20.10.2015 - Monetary policy of the Fed and the ECB remain the main factors on the foreign exchange market

Currency trading and the euro. The price of euro continues to show a negative trend, which is associated with the estimates of possible steps of the ECB and the Fed on monetary policy. Thus, inflation in the euro area showed a negative value in September, which increases the probability of additional stimulus measures by the European regulator. At the same time, in the United States increased confidence in the Fed's interest rate hike in December. Today, we should pay attention to the balance of payments statistics in the euro area (08:00 GMT), which is likely to have a negative impact on the price of the euro. In addition, investors will be watching the news on the number of permits issued for construction of new homes and the number of housing starts in the US (12:30 GMT). Growth of volatility is projected after the speech of Fed Chairman Janet Yellen (15:00 GMT) in which it can again point to the expected tightening of monetary policy of the Fed this year. Our medium-term outlook for the euro remains negative.

Currency trading and the British pound. The price of the British pound continues to consolidate below the important level of 1.55. Investors are waiting for incentives for opening new positions. Expectation of monetary tightening by the Fed have a negative impact on the British pound. Today, strong price movement is possible after the speech by Bank of England Governor Mark Carney (10:00 GMT), which according to our forecasts will probably support the British pound. Our medium-term outlook remains negative and we are waiting for new signal for opening positions.

Currency trading and the Japanese yen. The price of the Japanese yen has stabilized after a decline caused by the recent strengthening of the US dollar. Statistics from China turned out to be contradictory and did not lead to increased demand for defensive assets like the yen. Today, the dynamics of trading can be strongly affected by the statements of the Federal Reserve chairwoman Janet Yellen (15:00 GMT). Tomorrow a strong influence on the course of trading will have news on the trade balance and the index of business activity in Japan. We maintain a medium-term negative outlook on the yen.

Currency trading and the Australian dollar. The price of the Australian dollar showed growth after the publication of minutes of the previous meeting of the Reserve Bank of Australia, where it was noted that the main risk to the economy is overheated housing market. At the same time commodities’ prices have stabilized and the situation on the labor market of the country has improved. Tomorrow the course of trading will have little impact on the news index of leading economic indicators in Australia. According to our forecasts, the price of the Australian dollar will continue falling in the near future and in the medium term.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar continues to consolidate against the backdrop of a lack of new drivers in either direction. The weakening of the US dollar and an improvement in commodity markets were the main reasons for the recent increase in the price of New Zealand currency, but the potential for further increase is limited. We maintain a medium-term negative outlook and are waiting for new signals to open the position.

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