22.01.2015 - The Australian dollar fell after an unexpected decision by the Bank of Canada
The price of euro continues to consolidate around 1.16 level amid expectations of today's speech of the ECB President Mario Draghi (12:45 GMT) and the announcement of the decision on the program of quantitative easing in the Eurozone. Yesterday, on the market has appeared an information about the proposal of the asset repurchase up to 50 billion euros per month and for a period of about 1 year. Investors are waiting for the decision on this issue and are in no hurry to open new positions. At the same time on Sunday will be held parliamentary elections in Greece, which could lead to a destabilization of the financial system in the euro area in case of a victory of the opposition party Syriza. Today is also worth paying attention to consumer confidence index in the Eurozone (15:00 GMT). We maintain our medium-term negative outlook for the euro and we expect strong growth of volatility today.
The British pound yesterday showed a decline after the publication of the results of voting of the Monetary Policy Committee of the Bank of England, where all members supported the current settings of monetary policy. Earlier, 2 of 9 members voted for raising interest rates, but the fall in inflation forced them to change their minds. Despite this negative, investors were pleased with the data on the labor market of the country, where the number of unemployed decreased by 29.7 thousand and the unemployment rate fell in November to 5.8%, which is 0.2% better than the previous figure. We predict the fall of the British pound in the medium term due to the pressure of the weak euro.
The price of the Japanese yen today resumed its decline due to the expectation of the publication of statistics on the US labor market, which is expected to improve after the traditionally weak performance of early January. At the same time, it is worth noting downward revision of growth in inflation to 1.0% in 2015, and the growth of GDP forecast to 2.1% in 2015 and 1.6% in 2016. The course of trading will also be influenced by the decision of the ECB on monetary policy, which could lead to an increase in the US dollar. Tomorrow will be published statistics on the manufacturing PMI. We maintain our medium-term negative outlook on the Japanese yen.
The price of the Australian dollar fell sharply after the Bank of Canada cut its interest rate by 0.25% to 0.75% due to the fall in oil prices, which may adversely affect the economic growth of the country. Investors expect a similar move by the Reserve Bank of Australia. At the same time, the price of the Australian dollar continues to be under the pressure of low prices for iron ore and copper, and support from rising gold prices can not compensate this negative effect. We forecast a fall in price of the Australian currency in the medium term and recommend holding short positions.
The price of the New Zealand dollar continued to decline and broke an important resistance level due to the expectation of monetary easing to sustain economic growth amid falling prices for export products. Yesterday the Bank of Canada unexpectedly lowered the interest rate from 1.0% to 0.75%. Therefore, traders are waiting for a similar move by the Reserve Bank of New Zealand. We expect a further fall in the prices of the New Zealand currency in the medium term.