22.08.2014 - Investors' attention is drawn to Jackson Hole
The price of Euro corrected upwards despite a number of statistics on the euro area, which fell short of analysts' expectations. Thus, the manufacturing PMI in August fell to 50.8, which is 0.6 worse than expected and the service PMI declined to 53.5, compared with an expected 53.6. At the same time, the index of consumer confidence in the euro area has deteriorated to -10 in August against -8 in July. On the other hand statistics in the United States came out better than expected. Thus, the number of initial unemployment claims dropped to 298 thousand, while existing home sales rose to 5.15 million, which is 140 thousand above analysts' expectations. Thus, the figures of the Eurozone economy are deteriorating, and in the United States are improving, leading to continued devaluation of the euro. Today investors will be focused on the speeches of Mario Draghi (14:30 GMT), and Janet Yellen (14:00 GMT) at a conference in Jackson Hole. Investors are awaiting more information on future plans on monetary policy in the United States and the euro area. We maintain a medium-term negative outlook for the euro.
On Monday the dynamics of trading will depend on the data on the index of business sentiment in Germany, service PMI in the United States and the main news of the day will be the publication of data on new home sales in the United States.
The fall of the British pound has slowed down. It is worth recalling that the quotes fell at the fastest pace since September 2008. Yesterday was released the data on retail sales growth in the UK which did not meet the forecast of 0.4% and made only 0.1%. Retail sales are an important indicator for the determination of consumer sentiment in the country and slowing its growth has a negative impact on the economy as a whole. Given the long-term decline of the British pound not supported by fundamental reasons, we expect the beginning of a correction of the British pound in the near future. Today we expect an increase in volatility after the speech by Fed in Jackson Hole. We expect growth rates of the pound in the medium term.
The price of the Japanese yen after a significant reduction took a break and now is consolidating in the side channel. Yesterday, investors were pleased with the data on the growth of the manufacturing PMI to 52.4 in Japan, which is 0.7 better than expected. Increased volatility today will be associated with the symposium in Jackson Hole, where can be made statements that may greatly affect the American dollar. We expect a further decline in the yen against the dollar in the medium term, but do not exclude the correction in the near future.
The price of the Australian dollar corrected up against fixing position, as well as due to the weakening of the American currency. Positive for the bulls has also become positive corporate reporting of companies in mining and oil sectors. Despite this, we expect the resumption of the downward trend in relation RBA monetary policy that may apply intervention to weaken the national currency and the weak macroeconomic data. The medium-term outlook remains negative.
The New Zealand dollar corrected upwards after a significant decline. The course of trading yesterday was influenced by negative data on slowing growth in the industry in China, which is a major trading partner. In addition, low export prices continue to put pressure on the currency quotes. We expect that the price of the New Zealand dollar will continue to move around 0,84-0,85 levels in the near future.