20.04.2016 - Weak data on the housing market in the United States puts pressure on the dollar

Currency trading and the euro. Price of euro continued to rise against the backdrop of the weakening of the US dollar after was published the data on the housing market in the US, which fell short of analysts' expectations. Thus, the number of issued building permits in March was 1.09 million compared to 1.18 in February, while the number of housing starts fell to 1.09 million from 1.19 million in the previous month. Today activity on the market will be constrained by the expectation of tomorrow's decision by the ECB on monetary policy and a press conference by ECB President Mario Draghi. The probability of the Fed raising interest rates next week and in July is low, but in the second half of the year, this process can be accelerated in case of growing inflation. Our medium-term outlook for the euro remains negative.

Currency trading and the British pound. The price of the British pound after recent gains, started to correct downwards. Today is forecasted the increase of activity in connection with the release of an important report on the labor market in the UK (08:30 GMT). Despite the recent strengthening of the British currency, its growth is limited due to fears the country's exit from the Eurozone, after the referendum on 23 June. This scenario will have a negative impact on the British economy. Our outlook on the British pound in the coming months is negative.

Currency trading and the Japanese yen. The price of the Japanese yen continued to strengthen, despite the statement of the Bank of Japan Haruhiko Kuroda about the readiness to launch measures to deal with the speculations on the currency market. It is worth recalling that the government and the central bank continue to operate in order to increase inflation in the country to the level of 2.0%. Today, was released the data on the trade balance of the country and its surplus in March was 0.28 trillion yen against the expected 0.45 trillion yen. According to our estimates, after some consolidation around current levels, the yen will resume decline due to the divergence in monetary policies of the Fed and the Bank of Japan, but the deterioration of the situation on the stock markets will lead to increased interest to the yen as a safe haven for investment.

Currency trading and the Australian dollar. The price of the Australian dollar after the recent strong growth, is falling following oil prices. The dynamics on commodity markets strongly influences the Australian currency and a likely decline in prices of oil in the near future may become a strong driver for the falling Australian dollar. Tomorrow we should pay attention to the statistics on the index of business sentiment in Australia in the 1st quarter. We forecast a drop in the price of the Australian dollar in the near future.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar is corrected after recent gains and is currently around the psychologically important level of 0.7000. The correction in commodity prices will have a negative impact on the New Zealand currency in the near future, but it is worth noting that the improvement in the dairy products market and overall strong macroeconomic indicators have considerably improved the prospects for the New Zealand currency. We expect a decline in the short term.

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