21.05.2015 - Fed rate hike in June is unlikely

Currency trading and the euro. The price of euro has stabilized near the level of 1.1100 after strengthening of the dollar caused by the strong statistics on the housing market in the United States. It is worth noting that yesterday was published the minutes of the previous meeting of the Fed on monetary policy. Most members of the Federal Open Market Committee do not expect raising interest rates in June in connection with the uncertain data on the growth of the US economy. Today, the course of trading will be affected by the data on manufacturing and service PMI (08:00 GMT), the index of consumer confidence in the Eurozone (14:00 GMT), and speech of Mario Draghi (17:30 GMT). Statistics on the labor market (12:30 GMT) and the US housing market (14:00 GMT) can also affect the mood of investors. We maintain a medium-term negative outlook for the euro.

Currency trading and the British pound. The price of the British pound continues to increase gradually after a steady fall, which was caused by weak data on inflation and the strengthening of the US currency. Today is forecasted the rise in volatility in connection with the publication of statistics on retail sales in the country (8:30 GMT), as well as the balance of production orders in the country (10:00 GMT). According to our estimates, the growth of price may continue in the near future to the psychologically important level 1.55, but the medium-term view remains negative.

Currency trading and the Japanese yen. The price of the Japanese yen corrected after Fed statement on weakness of economic growth in the United States after the first quarter. Support for the Japanese currency today was the data on the growth of the manufacturing PMI, which rose to 50.9 in May, which is 1.0 better than the previous figure. We recall that Japan's GDP growth of 0.6% in the first quarter, could not lead to an increase of the yen. It should be noted that the improvement of data on the growth of the Japanese economy points to the effectiveness of soft monetary policy of the country and provides an opportunity for further stimulus by means of monetary policy easing. Our medium-term outlook for the yen remains negative.

Currency trading and the Australian dollar. The price of the Australian dollar has stabilized around the level of 0.79. Negative for the Australian currency quotations that constrains the price from the upward correction has become the manufacturing PMI in China from the bank HSBC. Thus, according to preliminary data, the index in May fell to 49.1 against 49.4 expected. We recall that the value of the index less than 50.0 indicates a reduction in the sector. The growth of the dollar and cease of rally in commodities negatively impact the Australian currency. We maintain a medium-term negative outlook for the Australian dollar.

Currency trading and the New Zealand dollar. The price of the New Zealand dollar continues to consolidate near the levels of the previous day against the publication of the draft of the annual budget. On the one hand the budget deficit will increase to 684 million and the GDP growth rate will drop to the lower limit of 2% in the third quarter, but on the other hand, in the Treasury expect higher prices for dairy products in the second half of this year. It should be noted that dairy products are the main export product group of New Zealand. We expect a continuation of the downward movement of prices in the near future.

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