23.01.2015 - The ECB has launched a full-scale program of quantitative easing
The price of euro fell sharply yesterday following a statement of the ECB about the launch of the quantitative easing program in March. Thus, each month will be bought assets for 60 billion euros. The minimum term of the program is limited by September 2016. 20% of the funds will be presented by the ECB and 80% by national central banks. This step strengthened the confidence in further decline of the euro, which should support European producers. In addition, analysts expect the results of the parliamentary elections in Greece, which can win the opposition party Syriza, which will increase concerns about the Greek debt restructuring. Our medium-term outlook for the euro remains negative and we recommend holding short positions.
The price of the British pound fell sharply following the euro, after the announcement of the ECB's decision on the asset purchasing program with a monthly volume of 60 billion euros. It is worth noting that the price of the British pound broke through the psychologically important support level at 1.50. Today, the course of trading will be affected by the retail sales data in the UK (09:30 GMT), which may show a decline in December due to the large number of holidays. Our medium-term outlook remains negative due to the euro's decline.
The Japanese yen continued to decline amid growing demand for the dollar in relation to the ECB's decision to launch a program of quantitative easing. It is worth noting that the decline was minimal on the background of the increased demand for defensive assets in connection with waiting for the results of the parliamentary elections in Greece, which will be held this Sunday and can lead to problems with the restructuring of the country's debt, which adversely affects the stability of the financial system of the euro area. The fall of the yen was also hindered by the improvement of statistics on the manufacturing PMI, that rose in January to 52.1, which is 0.1 better than the previous figure. Our medium-term outlook remains negative, but in the near future we can see the strengthening of the Japanese currency.
The price of the Australian dollar continued to decline and has overcome the psychologically important support level at 0.80. The reason for the decline was the increased demand for the dollar following a statement of the ECB on monetary policy. In addition, investors expect interest rate cuts by the Reserve Bank of Australia following the Bank of Canada, which cut interest rates from 1.0% to 0.75%. It is also worth noting the negative impact of falling commodity prices on the Australian currency. The growth of China's manufacturing PMI from HSBC Bank to 49.8 against 49.5 expected supported the Australian dollar. We maintain our medium-term negative outlook and recommend holding short positions in Australian currency.
The price of the New Zealand dollar continued to decline against the background of the US dollar and reached the target level of 0.75. Additional incentive for continuing fall was the reduction of the interest rate by the Bank of Canada, which has led to an increase in expectations of a similar move by the Reserve Bank of New Zealand. We predict saving the current dynamics in the medium term and recommend holding short positions.