21.07.2014 - Geopolitical tension in the world is growing

The price of euro continues to consolidate around the level of 1.3530. On Friday, the U.S. dollar weakened slightly on the background of the weak performance of the index of leading economic indicators of the U.S. in June, which rose by 0.3% compared with an expected growth of 0.6%. Consumer confidence in the U.S. over the same period fell to 81.3, against expected 83.5. Today the course of trading can be affected by a monthly report of the central bank of Germany. The focus of traders remains on the events in Gaza, where the number of victims continues to grow, as well as the situation in Ukraine, where the Ukrainian army is actively fighting with the separatists. Tomorrow it may be decided on more sanctions against Russia from the EU and the United States in connection with the downed passenger plane in Ukraine. We maintain a medium-term negative outlook for the euro with the next t

The price of the British pound, after a sharp decline on Friday, bounced and now continues to move through the corridor 1,7060-1,7180. The housing price index in the UK in July fell by 0.8%, against a 0.1% increase in June. This fact indicates that the policy of the Bank of England to tighten mortgage lending in order to protect the economy from potential mortgage crisis gives its results. The focus of investors remains on geopolitical tensions in connection with the events in Ukraine. EU and U.S. accused Russia in supporting separatists and tomorrow may agree on new sanctions against Russia. We maintain a medium-term positive outlook for the British pound, despite the decline in potential price growth.

The amplitude of the price fluctuations of the Japanese yen continues to decline. Investors are trying to determine the further direction of price. On the one hand the U.S. dollar has strengthened due to the reduction of quantitative easing and positive data on the labor market, while the Bank of Japan's policy remains ultra-soft. On the other hand the demand for the Japanese yen is supported by the increased geopolitical tensions in connection with military operations in Iraq, Israel and Ukraine. In Japan today, is the day off and activity of traders will be reduced. Tomorrow the course of trading can be affected by index of business activity in Japan. Despite the gradual rise of the yen, we expect its devaluation in the medium term.

The price of the Australian dollar reached 0.9400 and continues to consolidate below it. Price volatility today is likely to remain low and growth is expected tomorrow, after the release of data on the index of leading economic indicators in China. Growth is constrained by lower commodity prices. Given the statements of the Reserve Bank of Australia that the high exchange rate harms the economic growth and investors underestimate the potential of decline of the Australian dollar, we maintain a medium-term negative outlook with the immediate goals of about 0.9330 and 0.9230.

The price of the New Zealand dollar after the sharp decline last week corrected upwards and now traders expect the new signals to determine future price movements. This week will be published a series of important macro in New Zealand, the output of which will lead to increased price volatility. So, on Wednesday, will be published the data on the trade balance of the country and the Reserve Bank of New Zealand will announce its statement on monetary policy. We expect the signals to open positions on the New Zealand dollar.

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