22.02.2016 - The British pound will be influenced by the forecasts on the referendum results
Currency trading and the euro. The price of euro has stabilized after the recent decline. The negative impact of the euro on Friday, had the news on the consumer price index, which remained unchanged in January, despite the forecast of decline by 0.1%. At the same time, core consumer price index rose by 0.3%, against a 0.1% increase in December. This fact increases the possibility of an earlier Fed raising interest rates. This week, the central event will be the publication of preliminary report for US GDP growth in the 4th quarter. Today, we should pay attention to the statistics for the Eurozone’s manufacturing PMI (09:00 GMT) and the US (14:45 GMT), as well as the Eurozone service PMI (09:00 GMT). We maintain our medium-term negative outlook for the euro.
Currency trading and the British pound. The price of the British pound showed a strong move today and opened the trading week with a gap down after the popular UK Mayor of London Boris Johnson said that would agitate for a decision of exit the country from the EU structure. 6 Ministers in the UK Government is also in favor of such an initiative. It is worth mentioning that, after talks between the EU and the UK, was reached an agreement, and Prime Minister David Cameron has announced a referendum on the country's membership in the European Union on 23 June. The agreement is supporting the British pound, and improves its growth prospects, but we expect strong price movements prior to the referendum. Our forecast for the coming months will be reviewed to a neutral.
Currency trading and the Japanese yen. The price of the yen started the trading week lower against the US dollar, due to a correction after rising last week, and weak data on manufacturing PMI of the country, which in February, according to preliminary data fell to 50.2 against 52.3 in January. Strong influence on the course of trading continues to have the dynamics of commodity markets, the fall of which leads to an increased demand for protective assets. According to our forecasts, the demand for the yen in the near future will decrease that together with the expected strengthening of the dollar will lead to a drop in prices of the Japanese currency. Our medium-term outlook remains negative.
Currency trading and the Australian dollar. The price of the Australian dollar showed growth against the background of rising oil prices within the correction after recent reduction. This week will not be published important statistics in Australia, which will be able to significantly influence the course of trading. The focus will be on China's stock markets situation and the dynamics of commodity prices. At the moment, we see no reason for the start of the upward dynamics and the negative trend may continue given the speculation about a possible further reduction of the RBA interest rate. Our medium-term outlook remains negative.
Currency trading and the New Zealand dollar. The price of the New Zealand dollar shows an increase at the beginning of the trading day following the growth of the Australian currency. The potential for further growth is limited. According to our estimates, the price will continue to consolidate in the near future and after its completion, we expect a strong price movement. Thursday night will be published data on the trade balance of the country, which can lead to a strong price movement. Our medium-term outlook remains negative and we are waiting for the signal for opening short positions.