19.09.2014 - ​Scotland voted against independence

The price of euro rose yesterday due to a number of factors. On the one hand the first TLTRO auction ended with granting banks 82.5 billion versus the expectations to give about 110-150 billion. Let us recall that the ECB program is aimed at lending to European banks for a long time under the minimum rates in order to support the real economy in the region and to reduce deflationary risks. On the other hand news from Scotland, which is likely to remain a part of the United Kingdom have also reduced the fears of investors about the euro. Also yesterday, despite the decrease in the number of initial unemployment claims in the United States that has fallen to 280 thousand compared with an expected 312 thousand, investors were disappointed by weak data on the housing market. Thus, the number of housing starts in August fell to 0.96 million., compared with an expected 1.04 million while the number of permits for construction of new homes fell to 0.06 million, to 1,00 million. Today, the course of trading will be affected by the data on the balance of payments of the Eurozone (08:00 GMT) and the index of leading economic indicators in the United States (14:00 GMT). We maintain a medium-term negative outlook for the euro, but we can see the continuation of the correction in the coming days.

The price of the British pound shows a strong growth on the preliminary results of a referendum on Scottish independence, where more than 54% of voters voted to retain the country within the UK. Earlier, investors sold the pound in relation to risks that could arise in case of declaration of independence of Scotland. UK retail sales rose in August by 0.4%, which coincided with the previous indicator, and analysts' forecasts. Balance of production orders totaled -4, against the forecast of 9. We look forward to continued growth of the pound with the target of about 1.6670 and 1.6900. In the medium term quotations of the pound will look stronger than it is now.

The Japanese yen continued to fall, despite the weakening of US dollar. The reason for the pessimism of investors has become the first in 5 months downward revision of growth forecast of the Japanese economy, which casts doubt on the future increase in the sales tax to 10% in October 2015. In addition to increased tax, the demand in the country was negatively affected by poor weather conditions this summer. The divergence between the monetary policy of the Bank of Japan and the Fed is the main reason for our negative view on the prospects for the yen. We maintain a medium-term negative outlook, despite a decline in the capacity of the fall and a greater likelihood of correction in the near future.

The Australian dollar after correction has resumed the downward movement. It is worth mentioning that the Australian currency is under the pressure of lower prices for iron ore, which is the main export commodity of the country, and other raw materials. The Reserve Bank of Australia previously stated on the significant potential for reduction of the national currency of the country and this is obviously not the potential has not been exhausted. We expect a continuation of the current negative dynamics and recommend holding short positions with the target of about 0.88.

The New Zealand dollar started to decline after the correction following the Australian currency. Weak economic performance in China, where the slowing industrial growth continues to negatively affect investor sentiment regarding the New Zealand dollar. Today in New Zealand is the parliamentary elections, but their impact on the exchange will be limited. Low prices for agricultural products are another negative factor for the New Zealand dollar. We expect further price decline in the medium term and recommend holding short positions.

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