the downward movement of the yen against the US dollar in the medium term.

The price of the Australian dollar has strengthened against the US dollar along with the main world currencies, which was caused by the statement of the US Federal Reserve and the worsening economic outlook for inflation and exports, which are under the pressure from a strong US dollar. At the same time a strong data on GDP growth in New Zealand supported the growth of the Australian currency. Despite this, a number of fundamental factors such as low commodity prices, a slowdown in China’s growth pace and the reduction of investment in the mining sector of the country continues to put pressure on the Australian dollar quotes. We expect a price drop in the medium term.

The price of the New Zealand dollar has shown steady growth against the US dollar, amid it’s weakening. It is worth noting that yesterday was published statistics for GDP growth in New Zealand, according to which the economy has grown with the fastest pace since 2007 - 3.5% compared to the same period of the last year. In the 4th quarter growth was 0.8%, compared with the 3rd quarter, in line with analysts' forecasts. Earlier, the growth was estimated at 1.0%. The main growth drivers are retail sales, hotels, industry and real estate. To determine the medium-term price direction we need additional signals.

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